Notice: 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@akcourts.gov. 

THE SUPREME COURT OF THE STATE OF ALASKA 

GAVORA, INC., 

Appellant, 

v. 

CITY OF FAIRBANKS, 

Appellee. 

) 

) Supreme Court No. S-17705 

Superior Court No. 4FA-16-01898 CI 

O P I N I O N 

No. 7575 – December 30, 2021 

) 

) 

) 

) 

) 

) 

) 

) 

Appeal from the Superior Court of the State of Alaska, 

Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge. 

Appearances: Michael Kramer and Robert John, Kramer 

and Associates, Fairbanks, for Appellant. Cameron Jimmo 

and Cameron Leonard, Perkins Coie LLP, Anchorage, for 

Appellee. 

Before: Winfree, Maassen,Carney,andBorghesan, Justices. 

[Bolger, Chief Justice, not participating.] 

WINFREE, Justice. 

I. INTRODUCTION 

Areal estatecompany acquired an existinglong-termleasewithapurchase 

option for a municipality-owned property. Dry-cleaning businesses operating on the 

property contaminated the groundwater both prior to and during the real estate 

company’s involvement. The municipality knew about, but did not disclose, 

groundwater contamination at nearby sites when the real estate company ultimately 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

purchased the property. A state agency later notified the real estate company and the 

municipality of their potential responsibility for environmental remediation. The real 

estatecompany sued themunicipality in federal district court; thatcourt enteredfindings 

of fact, determined that the parties were jointly and severally liable for the 

contamination, and apportioned remediation costs. The real estate company also sued 

the municipality in state court for indemnity and further monetary damages, alleging 

that the municipality had misrepresented the property’s environmental status during 

purchase negotiations. The superior court ruled in the municipality’s favor, and the real 

estate company appeals. Seeing no error, we affirm the superior court’s decision. 

II. FACTS AND PROCEEDINGS 

A. Background Facts 

Gavora, Inc. is a Fairbanks-based real estate holding company that has 

owned properties in Alaska, Hawaii, and Washington. In 1974 Gavora acquired a 

commercial mall business that held a lease for property owned by the City of Fairbanks, 

and in 1976 the City approved the lease’s assignment to Gavora. Much later Gavora 

exercised the lease’s purchase option, ultimately purchasing the property in 2002. 

A dry-cleaning business was a mall tenant pre-existing the lease’s 

assignment to Gavora, and Gavora continued subleasing to dry-cleaning tenants for 

about 35 years. Dry-cleaning tenants contaminated groundwater with 

tetrachloroethylene, also known as perchloroethylene, (PCE) and trichloroethylene 

(TCE). In 2009 the Alaska Department of Environmental Conservation (ADEC) 

notified the City and Gavora that they were potentially liable for environmental 

remediation related to the groundwater contamination. 

Gavora subsequently sued the City in federal district court to apportion 

liability for environmental contamination remediation costs under the Comprehensive 

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Environmental Response, Compensation, and Liability Act (CERCLA).1 The federal 

district court concluded that under CERCLA the City and Gavora were jointly and 

severally liable for the groundwater contamination’s environmental remediation costs, 

establishing the City’s fault for 55% and Gavora’s fault for 45%.2 The federal district 

court found that a “substantial majority of the contamination” was caused by Gavora’s 

dry-cleaning tenants, “estimat[ing] that between 80% and 90% of the total on-site . . . 

contamination was from [dry-cleaning] operations . . . from 1976 to approximately 

2001.”3 

B. Proceedings 

Gavora later sued the City in superior court for misrepresentation, fraud, 

breach of contract, breach of implied covenant of good faith and fair dealing, breach of 

implied warranty of fitness for public use, implied indemnity, and negligence. Gavora 

alleged that the City either “intentionally, negligently, or innocently [affirmatively] 

misrepresented the [mall] property as environmentally clean” or by omission 

“misrepresented” it as “uncontaminated” prior to Gavora purchasing it. Although the 

parties agreed that the federal district court’s factual findings were binding — and we 

rely on those facts in the following discussion — they presented additional evidence. 

The superior court ruled for the City on all major issues. We discuss only those issues 

and superior court rulings relevant to this appeal. 

1. Credibility determination 

The superior court found that the City did not actively deceive Gavora 

1 42 U.S.C. §§ 9601-9675. 

2 Gavora, Inc. v. City of Fairbanks (Federal Findings), No. 4:15-cv-00015­

SLG, 2017 WL 3161626, at *9 (D. Alaska July 7, 2017). 

3 Id. at *2. 

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during the purchase negotiations. The court was bound by the earlier finding that City 

Development Manager PatrickSmith, theCity’sprimarynegotiator, knewin 1999about 

groundwater contamination at a City-owned apartment complex property near the mall. 

