Court Opinion

ID: 9898643
Source: CourtListenerOpinion
Date Created: 2023-11-14 21:04:49.417825+00
Date Added: 2024-06-11T09:15:37.826236
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
    Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
    303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
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             THE SUPREME COURT OF THE STATE OF ALASKA

HIGHLIGHT CANYON, LLC,        )
                              )                     Supreme Court No. S-18243
               Appellant,     )
                              )                     Superior Court No. 3PA-17-01911 CI
     v.                       )
                              )                     OPINION
JOHN CIOFFOLETTI; VALDEZ      )
CREEK MINING LLC; ROBERT A.   )                     No. 7667 – August 11, 2023
COINER; DORIS A. COINER;      )
SHERRI COINER GERHARZ,        )
CLAUDE H. MORRIS, JR.;        )
CLEARWATER MOUNTAIN           )
MINING; and LUCKY MINE GROUP, )
LLP,                          )
                              )
               Appellees.     )
                              )

            Appeal from the Superior Court of the State of Alaska, Third
            Judicial District, Palmer, Kristen C. Stohler, Judge.

            Appearances: Curtis Martin, Curtis W. Martin Law Office,
            Palmer, for Appellant. Jennifer M. Coughlin, Landye
            Bennett Blumstein, LLP, Anchorage, for Appellees.

            Before: Winfree, Chief Justice, Carney, Borghesan, and
            Henderson, Justices. [Maassen, Justice, not participating.]

            BORGHESAN, Justice.
      INTRODUCTION
             The superior court may dismiss a case for want of prosecution if “the case
has been pending for more than one year without any proceedings having been taken”
unless the plaintiff shows good cause for the delay.1 In this case the court dismissed a
mining company’s claims when its sole filing in the prior year was a substitution of
counsel.   We hold that the substitution of counsel was not a “proceeding” that
terminated the period of delay. We also conclude that actions taken by the company
after the defendant moved to dismiss for lack of prosecution do not preclude dismissal.
And because the company failed to clearly explain its dilatory conduct, the superior
court did not abuse its discretion by finding no good cause for the failure to prosecute.
We therefore affirm dismissal.
      FACTS AND PROCEEDINGS
      A.     Facts
             Highlight Canyon, LLC (Highlight) is a limited liability company
headquartered in Palmer. David Norton is a member and principal of Highlight Canyon.
In May 2010 Norton contracted with Robert Coiner and Claude Morris of Clearwater
Mountain Mining (Clearwater) and Lucky Mine Group, LLP (Lucky Mine) for
exclusive rights to develop several gold mining claims belonging to those businesses.
Highlight’s contract to develop the claims was to continue “through 2013” with an
option to renew Highlight’s exclusive right to mine every five years. But Clearwater
and Lucky Mine sold their mining claims to Valdez Creek Mining, LLC (Valdez Creek)
in April 2013.
      B.     Proceedings
             Highlight Canyon originally filed a civil action against Clearwater, Lucky
Mine, Valdez Creek, and other defendants in 2013. In 2016 the superior court dismissed

      1
             Alaska R. Civ. P. 41(e).

                                           -2-                                     7667
that lawsuit without prejudice for failure to prosecute, explaining that the case had been
pending for three years with no substantive activity.
              Highlight re-filed in July 2017, more than four years after Clearwater and
Lucky Mine terminated the agreement. The 2017 complaint asserted claims for breach
of contract, tortious interference with a contract, tortious interference with a prospective
economic advantage, and conversion. After Highlight voluntarily dismissed some of
its claims, the superior court allowed the company to file an amended complaint on
September 5, 2017.
              In June 2019 the parties exchanged preliminary witness lists in
anticipation of a November 2019 trial. Valdez Creek served discovery requests that
same month and received timely responses to the requests for admission in July 2019.
Highlight requested an additional 30 days to respond to the interrogatories and requests
for production, which Valdez Creek granted.           In August and September 2019,
Highlight’s attorney repeatedly promised that he was working on Valdez Creek’s
discovery requests and would provide responses soon. Highlight provided unsigned
partial responses to the interrogatories in October 2019 but failed to produce any of the
requested documents. Given the inadequate discovery, the parties jointly moved to
continue the November 2019 trial. The court advised the parties to request a trial setting
conference when ready.
              At a trial setting conference in August 2020, Highlight’s counsel
announced his intent to withdraw. Highlight’s attorney agreed with the defendants that
the case had “flat-lined” and characterized the lawsuit as “stalled” and “languished.”
He did not file a motion to withdraw for good cause until December 2020. The motion
asserted that communication between Highlight and its attorney had deteriorated to the
point that he could no longer effectively represent the company. The court granted the
unopposed motion to withdraw on December 30, 2020.
              In January 2021 Norton appeared pro se at a status hearing. Norton
explained that the COVID-19 pandemic had “complicated [his transactions with his

