Court Opinion

ID: 2822140
Source: CourtListenerOpinion
Date Created: 2015-07-30 21:10:31.655734+00
Date Added: 2024-06-11T11:31:05.509767
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
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               THE SUPREME COURT OF THE STATE OF ALASKA

GRANT MILLER and WHITING    )
HARBOR AQUAFARM LLC,        )                           Supreme Court No. S-15370
                            )
              Appellants,   )                           Superior Court No. 1SI-11-00138 CI
                            )
     v.                     )                           OPINION
                            )
STATE OF ALASKA, DEPARTMENT )                           No. 7021 – July 24, 2015
OF ENVIRONMENTAL            )
CONSERVATION,               )
                            )
              Appellee.     )
                            )

              Appeal from the Superior Court of the State of Alaska, First
              Judicial District, Sitka, David V. George, Judge.

              Appearances: Teka K. Lamade, Sitka, for Appellants. David
              T. Jones, Senior Assistant Attorney General, Anchorage, and
              Craig W. Richards, Attorney General, Juneau, for Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              BOLGER, Justice.

I.    INTRODUCTION
              An oyster farmer closed his farm after dozens of people became sick from
eating his oysters. He sued a state agency, alleging that the agency negligently informed
him that the site of his farm was suitable for shellfish farming. The superior court
granted summary judgment for the agency, concluding that the farmer’s
misrepresentation claim was barred by state sovereign immunity. The farmer argues that
the agency’s sovereign immunity defense was inapplicable because his complaint alleged
a claim of negligence, not negligent misrepresentation. But the allegations in the
farmer’s complaint supported only a negligent misrepresentation claim. We affirm.
II.   FACTS AND PROCEEDINGS
             In 1996 the Department of Environmental Conservation (the Department)
approved an area in Whiting Harbor for shellfish farming. In 2000 Grant Miller applied
for a permit to operate an oyster farm in that area, and the Department granted his
application. In 2009 dozens of people became sick after eating oysters from Miller’s
oyster farm, and Miller shut down the farm.
             In 2011 Miller filed a complaint against the Department, alleging that it had
conducted its 1996 studies in a negligent manner and “held out Whiting Harbor as an
approved site for oyster farming.”     He further alleged that he had relied on the
Department’s approval of the site for shellfish farming when he sought and obtained a
permit, and that his reliance was a proximate cause of his oyster farm’s failure. Miller
later amended his complaint to add the City of Sitka as a defendant, add Whiting Harbor
Aquafarm LLC (his business) as a plaintiff, and allege that the Department was aware
of the presence of the invasive species tunicate in the area at the time it granted his
permit.
             The Department moved for summary judgment, arguing that Miller’s
amended complaint alleged only a single claim, misrepresentation, which was barred by
state sovereign immunity.1 Miller opposed this motion, arguing that his claim was one
of negligence, not misrepresentation. The superior court granted the Department’s
summary judgment motion.

      1
             See AS 09.50.250(3).

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                Miller appeals.
III.   STANDARD OF REVIEW
                “We review rulings on motions for summary judgment de novo. When
applying the de novo standard of review, we apply our independent judgment to
questions of law, adopting the rule of law most persuasive in light of precedent, reason,
and policy.”2
IV.    DISCUSSION
                In accordance with article II, section 21 of the Alaska Constitution,
AS 09.50.250 allows “[a] person or corporation having a . . . tort claim against the state
[to] bring an action against the state . . . .” This waiver of state sovereign immunity is
not unlimited, and AS 09.50.250(3) explicitly states that “an action may not be brought
if the claim . . . arises out of . . . misrepresentation.”         The tort of negligent
misrepresentation has four essential elements:
                (1) the party accused of misrepresentation must have made
                the statement in the course of his business, profession or
                employment; (2) the representation must supply “false
                information”; (3) the plaintiff must show “justifiable
                reliance” on the false information; and (4) the accused party
                must have failed “to exercise reasonable care or competence
                in obtaining or communicating the information.”[3]
                Miller’s allegations against the Department, in both his original and
amended complaints, constitute a straightforward claim of negligent misrepresentation.
First, Miller alleged that the Department “held out Whiting Harbor as an approved site

       2
Bush v. Elkins, 342 P.3d 1245, 1251 (Alaska 2015) (quoting
ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc., 322 P.3d 114, 122
(Alaska 2014)) (internal quotation marks omitted).
       3
            Willard v. Khotol Servs. Corp., 171 P.3d 108, 118-19 (Alaska 2007)
(quoting RESTATEMENT (SECOND ) OF TORTS § 552(1) (1977)).

