Opinion ID: 1357557
Heading Depth: 1
Heading Rank: 5

Heading: remedial issues

Text: The trial court found that appellants presented proof sufficient to justify only $927,813 in total project costs. Appellants challenge this finding, claiming it to be erroneous because it does not include the land value of Tract 3, or interest, or the interest due to Beirne for the use of his property for collateral to obtain the construction loan. With respect to the land we find no error. Although Tract 3 clearly had value, there is no unequivocal evidence that, as between Beirne and LOC, LOC was to be the owner rather than the lessor of the property. Further, there is no evidence that GHS reconveyed the property to LOC rather than to Beirne. With respect to construction loan interest, the superior court ruled prior to trial that such interest would be included within total project costs so long as it was reasonably and necessarily incurred. The court found at trial that if the $900,000 loan from Peoples Bank and Trust had been paid off on time, the total interest due would have been $61,617. The court did not, however, include the $61,617 figure within total project costs. In failing to do so the court erred. The Peoples Bank partial construction loan consisted of two notes which became due on August 29, 1974 and November 28, 1974. These are the dates to which the court was referring in relating what the interest would have been had the loan been paid on time. However, in LOC's application for state aid the time for completion of construction of the hospital was estimated to be March of 1975. It was therefore anticipated that interest on construction loans would continue until at least that time, regardless of the particular due date on individual notes. The record indicates that interest on the $900,000 loan was actually paid Peoples Bank and Trust through March 17, 1975 in the amount of $126,984.95. This sum should have been included within total project costs. With respect to the fee claimed for the use of Beirne's property as collateral, called interest by appellants, the court did not err in refusing to include it within total project costs. There was evidence, and the superior court found, that the fee requested by Beirne was excessive. On the other hand, there was no evidence as to what a reasonable fee would be or as to whether any fee would be reasonable. In accordance with the foregoing the court's finding respecting total project costs should be increased by $126,984.95. This means that LOC was entitled to a grant for fiscal year 1975 of 25% of $1,054,798 or $263,700, rather than $312,500. There has thus been an overpayment of $48,800. The state is entitled to a refund of this sum. The final issue is whether Beirne as well as LOC should be liable for payment of the refund. The superior court made extensive factual findings explaining its conclusion that Beirne should be liable, including: 1. That LOC was undercapitalized; 2. That Beirne as founder, as a director, and as president of LOC had substantially failed to observe corporate formalities; 3. That the other officers or directors of LOC did not exercise independent judgment and were controlled by Beirne; 4. That LOC was operated by Beirne as if it were a division or part of a single enterprise which also included his own personal businesses. These determinations are issues of fact which are not challenged as erroneous on appeal. They justify holding Beirne individually liable, along with LOC, for the refund of the overpayment. See Uchitel Co. v. The Telephone Co., 646 P.2d 229, 235 (Alaska 1982). The judgment of the superior court is REVERSED and the case is REMANDED with directions to enter judgment in accordance with the views expressed herein. REVERSED and REMANDED.