Opinion ID: 1172266
Heading Depth: 3
Heading Rank: 1

Heading: Grant of Summary Judgment to the State on ANI's Counterclaim

Text: ANI argues that the court erred in dismissing ANI's counterclaim on summary judgment for the State. [4] ANI's counterclaim alleged negligence by the State's Department of Law and Department of Public Safety. ANI's theory was that the State knew that insurance companies followed a practice by which, after a major accident, the insurer would assume title to the damaged car upon paying the insured for the loss. According to ANI, the insurance company would retitle the car and sell it to a repair shop, knowing that it would subsequently be sold to the public without disclosure of the accident. ANI reasoned that the State assumed a duty relating to this practice through some combination of: its knowledge of the practice; the Department of Public Safety's power to suspend or revoke registration of a vehicle that has been destroyed beyond repair; the Department of Law's power to enforce the Unfair Trade Practices and Consumer Protection Act, AS 45.50.071; and a secret or confidential agreement between the State and certain major insurance carriers, including State Farm, relating to `totaled' vehicles, in violation of public policy. The State breached this duty by failing to oversee the practices of State Farm in relation to severely damaged vehicles. [5] The State first moved to dismiss on September 13, 1994, arguing that it could not be held liable for not enforcing a given law. The superior court denied that motion, writing that [t]he allegation of a `secret agreement' removes this case from a simple lack of enforcement issue. The State then submitted an affidavit from Jay Dulany, the Director of the Division of Motor Vehicles at the Department of Public Safety. Dulany described discussions he had with representatives of some insurance companies dealing with the procedures they should follow in selling vehicles that were total losses. He affied that he simply gave the insurance companies verbal directions as to how they were expected to comply with the law.... .... ... [T]here have never been any written agreements between the state DMV and the insurance companies regarding the processing of titles to totaled vehicles. There have been meetings at which the insurance companies were told what the law required, and they were told to follow the law. But there have been no written agreements of which I am aware. On December 27 the court granted summary judgment to the State and dismissed the counterclaim, stating: [ANI] submitted no evidence of an agreement which the state might (or might not) have had an obligation to enforce. The state cannot be sued for making discretionary decisions about which laws to enforce most vigorously, absent imposition of a duty of care in accord with the factors set forth in D.S.W. v. Fairbanks North Star Borough School Dist., 628 P.2d 554, 555 (Alaska 1981). No duty arises under the D.S.W. factors in this case. It is not clear whether the superior court granted summary judgment because it concluded ANI failed to establish an issue of fact as to the existence of an agreement, or because it concluded the State owed no duty as a matter of law even if an agreement existed. We think that there is no material fact issue which prevents summary judgment against ANI. Civil Rule 56(e) provides that a party opposing summary judgment may not rest upon the mere allegations or denials of [its] pleading, but [its] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. Alaska R. Civ. P. 56(e). ANI failed to show any agreement other than oral instructions to the insurance companies relating to the law's requirements, or perhaps the solicitation of agreement by the insurance companies to surrender the title documents of totaled vehicles to the DMV under 13 Alaska Administrative Code (AAC) 70.240. [6] The affidavits submitted by the State show that there was a discussion with insurance companies as to whether the law required them to surrender title of a totaled vehicle for marking by DMV; they show nothing more. ANI argues that the State assumed a duty of care through its knowledge of the practice and its actions with regard to the practice. A party assuming a duty through its own undertaking must discharge that duty with due care. See State, Dep't of Nat. Resources v. Transamerica Premier Ins. Co., 856 P.2d 766, 773 (Alaska 1993); see also Restatement (Second) of Torts § 324A (1965). Because there is no evidence of an agreement or any undertaking by the State to oversee the practices of insurance companies with regard to damaged vehicles, we hold that the State has not assumed a duty of care. The State cannot be held liable for not enforcing a statute unless it owed a duty of care to the complaining party. We have held that the judiciary may not interfere with the executive discretion of the Attorney General's Office by telling it when or how to enforce the laws. Public Defender Agency v. Superior Court, 534 P.2d 947, 950-51 (Alaska 1975). There is no other basis for finding that the State owed a duty of care to ANI and other car dealerships. In determining whether a duty of care exists, we consider a number of factors: The foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved. D.S.W. v. Fairbanks N. Star Borough Sch. Dist., 628 P.2d 554, 555 (Alaska 1981) (citation omitted); see also Hawks v. State, Dep't of Pub. Safety, 908 P.2d 1013, 1016 (Alaska 1995); Estate of Day v. Willis, 897 P.2d 78, 81 (Alaska 1995). [7] The circumstances of this case are lacking with respect to each of the D.S.W. factors. That ANI would buy and resell a car without knowledge that it had severe structural damage seems unforeseeable and indeed unlikely still. The certainty that ANI suffered damage due to any failure of the State to protect car buyers is small. The connection between the State's conduct and any injury to ANI seems distant at best. Little moral blame can be attached to the State under the circumstances. Little future harm will be prevented by imposing a duty of care. The burden on the State could be significant. The availability of insurance has no bearing here. The D.S.W. factors impose on the State no duty of care to ANI or other dealerships in this situation. Because we do not interfere with executive discretion to enforce State law and because the State owes and has assumed no duty of care, we affirm the superior court's grant of summary judgment in favor of the State on ANI's counterclaim. ANI also argues that the superior court erroneously held that the State was entitled to discretionary function immunity. It appears the court did not reach the immunity issue, but in any event our conclusion that the State owed ANI no duty of care makes it unnecessary for us to consider whether the State was immune from ANI's claim. Beilgard v. State, 896 P.2d 230, 234 & n. 8 (Alaska 1995).