On consideration of appellant's Petition for Rehearing filed on
1. The Petition for Rehearing is
(a) The first paragraph of page 19 of the opinion is modified to read as follows:
2. In all other respects the Petition for Rehearing is
This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email corrections@appellate.courts.state.ak.us.
MATTHEWS, Senior Justice.
This case involves a three-way transfer of boat tie-up spaces in a recreational subdivision. The main issue is whether the court erred in requiring the joinder of one of the people involved in the transfer as an indispensable party. We conclude that the court did not err because appropriate relief could not be afforded in the absence of the person in question. We also conclude that the case was properly dismissed because the plaintiff refused to comply with the court's order requiring joinder.
Poachers Cove Subdivision is a planned unit development organized under Alaska's Uniform Common Interest Ownership Act.
In 1999 appellant Ronald Weilbacher owned guide lots 71, 72, and 74. In the owners' association records tie-ups 26 and 48 were designated for lot 71; 27 and 47 were designated for lot 72; and 24 and 79 were designated for lot 74. Weilbacher decided to sell lots 71 and 72 but he wanted to keep tie-up 26 because it was on the Kenai River next to a boat launch ramp and in his view this location was especially desirable. Weilbacher sold lots 71 and 72 and attempted to reallocate the tie-ups associated with these lots and the lot he retained in transactions that ultimately led to the litigation in this case.
On August 6, 1999, Weilbacher sold lot 71 to appellees Floyd Ring, Sandra Ring, Wade Henry, and Jane Henry for a cash sum of $25,000. All parties agreed that the Ring/Henrys would receive tie-up spots 27 and 48, and the escrow instructions signed by Weilbacher and the Ring/Henrys so state. On September 2, 1999, Weilbacher sold lot 72 to Edward Berube for $40,000. The parties agreed that Berube would receive tie-up spots 79 and 48; the escrow instructions signed by Weilbacher and Berube reflect this agreement, as does the warranty deed.
The fact that tie-up space 48 appears to have been conveyed twice by Weilbacher is not the source of the controversy in this case. According to Weilbacher, after the sale to the Ring/Henrys but before the sale to Berube, Sandra Ring asked if they could have tie-up 47 rather than tie-up 48 (both were side-by-side in the lagoon). Weilbacher agreed. According to Weilbacher, Sandra Ring said she would take care of the change with the owners' association and he assumed that this had been accomplished at the time he made the sale to Berube. The Ring/Henrys used tie-up 47 and Berube used tie-up 48 until 2008 when a representative of the owners' association said that the Ring/Henrys should use tie-up 48 and Berube should use tie-up 47 so that the actual use of these tie-ups would be consistent with the association records. Berube and the Ring/Henrys made the switch and apparently regard it as inconsequential.
What did prove to be of consequence was the attempted reallocation of tie-up 26 from lot 71 to lot 74. Despite the agreement of the Ring/Henrys that they would receive tie-up 27 rather than tie-up 26 with their purchase of lot 71, the owners' association records were never changed to reflect this agreement. Weilbacher testified that he thought that the Ring/Henrys would take care of notifying the association board concerning the tie-up reallocation. Floyd Ring testified that he asked Weilbacher to go to the board with him on the morning of the sale to get approval of the tie-up change but Weilbacher declined. Wade Henry, who was an officer and board member of the owners' association, testified that it was his understanding that if a switch was necessary, Weilbacher was responsible for making the switch before selling the lot. Mr. Henry further testified that he "was unaware that we were not getting . . . the slot that was originally assigned to lot 71." The owners' association records were also not changed with respect to the tie-ups for lot 72 that Weilbacher and Berube agreed to.
Soon after Berube purchased lot 72 he began using tie-up 27, evidently because he discovered that tie-up 27 was still allocated to lot 72 in the owners' association records. Because Berube parked in tie-up 27, the Ring/Henrys used tie-up 26 in 1999 and 2000. In 2001 Weilbacher began parking at tie-up 26. This left the Ring/Henrys without access to a river tie-up. Sandra Ring wrote to the board requesting that the board resolve the conflict. Following numerous similar requests, the board met with the Ring/Henrys and Weilbacher on August 29, 2006. After reviewing documents submitted by Weilbacher and Sandra Ring the board decided that tie-up 26 would remain assigned to lot 71. The minutes of the board meeting state that a letter would be sent containing the following decision:
The letter was sent and this suit followed.
On April 6, 2007, Weilbacher filed a complaint in the Kenai superior court against the owners' association and the Ring/Henrys. Weilbacher's claim for relief against the Ring/Henrys sought rescission of the sale of lot 71 based on mistake. His claim against the owners' association was for maliciously interfering with the sales contract between Weilbacher and the Ring/Henrys by ordering Weilbacher to give tie-up 26 to the Ring/Henrys. The only explicit relief sought by Weilbacher against the owners' association was, as an alternative to rescinding the sales contract, an order that the owners' association rescind its action reaffirming that tie-up 26 was allocated to lot 71. Weilbacher also requested costs and attorney's fees and included a catch-all request for "such other and further relief as the [c]ourt deems equitable and just."