But the court found Smith “credibly testified that [during negotiations] he did not ‘make 

the connection’ between” the mall property and a 2001 environmental engineering 

reportindicatingthat theapartment complex contamination originatedoffsite. Thecourt 

reasoned that Smith may not have “connect[ed] the dots” because he negotiated the mall 

property sale about a year after reviewing the report and the deal was rushed after 

Gavora had threatened to sue the City if the sale could not be completed on Gavora’s 

time line. 

2. Negligent misrepresentation by omission 

The superior court determined that the “City had no duty to disclose the 

contamination” to Gavora under the Restatement (Second) of Torts § 551, which in 

essence states that a seller who fails to disclose a known material fact during a business 

transaction is liable as if the seller had made an affirmative misrepresentation if the 

seller has a duty to disclose the fact. 

4 Section 551(2) discusses five situations creating 

a duty to exercise reasonable care to disclose,5 and in this case §§ (a) and (e) are at issue. 

Under (a) it arises when a “fiduciary duty or other similar relation of trust and 

4 See Arctic Tug &Barge, Inc. v. Raleigh, Schwarz &Powell, 956 P.2d 1199, 

1202 (Alaska 1998) (noting that in Turnbull v. LaRose, 702 P.2d 1331, 1334 (Alaska 

1985) “[w]e . . . adopted, verbatim” the rule set out in the Restatement that “[o]ne who 

fails to disclose to another a fact that he knows may justifiably induce the other to act or 

refrain from acting in a business transaction is subject to the same liability [as for an 

affirmative misrepresentation] if, but only if, he is under a duty to the other to exercise 

reasonable care to disclose the matter” (emphasis and last alteration in original) (quoting 

RESTATEMENT (SECOND) OF TORTS § 551 (AM. L. INST. 1977))). 

5 RESTATEMENT (SECOND) OF TORTS § 551(2)(a)-(e) (AM. L. INST. 1977). 

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confidence” exists between the parties. And under (e) it arises when the seller knows 

both that the buyer is “about to enter into” a transaction based on a mistaken 

understanding of “facts basic to the transaction” and that the buyer “would reasonably 

expect a disclosure of those facts” because of either “the relationship between them, the 

customs of the trade[,] or other objective circumstances.” 

The superior court found that the parties did not have a “special 

relationship of trust” under § 551(2)(a) because they had transacted at arm’s length as 

buyer and seller, Gavora had presented “no evidence . . . of a special relationship of 

trust,” and a mere business relationship does not necessarily give rise to a fiduciary 

duty. Relying on precedent, the court also said that § 551(2)(e) does not apply when 

parties to a real estate contract are represented “by real estate professionals in an arm’slength commercial transaction [that] . . . contain[s] an as-is clause.”6 The court quoted 

commentary to § 551(2)(e) stating that there is no duty to disclose “[w]hen the facts are 

patent, or when the plaintiff has equal opportunity for obtaining information[,] . . . or 

when the defendant has no reason to think that the plaintiff is acting under a 

misapprehension.”7 The court found that Gavora “could have easily discovered” the 

contamination8 and that the City had no reason to know Gavora did not know about the 

contamination. 

3. Undisclosed dangerous conditions known to seller 

The superior court found that “the harm caused to the land occurred while 

6 The superior court quoted Deptula v. Simpson, 164 P.3d 640, 646 (Alaska 

2007). 

7 RESTATEMENT (SECOND) OF TORTS § 551 cmt. k (AM. L. INST. 1977). 

8 The mall property had been added to ADEC’s publicly available 

contaminated properties list in 2000. 

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Gavora was in possession of the land and well before the land was sold.” The court 

applied the Restatement (Second) of Torts § 353, in essence providing that a seller who 

fails to disclose a known condition involving “unreasonable risk” is subject to liability 

“for physical harm caused by the condition” if: (a) the buyer “does not know or have 

reason to know” of the risk but (b) the seller “knows or has reason to know” of the risk 

and “has reason to believe that the [buyer] will not . . . realize the risk.”9 The court 

rejected Gavora’s argument that the harm occurred after the purchase. The court found 

that Gavora had “not established that it did not have reason to know about the 

contamination” and reiterated that the City had no reason to know about Gavora’s 

mistake. 

4. Good faith and fair dealing 

Thesuperior court reasoned thatGavora’sgood faithandfairdealingclaim 

was “premised on the City’s duty to disclose the contamination” because the covenant 

of good faith “does not ‘create a duty where one does not exist.’ ”10 Because the court 

concluded that the City was under no duty to disclose, the court rejected Gavora’s good 

faith and fair dealing claim. 

5. Post-trial motions 

Gavora filed a post-trial motion for reconsideration, but the superior court 

denied reconsideration. Gavora also sought a restitution remedy, but the court 

concluded that the motion was not allowed. Gavora filed a motion for a new trial or 

amendment of judgment, essentially expanding on the arguments made in its motion for 

reconsideration; the superior court denied the motion. Gavora sought reconsideration, 

9 Brock v. Rogers &Babler, Inc., 536 P.2d 778, 782 (Alaska 1975) (quoting 

RESTATEMENT (SECOND) OF TORTS § 353 (AM. L. INST. 1965)). 

