Wright v. Vickaryous
| Decision Date | 03 August 1979 |
| Docket Number | 4080,Nos. 4079,s. 4079 |
| Citation | 598 P.2d 490 |
| Parties | Sande WRIGHT, Appellant, v. James and Catherine VICKARYOUS, Appellees. James and Catherine VICKARYOUS, Cross-Appellants, v. Sande WRIGHT, Cross-Appellee. |
| Court | Alaska Supreme Court |
Ernest Z. Rehbock, Rehbock & Rehbock, Anchorage, for appellant/cross-appellee.
Richard R. Huffman, Kemppel, Huffman & Ginder, Anchorage, for appellee/cross-appellants.
Before RABINOWITZ, C. J., BOOCHEVER, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice.
This is a dispute between two stubborn Matanuska Valley farmers, Sande Wright and Jim Vickaryous, arising from a lease agreement for Cottonwood Dairy Farm. 1
Wright challenges several aspects of the trial court's decision: the order allowing amendment of the complaint, the construction of the lease as a month-to-month tenancy and the Vickaryouses' right to crops harvested by Wright, a holdover tenant. Further, Wright challenges various rulings relating to damages, including application of the collateral source rule to insurance proceeds received by a landlord.
Sande Wright badly needed a place to put his cows. 2 James and Catherine Vickaryous were looking for a tenant for their dairy farm, Cottonwood Dairy, to avoid a foreclosure. On May 19, 1975, the parties signed an "Interim Lease Agreement," set out in Appendix A, providing that Wright should rent Cottonwood Dairy for a monthly rental of $1,500.00. 3 Wright took possession immediately.
Wright believed the Interim Lease Agreement was a five-year lease and the parties understood that Wright would work to improve Cottonwood Dairy's facilities.
Vickaryous believed the interim agreement was a temporary agreement, preliminary to a formal lease drawn by an attorney, which would be acceptable to both their creditors and would specify responsibility for improvements. 4 Vickaryous spent approximately $5,000.00 in attorney's fees negotiating with Wright about a lease. Vickaryous concluded in mid-December that Wright was not participating in the negotiations in good faith and was not interested in signing a lease. By letters of December 12 and 20, Vickaryous gave Wright notice to quit the premises.
Wright paid no rent from December 1975 until March 1976, 5 when the Vickaryouses filed suit alleging that Wright's failure to pay rent made his possession of Cottonwood Dairy unlawful and that Wright's possession caused them damage. 6 The Vickaryouses received a temporary order directing Wright to pay rent. In June, before trial, the Vickaryouses amended their complaint, over Wright's opposition, to allege that his possession was unlawful because the Vickaryouses had terminated Wright's lease, which had established only a month-to-month tenancy.
The trial was bifurcated. The first part occurred in July 1976 and determined the right to possession of Cottonwood Dairy. The bulk of the testimony was from Wright and Vickaryous. 7 The court found that Wright had been in unlawful possession of Cottonwood Dairy since the December notices to quit and issued a preliminary injunction returning possession of the farm to the Vickaryouses. By that order, the court also awarded hay crops from Cottonwood Dairy to the Vickaryouses. 8
The trial on damages lasted eight days in April and May 1977, and painstakingly covered all the specific claims of both sides. Basically, Vickaryous alleged that Wright had neglected the premises, that Wright's efforts at repair had only made things considerably less functional, and that Wright's negligence was responsible for a fire that occurred on Cottonwood Dairy. Wright alleged that the farm was in terrible shape when he moved in, that it could not operate properly as a dairy farm for Wright's herd, that he (Wright) had only improved the farm, and that the fire was not the result of his negligence. The trial court eventually found that Wright owed the Vickaryouses approximately $70,000.00 in damages less an offset for $18,000.00 worth of equipment and fertilizer Wright had used on the farm. 9
Wright appeals the decision on the right to possession of the farm, the hay crops, 10 and particular items of damages. The Vickaryouses cross-appeal the offset.
We affirm the decision on possession of the farm: the trial court did not abuse its discretion by permitting the Vickaryouses to amend their complaint, and the record supports the finding of a month-to-month tenancy. We find error in the award of the hay crops to the Vickaryouses. We affirm the trial court's decision on damages, except for two items: award of attorney's fees for unsuccessful lease negotiations, and the failure to reduce the Vickaryouses' award by the sum they received from fire insurance. On the cross-appeal, we affirm the offset awarded to Wright, except for costs incurred to grow the hay crops.