The owners' association and the Ring/Henrys answered, generally denying that Weilbacher had any right to relief. In addition, the Ring/Henrys pled a counterclaim alleging that Weilbacher sold lot 72 to an innocent third party and included in that sale tie-up 27 even though he had already transferred tie-up 27 to the Ring/Henrys. The counterclaim alleged that Weilbacher committed fraud and misrepresentation in transferring slip 27 twice causing loss of use damage to them. Weilbacher answered the counterclaim denying its material allegations.
After some discovery the owners' association moved for summary judgment. The essence of the association's motion was that the association, not individual property owners, owns the tie-ups and controls their allocation; therefore Weilbacher had no authority to transfer them. The association in its memorandum supporting its motion for summary judgment referred to a February 1988 letter sent by Poachers Cove developer and then-president Dave Keating, who wrote that "tie-ups will pass with the sale of any lot to a new owner" and explained that "if anyone wishes to trade on tie-up locations, we will accept a letter stating the swap, and will require both signatures of the lot owners of . . . record." The association's legal theory was:
Weilbacher opposed the association's motion for summary judgment. He argued primarily that at the time of the sale tie-ups were freely exchanged between lot owners and all that was required was notice to a board member rather than board approval.
While the association's motion for summary judgment was pending the association moved for the joinder of Edward Berube claiming that Berube was an indispensable party without whom the case could not be properly adjudicated. The Ring/Henrys joined in this motion and Weilbacher opposed it.
The trial court granted the association's motion for summary judgment. The court reasoned that the contract to transfer the boat tie-ups was invalid because it "conveys an interest in boat tie-ups [Weilbacher] did not have." Since the contract was not valid, it could not be interfered with. Subsequently the court ruled that there were no remaining claims against the association and dismissed the association from the suit.
The court also determined that Berube was an indispensable party and ordered Weilbacher to join Berube within 15 days. Weilbacher moved for reconsideration of this order claiming that he could not in good faith bring a claim against Berube in light of the court's finding that the contract between Weilbacher and the Ring/Henrys was void. This motion was denied by operation of law because it was not ruled on by the superior court within the applicable 30-day period prescribed by Alaska Civil Rule 77(k)(4). Weilbacher did not comply with the order to join Berube and Berube was not made a party to the case.
Weilbacher moved for summary judgment on the issue of rescission. He contended that since the court ruled that the contract concerning lot 71 was not a valid contract the only alternative was rescission. The superior court denied this motion ruling that the court had only "invalidated or voided" the portion of the contract concerning reallocation of the boat tie-ups, not the sale of the lot.
In July 2010 the superior court held a three-day trial. In his pretrial brief Weilbacher argued that the Ring/Henrys had breached the sales contract by asking the board to change the boat tie-up assignments contrary to the sales agreement. He requested that the Ring/Henrys "should at least be equitably estopped from taking over boat tie-up 26, or the contract should be rescinded if they are not happy with the boat slip assignments agreed to at the time of the sale. . . ." The Ring/Henrys in their trial brief noted that they had abandoned their counterclaim, and argued that there were no grounds for rescission of the transaction with Weilbacher based on mutual mistake.
At the trial Weilbacher continued to press for enforcement of the contract with respect to the tie-ups. He concluded his opening statement defining the issues for trial as follows: "So the question is, Your Honor, is do we get 26 when we leave here or do we get the land back. It's their call. Are they going to — because under Alaska law when the parties have a contract the Court is to give the expectations of the contract."
At the conclusion of the trial the court in a five-page decision declined to enforce the tie-up allocation agreed to by the parties because Weilbacher had refused to make Berube a party to the case. The court also declined to rescind the contract because Weilbacher had failed to follow the owners' association procedures for transferring tie-ups.
The court wrote, in relevant part:
Following the trial court's decision the case was reassigned from the Honorable Charles T. Huguelet, Superior Court Judge, to the Honorable Peter G. Ashman, Superior Court Judge pro tern. The Ring/Henrys requested a fee award of $31,900 which was 50 percent of their actual attorney's fees. This was an enhancement over the normal 30 percent of actual attorney's fees that would be awarded for a successful defense.
On appeal Weilbacher presents SIX issues for review. They are, as expressed in his brief:
The issues presented on this appeal involve questions of law, findings of fact, and discretionary decisions of the superior court. This court reviews questions of law using its independent judgment.
Under Alaska Civil Rule 19(a) a person should be joined as a party if "in the person's absence complete relief cannot be accorded among those already parties . . . ." Under subsection (b) of Rule 19 if a person who should be joined under Rule 19(a) cannot be made a party, the court should determine "whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable."
Weilbacher's argument that Berube was not an indispensable party is encompassed in the following paragraph in his brief:
The premise of Weilbacher's argument is that because the board had ultimate authority to approve or disapprove the transfer of tie-ups the contracts reassigning tie-ups that he had made with the Ring/Henrys and Berube were meaningless and incapable of enforcement. But this premise is false. Merely because a third party must approve of a transfer of a privilege does not mean that a contract to transfer the privilege is unenforceable.
Board members and officers of a common ownership association have a fiduciary relationship with unit owners.
