Court Opinion

ID: 9543932
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:50:42.177736+00
Date Added: 2024-06-11T15:11:31.486097
License: Public Domain

MOORE, Chief Justice,
dissenting in part.
I dissent from parts IIA and II.C.4 of the majority opinion. The majority’s willingness to set aside a valid deed of trust sale and to adopt a broad discovery exception to the statute of limitations for contract actions will decrease certainty in commercial transactions in Alaska. This case does not necessitate deviation from the clear statutory language governing both issues.
I.
The majority accurately cites AS 84.20.070-.090, the relevant statutes governing the foreclosure sale. Alaska Statute 34.20.070(b) specifically gives the party executing the deed of trust (in this case, the Baumans) the right to cure a default before the foreclosure sale. However, AS 34.20.090(a) states that after the foreclosure sale, “the party executing the deed of trust or the heirs or assigns of that party have no right or privilege to redeem the property, unless the deed of trust so declares.” (Emphasis added).
As the majority recognizes, the Baumans concede that the foreclosure sale in this case was conducted in accordance with AS 34.20.070-080. Op. at 823. The majority attempts to get around this fact by stating that “[t]he Baumans are not attempting to redeem property. Rather, the Baumans are suing on the underlying sales contract.” Op. at 823-824. This distinction is meaningless in this ease. It is true that the Baumans are not simply trying to cure the default to get their property back; they are instead seeking to have the purchase contract reformed to reflect the true value of their property. However, the majority cites absolutély no authority for the proposition that a complaint based on the underlying contract is grounds for overturning a valid foreclosure.
The majority cites Rosenberg, 727 P.2d at 783-84, for the proposition that “substantial defects such as the lack of a substantive basis to foreclose in the first place will make a sale void.” If the majority is implying that there was not a substantive basis to foreclose in the present case, then it is mistaken. The Days had a right to foreclose because the Baumans defaulted. The Baumans could have avoided the foreclosure by paying the debt owed on the property while pursuing their contract and tort actions for damages. Instead, they exercised impermissible self-help by unilaterally deciding to stop making payments. It is a short-sighted policy decision to encourage such self-help in the future by creating doubt as to the finality of foreclosure sales.1
The deed of trust is a device designed to make foreclosure simpler and less costly than judicial foreclosure for both the secured party and the judicial system. Its use will be disfavored if the secured party can no longer rely upon a validly executed foreclosure following non-payment of the note. Under the majority opinion in this case, a secured party would be forced to try to unload the collateral as quickly as possible to a bona fide purchaser, possibly at less than market value, to prevent having the foreclosure sale overturned. I see no compelling reason to risk such a result by ignoring Alaska’s nonjudicial foreclosure statutes, particularly when the Baumans had adequate remedies which they failed to exercise.
II.
I also dissent, on several grounds, from the majority’s decision to adopt a broad discovery rule for contract actions. First, I would *831charge the Baumans with constructive notice of the permafrost in 1984, thus barring their claim even under the discovery rule adopted by the majority. Secondly, I find the majority’s discovery rule to be far too broad in both the type of claim to which it applies and the length of the extension of time in which to file.
A.
In their second amended complaint, the Baumans alleged:
During the summer of 1992, while researching records at the Fairbanks North Star Borough, the [Baumans] first discovered that while [the Days] had only provided [the Baumans] with a copy of a small portion of the sub-division plat, that pertaining to Tract L, the sub-division plat on file at the Borough indicated that the property was underlaid with Minto soils, which are well-known to harbor significant amounts of permafrost.
The Baumans thus admitted that they could have discovered the existence of permafrost on the land in 1984 simply by examining the subdivision plat. The deed of trust even described the property as “Tract ‘L’ of the GREEN ACRES SUBDIVISION, according to the plat filed October 3, 1976 as Plat no. 76-126, Records of the Fairbanks Recording District.” (Emphasis added). It is not unreasonable to ejqoect the Baumans to have examined the subdivision plat, given that the deed of trust’s description specifically referenced that plat, and given that the Baumans claim to have been extremely concerned at the time of purchase with the issue of permafrost. Therefore, I would hold that the Baumans had constructive notice of the permafrost as of the time of purchase in 1984, and the six-year statute of limitations began to run at that time.
