Alaska Building, Inc. v. Legislative Affairs Agency
403 P.3d 1132
| Alaska | 2017Background
- Alaska Building, owner of property adjacent to the Legislative Information Office (LIO), sued the Alaska Legislative Affairs Agency and 716 West Fourth Avenue LLC challenging a large renovation/lease as an unlawful noncompetitive lease under AS 36.30.083(a).
- Alaska Building sought declaratory relief invalidating the lease and, if successful, monetary relief equal to 10% of the Agency’s resulting savings (a novel, judicially created “percentage-of-savings” remedy).
- The superior court severed and removed a separate property-damage claim; it later ruled Alaska Building prevailed on the lease-invalidity issue and awarded fees to Alaska Building against 716 West Fourth.
- The Agency moved for attorneys’ fees and Rule 11 sanctions, arguing the percentage-of-savings claim had no legal basis; the superior court found that claim frivolous and awarded modest fees under Rules 82 and 11.
- On appeal, the Alaska Supreme Court reviewed de novo whether the claim was frivolous as a matter of law and whether Rule 11 sanctions were warranted; it reversed the Rule 11 sanction and remanded for reexamination of the fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether the percentage-of-savings claim was frivolous under Alaska R. Civ. P. 11(b)(2) | Alaska Building: claim was a nonfrivolous, good-faith attempt to create a remedy to incentivize public-interest challenges after the Legislature narrowed Rule 82’s public-interest exception | Agency/716: no statutory or precedent support; claim had no legal basis and therefore was frivolous | Court: Not frivolous — it was a nonfrivolous argument to establish new law; sanction reversed |
| 2. Whether a court may judicially create a percentage-of-savings remedy (merits) | Alaska Building: judicially create remedy analogous to False Claims Act qui tam incentives to encourage public-interest suits | Defendants: remedy is legislative; no authority to create such an incentive | Court: Superior court correctly concluded it lacked authority to grant remedy on the merits, but that lack of authority alone did not make the claim frivolous |
| 3. Whether Rule 11 requires a remand for express findings explaining sanctions | Alaska Building: superior court failed to make clear findings; ordinarily remand required | Agency: sanctions were justified; findings suffice | Court: Typically remand needed, but unnecessary here because sanctions reversed on legal grounds |
| 4. Whether evidence showed improper purpose or misconduct justifying sanctions | Alaska Building: no improper purpose; claim pursued as public-interest advocacy | Agency: claim needlessly increased litigation costs and lacked basis | Court: Record lacked evidence of improper purpose; absence of bad purpose supports reversal of sanctions |
Key Cases Cited
- Enders v. Parker, 125 P.3d 1027 (Alaska 2005) (standard of review for Rule 11 sanctions and legal-error correction)
- Keen v. Ruddy, 784 P.2d 653 (Alaska 1989) (Rule 11 requires objective reasonableness; bad faith supports sanctions)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (U.S. 1990) (Rule 11’s scope and interaction of factual vs. legal inquiries)
- Luedtke v. Nabors Alaska Drilling, Inc., 834 P.2d 1220 (Alaska 1992) (reversing sanctions where continued advocacy reflected zealous representation, not frivolity)
- Alaska State Emps. Ass’n v. Alaska Pub. Emps. Ass’n, 813 P.2d 669 (Alaska 1991) (claim lacking direct precedent can still be a good-faith argument to extend or modify law)