                                            -3-                                       7667
attorney] a great deal because [the attorney] had requested that [Highlight] put together
funds that [were] substantial.” Because Highlight is an LLC, the lawsuit could not
proceed until Highlight retained new counsel. 2 Upon Norton’s request, the superior
court granted Highlight 60 days to secure new counsel before the next status hearing.
             At a March 2021 hearing attorney Curtis Martin — who had represented
Highlight in the initial 2013 action that had been dismissed for failure to prosecute —
made an appearance on behalf of Highlight. Martin explained that Highlight had
retained him earlier in the week, that he had not yet requested the case file from
Highlight’s prior counsel, and that he was appearing at the status hearing “hoping to get
some cues from the court and [the defendants’ attorney] on where [the case was] at and
what [the parties] need[ed] to proceed.” The superior court postponed the status hearing
for yet another month.
             When the parties reconvened in April 2021 Highlight remained
unprepared. Martin explained that he had received the case file from Highlight’s
attorney the week before but that the file did not contain any responses to the
defendants’ June 2019 discovery requests. “I know that’s bad,” Martin conceded.
Martin promised that Highlight was “working” on the requests for production. Valdez
Creek announced its intent to file a motion to dismiss for failure to prosecute. The
superior court postponed the status hearing for a third time, to August 2021, to
determine “if and when the case is going to be proceeding.”
             Valdez Creek filed a motion to dismiss under Alaska Civil Rule 41(e) in
May 2021. Highlight opposed the motion, arguing that its attorney’s withdrawal
constituted “proceedings” that precluded dismissal. Highlight also argued that the

      2
             Parlier v. CAN-ADA Crushing & Gravel Co., 441 P.3d 422, 423 (Alaska
2019) (holding that LLC member could not represent LLC defendant without attorney
because, under AS 08.08.210(a), “a non-attorney may not represent another person in
court, even when authorized by a power of attorney”).

                                           -4-                                     7667
COVID-19 pandemic had prevented it from obtaining new counsel for an extended
period. Highlight produced some discovery responses in early August 2021.
              The court denied Valdez Creek’s motion to dismiss. It reasoned that
“[a]lthough Plaintiffs have not been diligent in prosecuting this case over the last year,
there have been extenuating circumstances due to the global COVID-19 pandemic.”
Valdez Creek moved for reconsideration.
              On reconsideration the superior court granted Valdez Creek’s motion and
dismissed Highlight’s case with prejudice. It stated that “COVID-19 does not excuse
undiligent prosecution” and that Highlight had been “dilatory in pursuing its claims
since as early as October 2019 — five months before the COVID-19 declaration.” The
superior court also held that substitution of counsel did not “excuse over a year of delay
. . . where Plaintiff’s prior counsel withdrew due to a breakdown in communication with
Plaintiff . . . [and] [b]ecause Martin represented Plaintiff in the original three-year
action, he should be relatively familiar with the case’s history.” Finally, the superior
court held that Highlight’s behavior constituted “extreme circumstances” warranting a
dismissal with prejudice. The superior court held Highlight “personally and primarily
responsible for all of the unexcused delays” and noted that “[t]his is the second time
Plaintiff’s case is being dismissed for Plaintiff’s failure to pursue the litigation.” The
superior court also explained that the delay had caused defendants actual prejudice
because both Robert Coiner and Claude Morris — the Clearwater and Lucky Mine
equity holders who had contracted with Norton — had died since the events in dispute
took place.
              Highlight appeals.
      DISCUSSION
              “Before ordering dismissal pursuant to Rule 41(e), the trial court must
undertake a two-step inquiry: it must initially inquire whether the party facing dismissal
has engaged in any proceedings within the previous one-year period; if not, then it must

                                           -5-                                      7667
next inquire whether good cause exists for the delay.”3 This appeal challenges both
steps of the superior court’s analysis. First, Highlight challenges the superior court’s
finding that the case went over a year with no “proceedings” for the purposes of Rule
41(e). We review this issue, the interpretation of a court rule, de novo. 4 Second,
Highlight challenges the superior court’s ruling that there was no good cause for the
delay. “The decision whether to dismiss an action under Civil Rule 41(e) lies within
the sound discretion of the trial court.” 5 We review this ruling for abuse of discretion.6
       A.     The Superior Court Did Not Err By Dismissing The Complaint
              Because There Were No Proceedings In The Year Before The Motion
              To Dismiss.
              Alaska Rule of Civil Procedure 41(e)(1)(A) permits the superior court to
dismiss a case for want of prosecution if “the case has been pending for more than one
year without any proceedings having been taken.” This rule serves three policy
objectives. 7 First, it promotes judicial economy: “[A]s an administrative matter, it
allows the court to ‘clear [its] calendar of cases that are not being prosecuted
diligently.’ ”8 Second, Rule 41(e) “forces plaintiffs to keep their cases moving at a
reasonable speed.”9 Third, “Rule 41(e) ‘serves to protect a defendant from undue