10 The superior court quoted Alaska Fur Gallery, Inc. v. Hwang, 394 P.3d 

511, 516 (Alaska 2017). 

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but the court again denied reconsideration. 

III. STANDARD OF REVIEW 

“The existence of a duty is a question of law which we review de novo.”11 

We review legal questions de novo and factual findings, including whether a witness is 

credible, for clear error.12 Clear error is when we are “left with a definite and firm 

conviction based on the entire record that a mistake has been made.”13 We review 

denial of a motion for reconsideration for abuse of discretion and will reverse only when 

“necessary to prevent a miscarriage of justice.”14 When we review denial of a new trial 

request, “we view the evidence in the light most favorable to the non-moving party, and 

‘will . . . reverse a decision to deny a new trial [only] if the evidence supporting the 

verdict was so completely lacking or slight and unconvincing as to make the verdict 

plainly unreasonable and unjust.’ ”15 

IV. DISCUSSION 

A. Duty To Disclose Contamination 

The superior court discussed the five circumstances set out in Restatement 

(Second) of Torts § 551(2)(a)-(e) creating a duty to disclose and concluded that the City 

11 Burnett v. Gov’t Emps. Ins. Co., 389 P.3d 27, 29 (Alaska 2017). 

12 Brown v. Knowles, 307 P.3d 915, 923 (Alaska 2013) (stating applicable 

standards of review); Rausch v. Devine, 80 P.3d 733, 737 (Alaska 2003) (applying clear 

error review to credibility determination). 

13 Casey v. Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004). 

14 N. Slope Borough v. Brower, 215 P.3d 308, 311 (Alaska 2009) (quoting 

Alyeska Pipeline Serv. Co. v Anderson, 629 P.2d 512, 518 (Alaska 1981)). 

15 HDI-Gerling Am. Ins. Co. v. Carlile Transp. Sys., Inc., 426 P.3d 881, 886 

(Alaska 2018) (alterations in original) (quoting Hunter v. Philip Morris USA, Inc., 364 

P.3d 439, 447 (Alaska 2015)). 

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had no duty to disclose. Gavora argues that the court misapplied §§ 551(2)(a) and (e), 

but Gavora points to no evidence of “loyalty” or “disavowal of self interest” indicative 

of a fiduciary relationship.16 

1. Restatement (Second) of Torts § 551(2)(a) 

Section 551(2)(a) provides: 

(2) One party to a business transaction is under a duty to 

exercise reasonable care to disclose to the other before the 

transaction is consummated, 

(a) matters known to him that the other is entitled to 

know because of a fiduciary or similar relation of 

trust and confidence between them . . . . 

Gavora contends that the parties transformed their business relationship 

into a “joint venture[]” by coordinating to determine the property’s fair market value. 

A joint venture is “an association of two or more persons to carry out a single business 

enterprise for profit, for which purpose they combine their property, money, effects, 

skill and knowledge.”17 The parties pooled resources for the appraisal, not as a “single 

business enterprise for profit” but as one step in a transaction between self-interested 

parties with no shared profits. They disputed how to value the property, negotiated a 

compromise, and finalized the appraisal instructions, suggesting that neither party 

disavowed its self-interest or placed “special confidence” in the other creating a relation 

16 Wagner v. Key Bank of Alaska, 846 P.2d 112, 116 (Alaska 1993) (noting 

“hallmarks” of fiduciary relationship are “[l]oyalty and the disavowal of self interest”); 

see also Paskvan v. Mesich, 455 P.2d 229, 232 (Alaska 1969) (“[A] confidential or 

fiduciary relationship exists when one imposes a special confidence in another, so that 

the latter, in equity and good conscience, is bound to act in good faith and with due 

regard to the interests of the one imposing the confidence.”). 

17 N. Lights Motel, Inc. v. Sweaney, 561 P.2d 1176, 1187 (Alaska 1977) 

(quoting State v. Bland, 197 S.W.2d 669, 672 (Mo. 1946)). 

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of trust.18 

Gavora also contends that the parties formed a relation of trust because “a 

government entity[, such as the City,] has the highest” duty “when entering contracts 

with its citizens.” But the City’s status as a government entity does not by operation of 

law establish a relation of trust.19 The City neither entered into a public contract nor 

exercised a statutory duty; it participated in the market as a commercial real estate 

vendor. The superior court found that Gavora had cited “no case holding that either the 

landlord-tenant relationship or the buyer-seller relationship in a commercial real estate 

sale establishes a . . . relation of trust” and that “Gavora presented no evidence that [the 

parties] had a close business relationship[] or . . . regularly shared information about [the 

mall property].” The court noted that “the relationship . . . had always been [at] an 

arm’s length.”20 

Gavora assumed the mall property lease by acquiring the prior leaseholder 

and then obtaining the City’s permission to assign the lease to Gavora; Gavora did not 

initially negotiate or collaborate with the City. The lease allowed Gavora to 

independently terminate the relationship, to develop and sublease the property without 

the City’s input, and to monetize the property without sharing profits. Gavora was 

experienced at negotiating commercial real estate transactions and was represented by 

18 See Paskvan, 455 P.2d at 232; see also Munn v. Thornton, 956 P.2d 1213, 

1220 (Alaska 1998) (“Fiduciary relationships are generally defined by a level of trust 

beyond that in ordinary business relationships.”). 

