Ostrow v. Higgins
| Decision Date | 18 July 1986 |
| Docket Number | No. S-1004,S-1004 |
| Citation | 722 P.2d 936 |
| Parties | Gerry OSTROW, Appellant, v. Albert L. HIGGINS and Onita B. Higgins, Yukon Office Supply, Inc., and Fairbanks Title Agency, Appellees. |
| Court | Alaska Supreme Court |
Gail T. Voigtlander and Anthony Guerriero, Roberts & Shefelman, Anchorage, for appellant.
Barbara L. Schuhmann, Schaible, Staley, DeLisio & Cook, Inc., for appellees Albert L. Higgins and Onita B. Higgins.
Ronald E. Noel, Hughes, Thorsness, Gantz, Powell & Brundin, Fairbanks, for appellee Yukon Office Supply, Inc.
James D. DeWitt, Fairbanks, for appellee Fairbanks Title Agency.
Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.
This is an appeal from a trial court decision granting summary judgment in favor of Albert and Onita Higgins, Fairbanks Title Agency and Yukon Office Supply. Gerry Ostrow claims that property she purchased from the Higginses was unlawfully foreclosed at a deed of trust sale in 1983. We reject Ostrow's arguments and affirm the trial court decision.
In 1980, Gerry Ostrow purchased a commercial site near downtown Fairbanks from Albert and Onita Higgins. In connection with that purchase, Ostrow gave the Higginses a promissory note for $74,593.94 secured by a deed of trust. The note obligated Ostrow to make monthly payments to the Higginses and the deed of trust required Ostrow to maintain fire insurance on the property in an amount "not less than the unpaid balance of the aforesaid Promissory Note." Ostrow also assumed an outstanding debt to Arctic First Federal Savings & Loan Association totalling $31,954.47.
The improvements on the property were destroyed by two fires in early 1981. All insurance proceeds, less a fee to an insurance recovery expert, were paid by Ostrow to the Higginses, as specified under the deed of trust. At the Higginses' option, the proceeds were applied to repay the debt to Arctic First Federal and to reduce the unpaid balance owed by Ostrow to approximately $33,000.
After October 1981, Ostrow ceased making monthly payments. In April 1982 Transamerica Title Insurance Co., the deed trustee who preceded Fairbanks Title Agency, recorded an amended Notice of Default and Election to Sell. The notice stated that Ostrow had breached her obligations under the note and deed by failing to make monthly payments and by not maintaining adequate fire insurance. The notice also declared that the property would be sold on August 9, 1982. Subsequently, the Higginses voluntarily postponed that sale date.
On August 5, 1982 Ostrow sued the Higginses and Transamerica for declaratory relief, an injunction and damages. Ostrow also moved for a temporary restraining order (TRO) and a preliminary injunction.
At the August 26 hearing, Judge James R. Blair granted a TRO barring foreclosure pending a determination of the preliminary injunction motion. The parties agreed at the hearing to record notice of foreclosure postponements in lieu of written notice.
Ostrow did not pursue her motion for a preliminary injunction for more than nine months. In a letter dated May 11, 1983, the Higginses informed Ostrow that they intended to foreclose on June 6, 1983. Ostrow's attorney then advised the Higginses that an outstanding injunction barred foreclosure. In response, the Higginses informed Ostrow that they considered the TRO expired and reaffirmed their intention to foreclose.
On June 1, the Higginses' counsel requested the substituted trustee, Fairbanks Title Agency, to record the Notice of Sale. This notice was never recorded.
On June 6, 1983 at 10:10 a.m. the property was sold to Yukon Office Supply for $29,500.
Two weeks after the foreclosure sale, Ostrow moved for a preliminary injunction. The trial court dismissed Ostrow I with prejudice on September 1, 1983. This was because Ostrow withdrew her motion after the Higginses opposed it as moot. The following day, Ostrow moved to amend her complaint to add Fairbanks Title Agency and Yukon Office Supply as defendants. A week later, she also moved for reconsideration of the court's dismissal order. The court denied both motions and Ostrow did not appeal.
The trial court awarded the Higginses $1,000 in attorney fees. Ostrow appealed that award. We affirmed the award in a Memorandum Opinion and Judgment issued February 6, 1985.
Ostrow filed this lawsuit in November 1983 claiming that the property was wrongfully sold and the sale was improperly conducted. The trial court granted summary judgment in favor of all defendants. The court ruled that Ostrow breached her obligations under the deed of trust by failing to maintain adequate fire insurance. It held that the sale was proper and that Ostrow I precluded all other matters raised in the subsequent suit.