The Vickaryouses' initial complaint alleged that Wright was in unlawful possession of Cottonwood Dairy Farm because Wright owed three months rent. The affidavit in support of the complaint stated that James and Catherine Vickaryous
executed a lease agreement with the defendant, Mr. Sande Wright, Whereby we agreed to lease to Mr. Wright Cottonwood Dairy for a period of five years in exchange for monthly rental payments in an amount of $1,500.00. (emphasis added)
In response to this complaint, Wright paid rent to the registry of the court which in turn dispensed it to the Vickaryouses.
The trial court permitted the Vickaryouses to amend their complaint to state that Wright's possession was unlawful because Wright's lease had been terminated. The amended complaint stated that Wright and the Vickaryouses had a
Written month to month rental agreement for Cottonwood Dairy farm . . . which rental agreement permitted defendant to occupy the premises until the parties could negotiate a lease for a longer period of time. (emphasis added)
The trial court permitted amendment pursuant to Alaska Civil Rule 15(a) 11 which is identical to the federal rule governing amendment of pleadings, Federal Civil Rule 15(a). Trial courts have broad discretion in deciding whether to grant leave to amend. 12
The Supreme Court described in Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222, 226 (1962), the conditions under which denial of an amendment might be proper:
Rule 15(a) declares that leave to amend "shall be freely given when justice so requires"; this mandate is to be heeded. See generally, 3 Moore, Federal Practice (2d ed. 1948), PP 15.08, 15.10. If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. the leave sought should, as the rules require, be "freely given."
This court has stated:
Probably the most frequent reason for denying leave to amend is that it would be prejudicial to the opposing party. The prejudice can result from the opposing party being put to an added expense, a more burdensome and lengthy trial, or if the issues being raised in the amendment are remote from the scope of the original case.
Estate of Thompson v. Mercedes-Benz, Inc., 514 P.2d 1269, 1271 (Alaska 1973) (footnotes omitted). 13
Wright argues prejudice on three grounds. First, he claims surprise by the new theory of a month-to-month lease. The amended complaint, however, only introduced a new theory; the Vickaryouses were still suing on the same conduct of Wright which was the subject of the initial complaint. 14 The change in theory to a month-to-month lease did not widen the scope of the dispute and this amendment is equivalent to other amendments that courts have permitted. 15
Furthermore, the remedy for inadequate time to prepare on a new theory is a continuance, not preventing a trial on the merits of the new theory. Wright received the one twenty-day continuance he requested. He did not argue that twenty days was inadequate for trial preparation. 16 The court's comment in Scott v. Baltimore & O. R. Co., 151 F.2d 61, 64 (3d Cir. 1945), is apt:
The only injustice to the defendant in such a situation is when he is compelled to go on with the trial and meet a new point which is a surprise to him and on which he has had no opportunity to prepare. That situation is not claimed by the defendant to exist here and, therefore, his point completely disappears. (footnote omitted)
Second, Wright implicitly assumes that the inconsistency between the first pleading with its supporting affidavit and the amended pleading proves by itself that the amendment was in bad faith and estops the Vickaryouses from making the amendment. The trial court did not find that the Vickaryouses' original complaint or the amendment was in bad faith, and the record supports that determination. 17 Professor Moore states the correct general rule:
The fact that an amendment involves a departure from the facts previously alleged is no bar to its allowance, since consistency in pleadings is not required.
3 Moore's Federal Practice P 15.08(2), at 15-71 (2d ed. 1948) (footnote omitted). 18
Wright's final claim of prejudice is that his payment of rent for the previous months was a complete defense under the initial complaint, but it was not under the amended complaint. 19 Assuming this is true, Wright does not show prejudice simply because the Vickaryouses were more likely to succeed under the amended complaint; presumably, that is the purpose of any amendment offered by a plaintiff. As the court stated in Chamberlin v. United Engineers & Constructors, Inc., 194 F.Supp. 647, 649 (E.D.Pa.1961) A plaintiff is not precluded from amending a faulty complaint so that it states...
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