Opinion ID: 2610901
Heading Depth: 3
Heading Rank: 1

Heading: the superior court erred by denying the kasnicks prejudgment interest.

Text: Questions as to when prejudgment interest begins to accrue are questions of law and subject to our independent judgment. E.g., Land & Marine Rental Co. v. Rawls, 686 P.2d 1187, 1191 (Alaska 1984). Our duty is to adopt the rule of law which is most persuasive in light of precedent, policy and reason. Guin v. Ha, 591 P.2d 1281, 1284 n. 6 (Alaska 1979). AS 09.55.440(a) provides that when a quick take is made interest runs from the date title vests to the date of payment of the judgment. Because the state chose to proceed by the quick take procedure (declaration of taking and deposit), title vested in the state immediately upon the filing and deposit with the court. AS 09.55.440; ARCO, 539 P.2d at 67. This occurred on June 10, 1986. The order of the superior court of September 8, 1986, entered pursuant to AS 09.55.450, gave the state  immediate possession of the property. (Emphasis added). We have not previously considered the effect of an immediate seizure of possession by the state. The center of this controversy lies in the proper interpretation of AS 09.55.450. AS 09.55.450(a) provides in full: Upon the filing of the declaration of taking and the deposit of the estimated compensation, the court may, upon motion, fix the time during which and the terms upon which the parties in possession are required to surrender possession to the petitioner. However, the right of entry shall not be granted the plaintiff until after the running of the time for the defendant to file an objection to the declaration of taking or until after the hearing on any objection to the declaration of taking if the objection is made in the time allowed by law. Where the party in possession withdraws any part of the award and remains in possession, the court may fix a reasonable rental for the premises to be paid by that party to the plaintiff during such possession. Implicit, therefore, in the trial court's allowance of a rental offset is a finding that the Kasnicks never surrendered legal possession of the lot to the state. Were this true, it would mean that a condemnor could both judicially seize immediate possession under this statute and yet maintain that the prior owner retained possession for purposes of the same statutory subsection. This is an untenable construction. It is a basic rule of statutory construction that a statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant, and so that one section will not destroy another unless the provision is the result of obvious mistake or error. E.g., 2A C. Sands, Sutherland Statutory Construction § 46.06, at 104 (4th ed. 1984); see also Alascom, Inc. v. North Slope Borough, Bd. of Equalization, 659 P.2d 1175, 1178 & n. 5 (Alaska 1983); King v. Alaska State Housing Authority, 633 P.2d 256, 264 (Alaska 1981); Libby v. City of Dillingham, 612 P.2d 33, 43 (Alaska 1980) (Rabinowitz, J., concurring); Isakson v. Rickey, 550 P.2d 359, 364 (Alaska 1976). Despite the state's seizure of immediate possession pursuant to AS 09.55.450(a), if the Kasnicks retained possession within the meaning of the same statute, the court's possession order, and the statute itself which authorized it, become meaningless. Cf. Brown v. United States, 263 U.S. 78, 84-86, 44 S.Ct. 92, 94-95, 68 L.Ed. 171 (1923) (interpreting effect of immediate seizure of possession under analogous Federal and Idaho statutes as stripping prior owner of all right, title and interest in both land and subsequent rents and profits and vesting it in the taker). [2] At the time of the Satterberg/Walton agreement, the state had both title and possession, entitling it to chain off the parking lot and let it sit, or immediately begin work. [3] The Kasnicks had the right to seek appellate review. All the Satterberg/Walton agreement says, both sides admit, is that the forbearance of each was the quid pro quo for the other. It says nothing about interest. Indeed, interest was not contemplated by the state. The state had possession, the Kasnicks did not, and the agreement did not affect interest. It did not stop running. Use was admittedly given for bargained-for consideration, and the state presents no persuasive reason to disregard the agreement. The state argues that had the issue of offsetting interest by rental been discussed explicitly, it is unlikely that the state would have agreed to give up its rights to avoid the payment of interest. This argument apparently is what persuaded the trial court to allow a rental offset. However, as discussed supra, it was the state's judicial seizure of possession which cost it a rental offset; the agreement merely did nothing to resurrect it. The state's argument, reduced to its core, is that it subjectively did not intend to forego rent, and did not think about what effect its previous seizure of immediate possession might have on any rental entitlement. An interpretation of AS 09.55.450(a) which equates use pursuant to a contract supported by bargained-for consideration with possession, thereby giving the condemnor additional compensation for the continued use, is not only an unreasonable construction of the statute, but one which is inequitable. [4] Consider the posture of these parties at the time the state obtained immediate possession. An issue involved in valuing the condemned tract was the availability of substitute parking. The state's appraiser suggested that were the Kasnicks to use an adjacent parcel (the back lots) for parking, the cost of cure would be not more than $22,000. The Kasnicks, on the other hand, had cost of cure estimates anywhere from $200,000 to $299,000, in rough figures. It was their view that the back lots could not be considered usable for curative purposes, since the back lots had been conveyed to a corporation owned by the Kasnicks, who claimed that they intended to build a motel on them. The state claimed that the conveyance to the corporation was a sham, and in any event since the corporation was controlled by the Kasnicks, they could use the back lots for curative purposes. Whether the back lots were part of the larger parcel was determined to be a jury question in a memorandum decision and order. Assuming the back lots were part of the larger parcel, the state argued that the Kasnicks had a duty to mitigate their damages by making an immediate cure, thereby substantially reducing any claim for business loss resulting from the condemnation. Thus, when the state took possession of the parking lot, its value (which in part depended on the cost of a replacement lot) was left up in the air. If the Kasnicks' back lot was not eventually held to be part of the parcel, the cost of a replacement, and hence the value of the land taken, and hence its fair rental value, would be higher. Allowing a rental offset for continued use pursuant to an agreement supported by consideration would require significant guesswork on the part of the condemnee, who is required to be treated with the utmost fairness in condemnation proceedings. Cf. Bridges v. Alaska Housing Authority, 349 P.2d 149, 153 (Alaska 1960). The condemnee should not have to second-guess how a court, or jury, will rule on the question of parceling. Whether a windfall might occur is an uncertain question. Furthermore, evidence with respect to damages dependent upon parceling may not even be available when the condemnee must make a decision, i.e., within ten days after the court awards immediate possession to the state. Here the court looked at all the evidence in the record following trial on the issue of damages to determine the propriety of an offset. That was not available to the parties at the time of their agreement; it could not be determined whether a windfall would result. We conclude it would be grossly unfair to place the condemnee in that position. If the state believed that it might stand to lose by allowing the condemnee to use the property on certain terms and conditions, it did not have to do so. It had taken title and immediate possession. The condemnee can be held in contempt for not giving up immediate possession if the condemnee uses or leaves personal property on the condemned property, and the state can let the chips fall where they may with respect to parceling, loss of business damages and the like. The state can also negotiate for an abatement, proportionate reduction or some other treatment of interest. In this case, having made an agreement which it admits it benefited from, and admits that the Kasnicks gave up something to obtain, the state seeks the further benefit of a hindsight look at the evidence.