B.
The majority holds that the discovery rule is applicable to all common law contract causes of action, absent a statute to the contrary. Op. at 25. Under this approach, the plaintiff has six years to file suit, regardless of the nature of the claim or the time that has elapsed before discovery. I find two major faults with the majority’s liberal approach to the contract discovery rule.
First, I would distinguish between allegations of knowing versus innocent misconduct by the breaching party. A person who knowingly takes advantage of the other party by failing to disclose relevant information is not worthy of protection. However, I do not believe that the discovery rule should be extended to innocent breaches of a contract. The rights of an innocent, aggrieved plaintiff must be balanced against the defendant’s right to achieve finality in contracts. Such finality is only achieved when a party who has not knowingly taken advantage of the other party is entitled to peace of mind upon arrival of a certain day. Furthermore, as time passes, the defendant’s ability to mount a viable defense may be weakened.
This problem of prejudice to the defendant’s case is further exacerbated by the second major problem with the majority’s approach: the provision for a six-year period in which to sue regardless of when “discovery” occurs. According to my interpretation of the majority’s approach, if a buyer of a home discovered a breach in the contract fifteen years after the purchase, the buyer could sue the seller as late as 21 years after the purchase. As previously discussed, part of my objection to such a scenario is that the seller should not be subjected to litigation for innocent breaches more than six years after the sale — i.e., the discovery rule should not apply at all to such a case. In addition, I vigorously object to the allowance of six additional years to sue.
We have previously recognized that “statutes [of limitation] are intended to encourage prompt prosecution of claims and thus avoid injustices which may result from lost evidence, faded memories and disappearing witnesses.” Lee Houston & Assocs. v. Racine, 806 P.2d 848, 855 (Alaska 1991) (citing Haakanson v. Wakefield Seafoods, 600 P.2d 1087, 1090 (Alaska 1979)). Regardless of whether the claim “discovered” sounds in tort or in contract, any tolling of the statute of limitations under the discovery rule will necessarily increase the very prejudice to the defendant that the statute is designed to avoid. *832Therefore, the amount of additional time for which the limitation period is extended should be minimized.2
The statute of limitations is six years for contracts but only two years for torts because an action on a contract is based on documentary evidence which is less likely to grow stale. See Lee Houston, 806 P.2d at 855. The legislature, weighing potential prejudices to both the plaintiff and defendant, has arrived at the six-year limitation period for contract actions. Presumably, once this period has expired, the prejudice to the defendant outweighs the prejudice to the plaintiff. Therefore, even if circumstances call for the application of the discovery rule to a contract claim, I would not allow the plaintiff to file beyond the later of two years from discovery or the expiration date for the original six-year period.3 I find it ridiculous to allow an additional six years from whenever discovery occurs.

. The Baumans may have been able to avoid foreclosure without making payments by asking the court in a timely manner to enjoin the foreclosure sale. The Baumans moved for a temporary injunction on the day of the foreclosure sale. The superior court denied their motion as moot. Although it is unclear whether the foreclosure sale had already occurred when their motion was denied, the Baumans do not challenge the court’s mootness decision on appeal.

. When the discovery rule is applied to tort actions, the plaintiff is given two additional years from the time of discovery in which to file. Similarly, Alaska's disability statute, AS 09.10.140, gives a formerly under-age or incompetent plaintiff two years to sue upon reaching the age of majority or becoming competent.

. I understand that my recommendation may appear to encroach on the function of the legislature. My proposal, however, is at least consistent with the policies underlying the legislature's adoption of a six year statute of limitation. The majority is engaged in wholesale judicial legislation by extending the limitations period to six years from discovery and thereby ignoring the policy considerations behind a six-year statute.