19 Cf. Laybourn v. City of Wasilla, 362 P.3d 447, 456 (Alaska 2015) (finding 

no special relationship between city and citizen in easement agreement context). 

20 An arm’s-length transaction “involv[es] dealings between two parties who 

are not related or not on close terms and who are presumed to have roughly equal 

bargaining power; not involving a confidential relationship.” Arm’s-length, BLACK’S 

LAW DICTIONARY (11th ed. 2019). 

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counsel. The record thus reflects that Gavora and the City formed a standard business 

relationship by engaging in an arm’s-length commercial real estate transaction between 

self-interested parties. And “[a] duty to disclose is rarely imposed where the parties deal 

at arm’s length and where the information is the type which the buyer would be 

expected to discover by ordinary inspection and inquiry.”21 

On these facts, which are not clearly erroneous, the superior court did not 

err by determining that the City had no disclosure duty under § 551(2)(a). 

2. Restatement (Second) of Torts § 551(2)(e) 

Section 551(2)(e) provides: 

(2) One party to a business transaction is under a duty to 

exercise reasonable care to disclose to the other before the 

transaction is consummated, 

. . . . 

(e) facts basic to the transaction, if he knows that the other 

is about to enter into it under a mistake as to them, and that 

the other, because of the relationship between them, the 

customs of the trade or other objective circumstances, would 

reasonably expect a disclosure of those facts. 

Gavora contends that the superior court “failed to consider Gavora’s 

insistence that the appraisal [for the mall property] address environmental concerns.” 

Gavora wrote to the City about the expected appraisal: “The industry standards for 

commercial appraisals include[] tax base assessments, comparable sales, existing 

leaseholds, environmental concerns, etc.” Gavora contends that listing environmental 

concerns conclusively indicated Gavora’s lack of knowledge about contamination. But 

the appraisal noted that appraisers are not experts in detecting environmental 

Matthews v. Kincaid, 746 P.2d 470, 472 (Alaska 1987) (citing 

RESTATEMENT (SECOND) OF TORTS § 551 (AM. L. INST. 1977)). 

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contamination and explicitly instructed the parties to hire an environmental expert “if 

desired.” As the superior court reasoned, to the extent Gavora specifically wanted the 

appraisal to address environmental concerns, relying on an appraisal that explicitly 

avoided the issue was unreasonable. 

Gavora next contends that it behaved reasonably and could not easily have 

discovered the contamination, noting that: (1) Smith, the City’s primary negotiator, did 

not use the ADEC database; (2) the ADEC database did not become available online 

until after the sale; (3) Gavora would have requested an environmental assessment had 

it known about possible contamination; (4) banks usually do not require assessments 

absent red flags; and (5) the City’s environmental engineer “conceded that Gavora’s 

actions were reasonable in the absence of knowledge of the environmental 

contamination.” But neither the Restatement nor case law appears to support Gavora’s 

proposition that there is a duty to disclose under § 551(2)(e) simply because one 

negotiating party acted reasonably. 

Gavora further contends that the City “was aware” the appraisal’s 

assumption “that the property was environmentally clean was a mistaken one.” But the 

relevant question is whether the City knew that Gavora (and not the appraiser) was 

mistaken.22 The appraiser’s lack of knowledge about the contamination is not evidence 

22 The Restatement explains: 

When the facts are patent, or when the plaintiff has equal
 

opportunity for obtaining information that he may be
 

expected to utilize if he cares to do so, or when the defendant
 

has no reason to think that the plaintiff is acting under a
 

misapprehension, there is no obligation to give aid to a
 

bargaining antagonist by disclosing what the defendant has
 

himself discovered.
 

(continued...) 

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Gavora also had no knowledge of the contamination, much less that the City 

knew Gavora had no knowledge of it.23 The parties asked the appraiser to make various 

factually inaccurate assumptions when calculating the property’s value, such as the 

assumption that the property was vacant. The City thus did not necessarily have an 

obligation to correct all of the appraiser’s factually inaccurate assumptions. 

Gavora contends the purchase agreement’s as-is clause “does not absolve 

the City from liability.”24 But the superior court considered the as-is clause as evidence 

that the City had no reason to know Gavora mistook the property as uncontaminated; 

Gavora stated in writing to the City that it had inspected the mall property, was familiar 

with it, and agreed to purchase it “as is.” 

The superior court first found that the parties engaged in a commercial real 

estate transaction involving an as-is clause, militating against finding a duty to disclose. 

