Hazen v. Municipality of Anchorage

• Citation: 718 P.2d 456
• Decision Date: 25 April 1986
• Docket Number: S-567,Nos. S-477,s. S-477
• Parties: Penny A. HAZEN, Appellant, and Cross-Appellee, v. MUNICIPALITY OF ANCHORAGE, Richard Stevens, William L. Casto, Tim Kasper, Michael Grimes, and Allen Bailey, Appellees, and Cross-Appellants.
• Court: Supreme Court of Alaska (US)

Page 456

718 P.2d 456

Penny A. HAZEN, Appellant, and Cross-Appellee, v. MUNICIPALITY OF ANCHORAGE, Richard Stevens, William L Casto, Tim Kasper, Michael Grimes, and Allen Bailey, Appellees, and Cross-Appellants.

Nos. S-477, S-567.

Supreme Court of Alaska.

April 25, 1986.

As Amended July 31, 1986.

Walter Share, Anchorage, for appellant/cross-appellee.

Susan L. Mendenhall, L.G. Berry, and Susan M. West, Robertson, Monagle, Eastaugh & Bradley, Anchorage, for appellees/cross-appellants.

Before RABINOWITZ, C.J., and MATTHEWS and MOORE, JJ.

OPINION

RABINOWITZ, Chief Justice.

The primary issue in this appeal involves the discovery sanctions imposed by the superior court in response to Penny Hazen's failure to turn over the customer lists of her massage parlor. The superior court dismissed Hazen's claims for false arrest and malicious prosecution and instructed the jury through an establishment order that the police had probable cause when they arrested Hazen for prostitution. We hold that the superior court abused its discretion in imposing these sanctions.

FACTS

Penny Hazen was the owner of The Body Shop, a massage parlor in Anchorage. In early 1977 she was an active opponent of a proposed municipal ordinance that would have strictly regulated massage parlors. She testified at a meeting of the municipal assembly and appeared on a taped television program to argue against the ordinance. Among the public supporters of the ordinance were police officers who were members of the Anchorage Police Department Vice Squad. The ordinance was scheduled for a vote on or about April 2, 1977.

On March 22, 1977, Officer Richard Stevens, wired with a hidden recorder, went to The Body Shop. Officers William Casto, Tim Kasper, and Michael Grimes waited nearby in an unmarked car equipped with electronic recording devices. Upon entering The Body Shop Officer Stevens was met by Hazen who introduced herself as "Kitten". The two discussed the services available; Hazen told Stevens that "nobody would be rushed" and that "all of our customers leave happy". Stevens selected the "deluxe massage" for $100 which consisted of a sauna, shower, chilled wine and an adult movie to be played while on "the magic carpet ride," an exchange of "dual nude massages" on a vibrating waterbed.

Both sides agree that Officer Stevens asked if sex would be available and that Hazen did not explicitly say that it would be available. Hazen contended that she emphatically denied that sex was available, telling Officer Stevens that he should go home and sleep with his wife, and that if he wanted sex he would have to "go down the block." Hazen's attorneys testified that when they originally listened to the arrest tape Officer Stevens had made of the conversation with a hidden recorder (the "arrest tape"), they had heard Hazen make these statements. Officer Stevens testified and a transcript of the arrest tape made in May 1984 indicates that Hazen told him "if we did it here, which we don't, do you think I'd tell you? It's illegal." The arrest tape transcript also indicates that when Officer Stevens told Hazen that he was leaving because sex was unavailable she replied, "I told you, you just weren't listening."

Officer Stevens testified that he concluded from the conversation that he had made an arrangement for sexual intercourse with Hazen for $100. Stevens paid Hazen $100 and went upstairs to a bedroom to get undressed. While in the bedroom Stevens radioed his fellow officers and instructed them to enter the building. When Hazen entered the bedroom Officer Stevens placed her under arrest. Officers Casto, Kasper, and Grimes assisted in the arrest, which was subsequently widely reported by the news media.

Following the arrest, Hazen's attorneys, Sandra Saville and Sue Ellen Tatter, called Municipal Prosecutor Allen Bailey and informed him that they wanted to listen to the arrest tape. Tatter testified that Bailey told her that the tape was not good for the prosecution's side.

Soon after the phone conversation Hazen, Tatter, Saville, and Bailey met and listened to the arrest tape. Hazen, Tatter and Saville testified that the tape was very clear and that they heard Hazen emphatically denying that sex was available. Bailey testified that the tape was not particularly clear.