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for oyster farming” as part of its “duty to conduct [suitability] studies in compliance with
the State’s . . . policies and procedures.” Second, he alleged that the State’s assurance
of the site’s suitability for oyster farming was false. Third, he alleged that he “actually
and reasonably relied” on this assurance. And fourth, he alleged that the Department was
negligent in conducting its suitability studies. Under AS 09.50.250(3), the Department
is immune from liability for this alleged misrepresentation.
              Miller argues that he subsequently introduced, in an affidavit supporting his
opposition to summary judgment, evidence of material facts that demonstrate that his
claim was one of negligence, not negligent misrepresentation. Namely, he claims that
he submitted evidence demonstrating that the Department “remained involved with on­
going inspections aimed at establishing a duty of care with regard to public health[,] . .
. fail[ed] to . . . enforce the terms of the [nearby] Wastewater Treatment Plant’s permit[,]
. . . [and] failed to respond appropriately in light of its knowledge of flow rates at the
[Treatment Plant] and its ability to regulate that flow.” Miller claims these negligent acts
“placed an unreasonable risk not only on Mr. Miller, but on the public generally.”
              But we do not need to decide whether this evidence would support an
independent negligence claim, because neither Miller’s original nor amended complaint
made allegations encompassing this evidence. The only injury Miller claimed was
detrimental reliance on the Department’s assurance that the site was suitable for shellfish
farming. This reliance was an element of Miller’s misrepresentation claim; it did not

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support an independent negligence claim.4 And Miller never amended his complaint to
allege an injury other than detrimental reliance.
              Finally, Miller cites several federal cases where courts have allowed
negligence claims against government agencies to                proceed    “even    though
misrepresentations [were] collaterally involved.”5         But in each of these cases,
government officials acted, or failed to act, in ways that caused injuries to the plaintiffs
that were separate and apart from any misrepresentation.
              In Block v. Neal a government official visited a construction site three times
and wrote inspection reports that failed to indicate defects in the project.6 The district
court originally dismissed the case,7 but the Sixth Circuit reversed, concluding that the
Federal Tort Claims Act’s misrepresentation exception 8 did not bar the homeowner’s
claim.9 The U.S. Supreme Court affirmed.10 Reasoning that the official “may have

       4
             See JBP Acquisitions, LP v. U.S. ex rel. FDIC, 224 F.3d 1260, 1264 (11th
Cir. 2000) (“The test in applying the misrepresentation exception [to the Tort Claims
Act] is whether the essence o f the claim involves the government’s failure to use due
care in obtaining and communicating information. The exception covers actions for
negligence when the basis for the negligence action is an underlying claim for
misrepresentation.” (citations omitted)).
       5
             See Block v. Neal, 460 U.S. 289 (1983); Nat’l Carriers, Inc. v. United
States, 755 F.2d 675 (8th Cir. 1985); Guild v. United States, 685 F.2d 324 (9th Cir.
1982).
       6
460 U.S. at 292.
       7
              Id.
       8
              28 U.S.C. § 2680(h) (2012).
       9
460 U.S. at 293-94.
       10
              Id. at 294.

                                            -5-                                       7021

undertaken both to supervise construction of [the] house and to provide [the homeowner]
information regarding the progress of construction,” the Court held that the
misrepresentation exception would not bar a claim stemming from the official’s
negligence in supervising the project.11
              In National Carriers, Inc. v. United States a government meat inspector
undertook the tasks of identifying and separating exposed and unexposed meat at an
accident site, but he negligently performed these duties.12 He also informed the salvage
crew that the exposed and unexposed meat was “all the same.”13 Although the district
court concluded that the misrepresentation exception shielded the government from
liability, the Eighth Circuit reversed, holding that the inspector “acted negligently [in his
inspection and separation duties], in a manner distinct from his misrepresentations.”14
              And in Guild v. United States a federal agency “surveyed possible [dam]
sites, performed foundation analyses, . . . prepared a topographic survey, . . .
recommended a site for [a] dam and reservoir, . . . design[ed] . . . the dam and reservoir[,]
and prepared construction plans and specifications.”15 After the dam failed due to faulty
design, the district court granted summary judgment for the government, concluding that
the misrepresentation exception barred the suit.16 The Ninth Circuit reversed, holding

       11
              Id. at 298-99. The homeowner did not allege negligent misrepresentation.
Id.
       12
              755 F.2d 675, 675-77 (8th Cir. 1985).
       13
              Id. at 676 (internal quotation marks omitted).
       14
              Id. at 677.
       15
              685 F.2d 324, 324 (9th Cir. 1982).
       16
              Id. at 325.

                                            -6­                                        7021
that “[d]esigning the dam and reservoir was an operational task and the [g]overnment
performed it negligently. Any communication of misinformation was collateral.”17
             In contrast to these cases, Miller’s misrepresentation claim was not
collateral to an independent claim of negligence — it was the only claim he alleged in
his complaint. Because the Department is immune from liability for misrepresentation,
the superior court’s summary judgment ruling was appropriate.
V.    CONCLUSION
             We AFFIRM the judgment of the superior court.

      17
             Id. at 326.

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