The court then concluded that Gavora had “an equal and readily available opportunity 

to” discover the contamination by contacting ADEC. The court further reasoned that 

the City had “[no] reason to know that Gavora mistakenly believed the property was 

uncontaminated.” As noted above, a duty to disclose “is rarely imposed where the 

parties deal at arm’s length and where the information is the type which the buyer would 

22 (...continued) 

RESTATEMENT (SECOND) OF TORTS § 551 cmt. k (AM. L. INST.1977). 

23 Seeid. § 551(2)(e) (noting duty todiscloseifoneparty to transaction knows 

that other party is mistaken about facts and disclosure would be expected based on 

parties’ relationship). 

24 Gavora cites our statement that “generally . . . an ‘as is’ provision in a 

contract for the sale of realty does not bar a vendee’s claim based on allegations of fraud, 

misrepresentation, or nondisclosure.” Stormont v. Astoria Ltd., 889 P.2d 1059, 1062 n.6 

(Alaska 1995). 

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be expected to discover by ordinary inspection and inquiry,”25 including “matters of 

public record.”26 And we have suggested that § 551(2)(e) is “inapplicable” if both 

parties are “represented by real estate professionals in an arm[’]s-length commercial 

transaction” and “the contract . . . contain[s] an as-is clause.”27 

On the findings of fact, which are not clearly erroneous, the superior court 

did not err by determining that the City owed no disclosure duty under § 551(2)(e). 

B. Failure To Disclose A Dangerous Condition Known To A Land Seller 

Section 353 of the Restatement (Second) of Torts provides: 

(1) A [seller] of land who conceals or fails to disclose to 

[a buyer] any condition . . . which involves unreasonable 

risk . . . is subject to liability . . . for physical harm caused by 

the condition after the [buyer] has taken possession, if 

(a) the [buyer] does not know or have reason to know of the 

condition or the risk involved, and 

(b) the [seller] knows or has reason to know of the condition, 

and realizes or should realize the risk involved, and has 

reason to believe that the [buyer] will not discover the 

condition or realize the risk.[28] 

Comment d to § 353 further explains that a seller who does not actively deceive a buyer 

“is entitled to expect” the buyer “will discover a condition which would be disclosed . . . 

by such an inspection as the [seller] should make before buying the land.” 

The superior court concluded under § 353 that the City was not liable 

because: the City did not actively deceive Gavora; Gavora had reason to know of the 

25 Matthews, 746 P.2d at 472. 

26 Laybourn v. City of Wasilla, 362 P.3d 447, 456 (Alaska 2015). 

27 Deptula v. Simpson, 164 P.3d 640, 646 (Alaska 2007). 

28 RESTATEMENT (SECOND) OF TORTS § 353 (AM. L. INST. 1965). 

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contamination; and all physical harm occurred before the sale. Gavora challenges all 

three findings. 

1. No active deception 

Smith testified in federal district court that he did not know the mall 

property likely caused the apartment complex contamination. The federal court found 

his testimony “not credible, given . . . Smith’s long career with the City,” concluding 

that “in 1999[] Smith knew, or . . . should have known, that it was likely there was PCE 

and TCE contamination at [the mall property].”29 The superior court was bound by this 

finding. 

Smith then testified in superior court that, during expedited negotiations 

with Gavora in 2002, he “made no connection” between the apartment complex 

contamination, the mall property contamination, and the sale. The superior court 

specifically found this testimony “credibl[e],” reasoning that perhaps Smith did not 

“connect the dots” because he negotiated the sale more than a year after learning about 

the contamination, the deal was rushed, and Gavora had threatened to sue the City if the 

sale was not completed on Gavora’s time line. 

Gavora first contends that the superior court’s finding has no evidentiary 

basis because “Smith never claimed” that he “failed to make the connection” about 

contamination. But when asked, Smith testified: “I didn’t make any connection at the 

time.” This does not contradict the federal court’s factual findings, which were only 

that Smith knew or should have known about the contamination by 1999. 

Gavora also contends that the findings about Smith being credible and the 

City not actively deceiving Gavora are clearly erroneous and that the binding federal 

See Federal Findings, No. 4:15-cv-00015-SLG, 2017 WL 3161626, at *3 

(D. Alaska July 7, 2017). 

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court findings resolve this issue in Gavora’s favor. But the federal court did not find 

that Smith, or any other City employee, consciously deceived Gavora.30 Rather, the 

federal court disbelieved some of Smith’s testimony — primarily his assertion that he 

did not know the direction of groundwater flow — and concluded that in 1999 he knew 

or should have known that the mall property was contaminated.31 This is distinctly 

different from the superior court’s finding that in negotiations occurring years later 

Smith did not actively deceive Gavora. 

Gavora pointsto evidencesuggesting that in 2001 Smith indicated that the 

City might conceal or choose not to disclose its knowledge. But Gavora points to no 

evidence directly suggesting that in 2002 any City employee intended to deceive 

Gavora. And Rudolf Gavora, Gavora’s agent, testified that no City employee 

affirmatively represented the property was uncontaminated. 