The Higginses and Fairbanks Title Agency argue that Ostrow is precluded from raising issues that she raised or could have raised in her first lawsuit. See Calhoun v. Greening, 636 P.2d 69, 72 (Alaska 1981). Despite the trial court's dismissal of Ostrow I with prejudice, we agree with Ostrow that the dismissal was based on mootness and did not adjudicate the merits.
Mootness is a jurisdictional issue which does not preclude a second action on the same claim if the justiciability problem can be overcome. McCarney v. Ford Motor Co., 657 F.2d 230, 233 (8th Cir.1981) (citing 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4436, at 344 (1981)). Under Alaska Civil Rule 41(b), a dismissal for lack of jurisdiction is not an adjudication on the merits. Blake v. Gilbert, 702 P.2d 631, 635 (Alaska 1985).
Ostrow's first lawsuit for injunctive and declaratory relief became moot simply because the foreclosure sale had already occurred. Thus, the trial court erroneously held that Ostrow could not now litigate whether she had breached her obligations and whether the TRO remained effective. However, any error was harmless.
Ostrow argues that the trial court improperly found that Ostrow breached her obligations under the deed of trust by failing to maintain adequate fire insurance. 1
In connection with her motion for partial summary judgment, Ostrow filed an affidavit stating that the Higginses acquiesced to a fire insurance policy amount of $72,000. We agree with Ostrow that this affidavit does raise a genuine issue of material fact. Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co., 584 P.2d 15, 19-20 (Alaska 1978). However, we find an alternative basis on which to affirm the trial court. Sisters of Providence in Washington, Inc. v. Municipality of Anchorage, 672 P.2d 446, 448 n. 2 (Alaska 1983). Ostrow breached her obligation under the promissory note by failing to make monthly payments.
Undisputedly, Ostrow ceased making monthly payments after October 1981. She claims no default occurred since the endorsement of insurance proceeds over to the Higginses constituted prepayment on the promissory note through 1988. We disagree.
Ostrow's obligation to maintain fire insurance and deliver proceeds to the trust deed beneficiary was separate from her obligation to make monthly payments under the promissory note. Furthermore, the trust deed expressly gave the Higginses the option to apply the insurance proceeds to any indebtedness secured by the deed of trust. Ostrow did not have the right or the option to declare the insurance proceeds as prepayment of monies due under the promissory note absent an express agreement from the Higginses to the contrary. The record firmly establishes that Ostrow's unexcused failure to make any monthly payments after October 1981 breached her contractual obligations under the promissory note. The defendants deserved summary judgment as a matter of law.
Ostrow argues that the foreclosure sale was unlawful since the parties agreed to extend the TRO. Alternatively, she claims that the TRO had the effect of a valid preliminary injunction. We reject both theories.
Alaska Civil Rule 65(b) 2 states that a TRO expires by its own terms within 10 days unless the restrained party agrees to an extension and the reasons for the extension are entered of record. Alaska Civil Rule 52(a) 3 requires the court granting or denying an interlocutory injunction to set forth findings of fact and conclusions of law which constitute grounds for the court's action. Strict compliance with Civil Rules 52(a) and 65(d) 4 is required and a procedurally defective injunction will be set aside. Department of Fish & Game v. Pinnell, 461 P.2d 429, 432 (Alaska 1969).
The Supreme Court, in interpreting an identical provision of the Federal Rules, stated:
Rule 65(b) provides that temporary restraining orders expire by their own terms within 10 days of their issuance. Where a court intends to supplant such an order with a preliminary injunction of unlimited duration pending a final decision on the merits or further order of the court, it should issue an order clearly saying so. And where it has not done so, a party against whom a temporary restraining order has issued may reasonably assume that the order has expired within the time limits imposed by Rule 65(b).
Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423, 444-45, 94 S.Ct. 1113, 1126-27, 39 L.Ed.2d 435, 453-54 (1974). We hold that Alaska Civil Rule 65(b) should be interpreted in the same way as the Supreme Court construed its Civil Rule 65(b) in Granny Goose.
At the August 26 hearing, Judge Blair issued a TRO pending a determination of Ostrow's motion for preliminary injunction. Ostrow argues that the TRO was, in effect, a preliminary injunction. This argument lacks merit. Judge Blair clearly stated:
I'll enter a temporary restraining order that prohibits the sale from proceeding until the motion for preliminary injunction has been fully--worked out.
The issuance of a preliminary injunction requires the trial court to enter findings of fact and...
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