Following the arrest, Officer Stevens prepared a report charging Hazen with assignation for prostitution. On June 27, 1977, Bailey moved to dismiss the criminal charges against Hazen. At the dismissal On March 21, 1979, the day before the statute of limitations ran, Hazen filed suit against the four arresting officers and against the Municipality of Anchorage. The complaint charged all the defendants with false arrest, malicious prosecution, defamation, violation of state and federal civil rights by interfering with the right to speak out against the anti-massage parlor ordinance, and negligent hire.

                hearing Hazen's attorneys requested that the arrest tape be preserved or that she be given a copy of the tape as Hazen was contemplating a civil suit.  Bailey then advised the court that the tape would be preserved.  Immediately after that statement, a male voice whispered, "[W]ait 'til you hear what is on the tape now."   This remark was not audible in the open courtroom but was picked up by a microphone. 1  The remark came from the prosecutor's table.  Seated at the prosecutor's table at the hearing were Bailey and an Assistant District Attorney who was not involved in the case
                

During discovery, Hazen's civil attorneys ² requested and received the arrest tape. They found the tape to be generally inaudible. Hazen then listened to the arrest tapes with Saville and Tatter, her attorneys in the prior criminal proceedings. and concluded that it was not as clear as it had been when they had originally listened to it and that it had been altered. Thereafter, Hazen and her present attorney listened to the tape of the June 27, 1977 dismissal hearing, and heard the whispered comment, "[W]ait 'til you hear what is on the tape now."

Hazen subsequently moved to amend her complaint to include Bailey as a defendant and to add claims for violation of state and federal civil rights by destruction or alteration of the arrest tape against Bailey, the four police officers, and the municipality. The superior court granted the motion, and on April 21, 1982 Hazen filed an amended complaint. Defendants opposed the motion and later moved to dismiss the cause of action against Bailey, arguing that it was barred by the statute of limitations. The court denied this motion on the ground that the statute of limitations did not begin to run until the aggrieved party either discovered or reasonably should have discovered the facts giving rise to the cause of action.

Shortly before trial began the defendants learned that Hazen kept customer lists. The defendants moved for discovery of any customer lists that Hazen had. At a hearing Hazen acknowledged that she had credit card records from 1982-83 and that she could remember some customers' names, but she refused to disclose them. During this hearing Hazen withdrew her defamation cause of action.

The superior court concluded that Hazen had knowledge of customer names and that she was willfully refusing to furnish these names to defendants. The court concluded that these names were relevant to defendants' ability to show that there was probable cause to arrest Hazen, because the customers could have provided information that Hazen's words meant that sex was being offered even though she didn't explicitly say so. The court therefore dismissed Hazen's claims for false arrest and malicious prosecution. The court also instructed the jury through an establishment order that as a result of Hazen's refusal to provide discovery it was an "established fact" that the police had probable cause to arrest Hazen and that The Body Shop was "at all times" a house of prostitution.

At the trial the superior court made several rulings shortly after Hazen rested her case. It directed a verdict in favor of the four police officers on the claims of alteration of evidence, holding that there was no evidence showing which, if any, of the officers had altered the arrest tape. The court denied a directed verdict for the municipality and Bailey on the tape alteration charge.

The superior court also directed a verdict in favor of all defendants as to Hazen's claims for violation of civil rights arising from the alleged false arrest and malicious The superior court made several additional rulings at the conclusion of the trial. It ruled that the municipality could not be sued under § 1983 because Hazen had not shown that the tapes had been altered pursuant to an official "custom or policy." However, the court created an implied cause of action under the Alaska Constitution for deliberate violations of due process. The court ruled that this cause of action was available against the municipality because it could not be sued under § 1983 and because there was no state statute that covered Hazen's allegations. The superior court ruled that the municipality could be liable under this cause of action without a showing of official "custom or policy," and that punitive damages were available against the municipality. The superior court also ruled that the implied cause of action was not available against Bailey because § 1983 was a complete remedy as to him.

prosecution. The court stated that the establishment order holding that there was probable cause was a complete defense to these claims. ³ The trial then continued with the remaining claims of violation of civil rights from the alteration of the arrest tape against the municipality and Bailey.

The case then went to the jury. The jury was instructed to find the defendants not liable for altering the tape if the evidence proved that, had Hazen's attorneys exercised reasonable diligence, they would have discovered the alleged alteration of...