The federal court’s credibility determination thus bound the superior court 

only with respect to the testimony that the federal court found not credible: that Smith 

did not understand groundwater flow in Fairbanks.32 The superior court was entitled to 

make its own credibility determination of Smith’s later testimony about whether he 

actively deceived Gavora because trial courts are best suited to weigh evidence and 

determine the credibility of witnesses who provide oral testimony.33 Fact finders 

30 See id. at *1-5. 

31 Id. at *3. 

32 See id. at *3. 

33 Luker v. Sykes, 357 P.3d 1191, 1199-2000 (Alaska 2015) (“[I]t is the 

function of the superior court, not of this court, to judge witness credibility . . . . [I]f most 

of the evidence is oral testimony . . . then the superior court’s greater ability to assess 

witness credibility requires deferential review . . . .” (first alteration in original) (quoting 

(continued...) 

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generally may discount all or part of a witness’s testimony.34 We “ordinarily will not 

overturn a trial court’s finding based on conflicting evidence” or “re-weigh evidence 

when the record provides clear support for the trial court’s ruling.”35 And “we will 

generally accept the determination[s] of witnesses’ credibility that are made by the 

[superior] court . . . [because] the court heard and observed the witnesses first hand.”36 

The superior court’s finding that Smith and the City did not actively 

deceive Gavora is not clearly erroneous. 

2. Reason to know about the contamination 

Because the superior court found that the City did not consciously deceive 

Gavora, the superior court also considered the Restatement (Second) of Torts: 

A [seller], innocent of conscious deception, is entitled to 

expect . . . that [a buyer] will discover a condition which 

would be disclosed by such an inspection as the [buyer] 

should make before buying the land and taking possession 

of it or before throwing it open to the entry of others.[37] 

33 (...continued) 

Fyffe v. Wright, 93 P.3d 444, 450-51 (Alaska 2004))). 

34 See, e.g., Vezey v. Green, 171 P.3d 1125, 1132 (Alaska 2007) (upholding 

trial court’s decisiondespiteinconsistencyin witnesses’ testimony becauseit“involve[d] 

the credibility of witnesses and interpretations of their testimony”); Wasserman v. 

Bartholomew, 38 P.3d 1162, 1167 (Alaska 2002) (upholding trial court’s decision 

despite witness’s partially inconsistent testimony because “the trial court did not adopt 

these portions of [the witness’s] testimony” and “this court consistently grants deference 

to trial courts where credibility is at issue”). 

35 Dara v. Gish, 404 P.3d 154, 159 (Alaska 2017) (quoting In re Adoption of 

S.K.L.H., 204 P.3d 320, 325 (Alaska 2009)). 

36 Demoski v. New, 737 P.2d 780, 784 (Alaska 1987). 

37 RESTATEMENT (SECOND) OF TORTS § 353 cmt. d (AM. L. INST.1965). 

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The superior court found that Gavora easily could have discovered and 

therefore had reason to know about the contamination. The court relied on evidence in 

the record that: Gavora “was aware generally of environmental concerns in commercial 

land sale transactions”; Gavora knew of the dry-cleaning operations; and Gavora took 

“no action to investigate.” 

Gavora challenges the finding that it had reason to know about the 

contamination. But the record reflects that Gavora was a sophisticated real estate buyer, 

experienced in commercial real estate transactions, aware of environmental issues 

commonly affecting commercial properties, represented by counsel, and experienced 

at dealing with ADEC. The mall property’s contamination status was easily 

discoverable by ordinary inquiry; Gavora did not need to independently discover the 

contamination because the property was added to ADEC’s publicly available list of 

contaminated sites in 2000, well before the sale negotiations. And nothing prohibited 

Gavora from inquiring about the mall property during its then-existing dealings with 

ADEC about Gavora’s other contaminated properties in Fairbanks. 

Gavora also argues that it “reasonably believed it knew everything there 

was to know about the property.” But Gavora did no environmental testing, made no 

inquiries into themallproperty’scontaminationstatus, and, after requesting anappraisal 

addressing “environmental concerns,” relied on an appraisal that explicitly did not 

address environmental contamination. Gavora stated in the purchase agreement that 

prior to the purchase it had done “due diligence” and that it had “inspected the 

property,” was “familiar with its condition,” and was agreeing to purchase the property 

“as is.” But Gavora apparently chose to not conduct any inspection or inquiry into 

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environmental concerns.38 The purchase agreement language supports the conclusion 

that the City did not “ha[ve] reason to believe that” Gavora had not discovered the 

contamination, as would be necessary to impose liability under Restatement (Second) 

of Torts § 353. 

The record supports the superior court’s finding that Gavora had reason 

to know about the contamination; it is not clearly erroneous. 

3. Physical harm 

Gavora contends the superior court’s finding that there was no physical 

harm after Gavora purchased the mall property was clearly erroneous. Gavora argues 

that trial testimony established the groundwater contamination plume’s continued 

expansion andthat thecourt “disregarded thehuman health hazard and propertydamage 

from contaminant vapors” arising after Gavora purchased the mall property. But 

Gavora provides no legal authority supporting its argument, citing only trial testimony 

about ongoing damage and remediation efforts related to the contamination. 