Berube was an indispensable party under Rule 19 because without his joinder the apparent intent of the contracting parties with respect to the transfer of the tie-ups in the two contracts could not be enforced. What Weilbacher intended was a three-way swap of the tie-ups. As already noted, lot 71 would get lot 72's tie-up, No. 27. Lot 74 would get lot 71's tie-up, No. 26. And lot 72 would get lot 74's tie-up, No. 79. Although the essential features of this three-way swap were reflected in the signed escrow instructions for the sale of lots 71 and 72, Berube refused to abide by the agreement and insisted on using tie-up 27. He contended that he had purchased tie-up 27. In order to accomplish Weilbacher's goal of retaining tie-up 26, the Ring/Henrys would have to receive their bargained-for tie-up 27. But for them to receive No. 27, Berube would have to give it up and take No. 79 instead. Berube could not be required to give up No. 27 without being made a party. Although what he agreed to seems clear as reflected by the escrow instructions and the deed, it is possible that Berube might have a defense, and it is clear that he had to be afforded an opportunity to be heard before he could be ordered to comply with the agreement. Thus joining Berube was necessary in order to enforce the expectations of the contracting parties.
Weilbacher argues that he had no claim against Berube and thus could not sue him. This has no merit. Weilbacher could have filed a claim against Berube that alleged the terms of the sale of lot 72 as to the tie-ups, and that Berube had breached those terms by failing to accept tie-up 79 and instead had claimed tie-up 27. The claim could allege that this not only violated the sale agreement, it also interfered with the sale agreement between Weilbacher and the Ring/Henrys under which the Ring/Henrys were to receive tie-up 27.
If Berube had been brought in under such a claim, and the sale as to the tie-ups was ultimately shown to be in accordance with the escrow instructions and Berube's deed, the court could have ordered the parties to submit the proper forms required by the owners' association to accomplish the three-way swap of boat tie-ups. If the parties had submitted the proper forms, there is little doubt but that the association would have approved the swap.
The superior court ordered Weilbacher to join Berube within 15 days. Weilbacher timely sought reconsideration of this order. When reconsideration was denied Weilbacher was required to join Berube or suffer dismissal for noncompliance:
We conclude that the court properly ordered Berube to be joined as an indispensable party under Civil Rule 19(a). When Weilbacher failed to comply with the court's order, dismissal of the case was justified. The fact that this dismissal took place at the close of the trial rather than before the trial is not of consequence. Either way dismissal would be justified. Hearing the testimony at the trial confirmed the conclusion implicit in the court's Rule 19 order that without Berube the court could not "determine or take action to enforce the intent of all the parties to the transaction."
Weilbacher's second, third, and fourth statement of issues presented for review claim that he was entitled to rescission of the Ring/Henrys contract based on a breach on the part of the Ring/Henrys or on mutual mistake. These claims have no merit for several reasons.
First, Weilbacher's rescission claim need not be reached because dismissal of Weilbacher's claim was justified based on his refusal to comply with the court's order requiring him to join Berube as an indispensable party.
Second, the court did no! find that the Ring/Henrys breached the contract or that there was a mutual mistake justifying rescission. The court instead found that there was no reason to rescind the contract.
Finally, even if there had been a mutual mistake, rescission would have been inappropriate because relief that enforced the parties' intent was available. In such circumstances the remedy of rescission would have been, to use the words of the Second Restatement of Contracts, "unnecessary and unavailable."
Weilbacher contends that the court erred by relying on a letter that was not admitted into evidence. The letter in question was written by the secretary of the owners' association in 2003. It was addressed "to whom it may concern" and stated that boat slip 26 was allocated to the owners of lot 71, the Ring/Henrys. As such, the letter merely reflected the uncontested fact that the original allocation of tie-up 26 as reflected in the association records for the 1999 sales was never changed in the board records. As this is an established fact in the present case the court's mention of the letter in question in its decision is harmless error.
Following the entry of judgment on the merits the Ring/Henrys filed an attorney's fees motion seeking enhanced fees under Civil Rule 82(b)(3) based, among other reasons, on Weilbacher's refusal to join Berube. Judge Ashman awarded enhanced fees. The order noted that Judge Huguelet "cited [Weilbacher's] stubborn refusal to obey the court's order as having frustrated the meaningful progress of the litigation." The court concluded that Judge Huguelet had in essence found that Weilbacher engaged in "bad faith or vexatious conduct" justifying an enhanced fee under Civil Rule 82(b)(3).
Weilbacher challenges the award of enhanced fees only on the ground that he had no viable claim against Berube following the trial court's ruling on the owners' association's summary judgment motion. He argues that his conduct was not vexatious because the court's joinder order was unjustified. As we have already concluded that the court properly ordered Berube's joinder as an indispensable party, this argument fails.
This is an unusual case. By all appearances if Weilbacher had joined Berube he could have won, not on his rescission claim, but by enforcing the expectations of the parties. Why he did not join Berube is difficult to understand. But once Weilbacher refused to join Berube as ordered by the court the litigation became an exercise in futility. For the reasons stated the judgment of the superior court is AFFIRMED.
Id. at 346-47 (citations omitted).
