State, Department of Transportation & Public Facilities v. Alaska Laser Wash, Inc.
382 P.3d 1143
| Alaska | 2016Background
- Alaska Laser Wash (Trefry) owned a high‑revenue Fifth Avenue car wash that the State condemned as part of a highway project; parties negotiated and the State paid $5.36M for the property.
- Trefry reserved the right to pursue business damages separately; he later closed rather than relocate, then sold the business for $6.95M.
- Trefry sued for special business damages (lost goodwill, going‑concern value, temporary lost profits, etc.). The superior court denied multiple summary judgment motions and instructed the jury under a reasonableness/mitigation standard.
- At trial the jury found the taking damaged the business as a whole and awarded $1,793,450; the court also awarded attorney’s fees and costs.
- The State appealed, arguing relocation feasibility (not reasonableness) controls entitlement to business damages and that directed verdict should have been granted because relocation was feasible.
Issues
| Issue | Plaintiff's Argument (Trefry) | Defendant's Argument (State) | Held |
|---|---|---|---|
| Proper legal standard for relocation when claiming business damages | Duty to mitigate — owner recovers unless State proves relocation was not reasonable | Owner must prove relocation was not feasible; feasibility controls entitlement | Feasibility is the correct standard (owner may recover business damages only if relocation was not feasible) |
| Whether directed verdict for State should have been granted on feasibility | Jury could find relocation unreasonable given claimed unique value of site and multi‑site loss | Evidence showed sites available, financing possible, and successors relocated — relocation was feasible as a matter of law | Directed verdict should have been granted for State; no reasonable juror could find relocation infeasible |
| Whether the $5.36M settlement already compensated business damages / risk of double recovery | Settlement did not necessarily include business damages; jury found parties did not agree business damages were included | State argued the negotiated price reflected intangible/income elements, covering business value | Court did not resolve as matter of law; trial jury found no inclusion, but reversal on feasibility requires reexamination on remand (dissent would preserve lost‑profits remand) |
| Attorney’s fees and costs award tied to prevailing‑party status | Trefry sought fees and costs and was awarded fees/costs for pre‑mistrial work | State challenged prevailing‑party finding and fee awards given reversal | Fee and costs awards vacated; remanded to reconsider prevailing‑party status, fees, and costs |
Key Cases Cited
- State v. Hammer, 550 P.2d 820 (Alaska 1976) (special damages and burden to prove lost profits with reasonable certainty)
- City of Detroit v. Michael's Prescriptions, 373 N.W.2d 219 (Mich. Ct. App. 1985) (recoverability of going‑concern/goodwill depends on transferability/relocatability)
- Hous. & Redevelopment Auth. of St. Paul v. Lambrecht, 663 N.W.2d 541 (Minn. 2003) (lost goodwill award reversed where relocation was not shown to be impossible)
- State v. Cowan, 103 P.3d 1 (Nev. 2004) (recognizes exception where condemnation destroys business because it cannot be relocated)
- Horan v. Kenai Peninsula Borough Bd. of Equalization, 247 P.3d 990 (Alaska 2011) (explaining income‑approach valuation methodology)