In ruling against Gavora on thisargument,thesuperior court cited credible 

trial evidence that the groundwater contamination plume may have continued to expand 

as it migrated off the mall property but that there was insufficient evidence showing 

contamination at the site grew any worse after 1999. The court was bound by the 

federal district court’s findings that 80% to 90% of the contamination was caused by 

Gavora’s dry-cleaning tenants from 1976 to 2001 and that no dry-cleaning 

establishment operated after Gavora purchased the property in 2002. The superior court 

thus determined that “all of the physical harm to the land occurred before Gavora took 

possession of the property” (emphasis in original) and that under Restatement (Second) 

38 See Laybourn v. City of Wasilla, 362 P.3d 447, 456 (Alaska 2015) (noting 

that buyers should discover information available by “ordinary inspection and inquiry” 

(quoting Matthews v. Kincaid, 746 P.2d 470, 472 (Alaska 1987))). 

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of Torts § 353(1) the City would be “liable to Gavora only ‘for physical harm caused 

by the [contamination] after [Gavora] ha[d] taken possession’ ” (emphasis and 

alterations in original). 

The record supports the superior court’s finding that the physical harm 

occurred prior to Gavora purchasing the mall property; it is not clearly erroneous. 

C. Implied Covenant Of Good Faith And Fair Dealing 

Gavora contends that: (1) the City had and violated a disclosure duty 

under tort law; (2) Gavora did not waive its contract law argument and the City had and 

violated a disclosure duty under contract law; and (3) the City had and violated an 

independent disclosure duty arising solely under the covenant of good faith and fair 

dealing. 

We have explained that: 

A “covenant of good faith and fair dealing is implied in all 

contracts in Alaska,” and it “prevents each party from doing 

anything that will injure the right of the other to receive the 

benefits of the agreement.” But the covenant’s purpose “is 

to effectuate the reasonable expectations of the parties, not 

to alter or add terms to the contract,” and it “will not create 

a duty where one does not exist.”[39] 

The superior court concluded that to establish a breach of the implied 

covenant of good faith and fair dealing, Gavora first needed to prove the City had an 

independent disclosure duty under tort or contract law. The court looked for a duty 

solely under tort law and, as explained above, found none. Gavora then argued in a 

39 Alaska Fur Gallery, Inc. v. Hwang, 394 P.3d 511, 516 (Alaska 2017) 

(emphasis added) (footnotes omitted) (first quoting Askinuk Corp. v. Lower Yukon Sch. 

Dist., 214 P.3d 259, 267-68 (Alaska 2009); then quoting Witt v. State, Dep’t of Corr., 75 

P.3d 1030, 1034 (Alaska 2003); and then quoting Casey v. Semco Energy, Inc., 92 P.3d 

379, 385 (Alaska 2004)). 

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post-trial reconsideration motion that the court had failed to address whether the City 

had a disclosure duty under contract law. The court concluded that Gavora had waived 

its contract law argument by raising it for the first time on reconsideration. 

1. Tort law arguments 

Gavora argues that the City had a duty to disclose under Restatement 

(Second) of Torts §§ 551(2)(a) and (e) that forms the basis for its breach of the implied 

covenant claim. Our earlier discussion affirming the superior court’s conclusion that 

the City did not have a disclosure duty under tort law forecloses this argument. 

2. Contract law argument 

Gavora contends on appeal that its Restatement (Second) of Contracts 

§ 161(b) argument is not waived because Gavora “specifically plead[ed] breach of 

contract . . . and specifically requested all damages and remedies available.” Gavora 

mischaracterizes its argument as merely seeking the proper remedy and not raising a 

new theory of liability, asserting that “even if tort liability is not imposed . . . contractual 

liability based upon nondisclosure may exist under the Restatement (Second) of 

Contracts.” Gavora argued in its motion for reconsideration that the City had and 

violated a disclosure duty under §161.40 The superior court determined that at trial 

Gavora had not mentioned claims under the Restatement (Second) of Contracts and 

therefore concluded that Gavora had waived those arguments. 

An issue raised for the first time in a motion for reconsideration is 

waived.41 But an argument is preserved for appeal if it was “closely related to the trial 

40 See Seybert v. Cominco Alaska Expl., 182 P.3d 1079, 1096 n.64 (Alaska 

2008) (following Restatement (Second) of Contracts to address contract law disclosure 

duty). 

41 See Blackburn v. State, Dep’t of Transp. & Pub. Facilities, 103 P.3d 900, 

(continued...) 

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court arguments and could have been gleaned from the pleadings.”42 

The superior court found only a cursory mention of § 161(b) in Gavora’s 

complaint. Gavora’s initial summary judgment motion characterized this as a “tort 

suit.” In opposition to a request by the City to stay trial, Gavora stated that it had filed 

a “common-law misrepresentation” claimagainst the City and was seeking damages for 

“tortious actions surrounding the sale of the property.” Gavora repeatedly cited the 

Restatement (Second) of Torts to support its misrepresentation claims without making 

any argument involving contract law. Gavora’s initial pretrial memorandum focused 

exclusively on tort law; it supplemented that memorandumwith a newtheory of liability 

under the Restatement (Second) of Torts but again did not mention contract claims. 

And during closing arguments, despite mentioning the Restatement (Second) of Torts 

several times, Gavora never mentioned the Restatement (Second) of Contracts. The 

City duringclosing argument identifiedcontract lawclaims Gavorainitially had pleaded 

but had not pursued at trial. Gavora did not discuss the unpursued claims on rebuttal. 

Gavora’s motion for a new trial states in a heading that “NEITHER PARTY ARGUED 

§161, BUTTHECOURTSHOULDHAVEAPPLIED[IT]”(capitalization inoriginal). 

Gavora therefore did not raise this theory of liability before its motion for 

41 (...continued) 

906 (Alaska 2004) (“[T]he court was under no obligation to consider an issue raised for 

the first time in a motion for reconsideration.” (quoting J.L.P. v. V.L.A., 30 P.3d 590, 597 

n.28 (Alaska 2001))). 

42 Pitka v. Interior Reg’l Hous. Auth., 54 P.3d 785, 788 (Alaska 2002). We 

have found arguments preserved when a party argued an issue’s elements without 

identifying the issue by name, Anchorage Chrysler Ctr., Inc. v. DaimlerChrysler Motors 

Corp., 221 P.3d 977, 985 (Alaska 2009); when the argument was “not inherently 

inconsistent” with and was “grounded in the basic elements of” an argument originally 

made, Coster v. Piekarski, 3 P.3d 333, 336 (Alaska 2000); and when an argument was 

identical to a theory argued at trial, Reid v. Williams, 964 P.2d 453, 456 (Alaska 1998). 

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reconsideration. 

Under § 161(b) a contracting party must disclose information if the party 

“knows that disclosure . . . would correct a mistake of the other party as to a basic 

assumption” under which the other party is acting. Gavora’s claim thus requires a 

factual finding that the City knew Gavora was mistaken. But, in connection with 

Gavora’s tort claims, the superior court explicitly found that the City had no reason to 

know Gavora was operating under a mistake; this would foreclose any contract claim 

under § 161(b). To the extent Gavora’s contract law claim is based on facts not 

considered for its tort claims, the contract claim was waived. 

3. Implied covenant of good faith argument 

Gavora contends that a “seller’s duty to disclose latent conditions of land 

is defined by the terms and scope of the covenant of good faith and fair dealing,” 

suggesting that the covenant itself gives rise to a disclosure duty. But we have not 

recognized a free-floating disclosure duty arising solely under the implied covenant; we 

instead have applied tort and contract law to misrepresentation by omission claims,43 

once stating that a property transaction involving an alleged misrepresentation by 

omission claimwas“best analyzed”as “involving afailureto discloseinformation when 

there is an affirmative duty to do so” under tort law.44 Nothing peculiar or unjust 

requires analyzing this case under anything other than established tort and contract law 

43 See, e.g., Arctic Tug &Barge, Inc. v. Raleigh, Schwarz &Powell, 956 P.2d 

1199, 1202 (Alaska 1998) (discussing tort of misrepresentation by omission); Bering 

Straits Native Corp. v. Birklid, 739 P.2d 767, 768-69 (Alaska 1987) (contemplating 

contract avoidance on grounds of misrepresentation by omission); Turnbull v. LaRose, 

702 P.2d 1331, 1334 (Alaska 1985) (discussing tort of misrepresentation by omission); 

Johnson v. Curran, 633 P.2d 994, 998 n.8 (Alaska 1981) (discussing contract law and 

misrepresentation by omission). 

44 Turnbull, 702 P.2d at 1334. 

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doctrines, and we decline to contradict precedent suggesting that the implied covenant 

does not give rise to an independent disclosure duty.45 

D. Gavora’s Post-Trial Motions 

Gavorafiled motions seekingreconsideration, restitution,46 andanewtrial, 

which the superior court denied on various grounds, including that (1) Gavora had 

raised new claims in its motion for reconsideration and (2) Gavora’s substantive 

arguments were unpersuasive. In lightofthepreceding discussions, the superior court’s 

decisions were not an abuse of discretion. 

V. CONCLUSION 

The superior court’s decision is AFFIRMED. 

45 See, e.g., Alaska Fur Gallery, Inc. v. Hwang, 394 P.3d 511, 516 (Alaska 

2017). 

46 Gavora filed an additional “Motion for Restitution Remedy” with its motion 

for reconsideration. The superior court denied the restitution motion as procedurally 

unallowed. This was not an abuse of discretion because Alaska Civil Rule 77(k) limits 

the length ofmotionsfor reconsideration and doesnot allowfor supplemental companion 

motions. Gavora concedes that it was able to address the restitution issue elsewhere. 

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