       3
              Novak v. Orca Oil Co., Inc., 875 P.2d 756, 759 (Alaska 1994) (citing
Willis v. Wetco, Inc., 853 P.2d 533, 536 (Alaska 1993)).
       4
             Ford v. Mun. of Anchorage, 813 P.2d 654, 655 (Alaska 1991) (“Since this
case involves the interpretation of a civil rule, we exercise our independent judgment.”).
       5
              Power Constructors, Inc. v. Acres Am., 811 P.2d 1052, 1054 (Alaska
1991) (citing Brown v. State, 526 P.2d 1365, 1368 (Alaska 1974)).
       6
              Id.
       7
             See, e.g., Shiffman v. K, Inc., 657 P.2d 401, 403 (Alaska 1983) (“[T]he
evil to be avoided is the stagnant case cluttering a court’s calendar or threatening
harassment of the party-defendant.”).
       8
             Power Constructors, 811 P.2d at 1054 (second alteration in original)
(quoting First Nat’l Bank of Fairbanks v. Taylor, 488 P.2d 1026, 1032) (Alaska 1971)).
       9
              Id.

                                           -6-                                       7667
delays which might subject him to harassment or force settlement of an otherwise
nonmeritorious lawsuit.’ ” 10
              Valdez Creek moved to dismiss the case in May 2021. Highlight argues
that actions it took after the motion was filed should preclude dismissal. Highlight also
argues that its substitution of counsel prior to Valdez Creek’s motion is a “proceeding”
that precluded dismissal.
                     Actions taken after the filing of a motion to dismiss for failure
                     to prosecute do not preclude dismissal.
              A motion or memorandum “filed after the court issues its notice of
dismissal does not constitute a ‘proceeding’ under Civil Rule 41(e).”11 Highlight argues
that this rule applies only to notices of dismissal issued by the court sua sponte rather
than motions to dismiss filed by the defendant. But we have not recognized a legal
distinction between notices of dismissal and motions to dismiss for the purposes of Rule
41(e). “The power of Rule 41(e) to achieve [its policy] goals would be considerably
compromised if plaintiffs knew that, no matter how long they delayed, they could avoid
dismissal by filing a pleading of record as soon as the court issued its notice of dismissal
or a party filed a motion to dismiss.” 12 This logic applies with just as much force to
actions taken after a party’s motion to dismiss as to those taken after a notice of
dismissal is issued by the court. 13 Highlight’s actions after Valdez Creek’s motion to
dismiss did not preclude dismissal.

       10
              Id. (quoting Shiffman, 657 P.2d at 403).
       11
              Id.
       12
              Id. (emphasis added).
       13
             Novak v. Orca Oil Co., 875 P.2d 756, 761 (Alaska 1994) (“[O]ur concern
in Power Constructors was with pretrial memoranda filed in response to a Rule 41(e)
notice of dismissal or motion to dismiss.” (emphasis added)).

                                            -7-                                       7667
                     A substitution of counsel alone is not a “proceeding” that
                     precludes dismissal.
              Highlight argues on appeal, as it did below, that its counsel’s withdrawal
and later appearance by new counsel amount to “proceedings” that preclude Rule 41(e)
dismissal. The superior court did not directly address this argument; instead, it
considered only whether the substitution of counsel excused Highlight’s delay. But
because the definition of a Rule 41(e) “proceeding” is a question of law, we nevertheless
address this issue using our independent judgment. 14
              We have defined a Rule 41(e)(1)(A) proceeding as “a step, act or measure
of record, by the plaintiff, which reflects the serious determination . . . to bring the suit
to a resolution; or a step, act or measure of record, by either party, which reflects that
the suit is not stagnant.” 15 A “step, act or measure of record” 16 means an action that is
entered on the docket. To accept undocketed actions as proceedings would undermine
the superior court’s prerogative to manage its docket by sua sponte identifying failures
to prosecute and issuing notices of dismissal. 17
              To count as a “proceeding” an action must also show that the lawsuit
reflects serious determination to resolve the dispute or is not stagnant. Highlight seeks

       14
             See Ford v. Mun. of Anchorage, 813 P.2d 654, 655 (Alaska 1991) (“Since
this case involves the interpretation of a civil rule, we exercise our independent
judgment.”).
       15
             See Power Constructors, 811 P.2d at 1053-54 (alteration in original)
(quoting Shiffman, 657 P.2d at 403). The parties dispute whether Power Constructors
holds that substitution of counsel is never a Rule 41(e) proceeding. We did not
expressly address in Power Constructors whether attorney substitutions qualify as Rule
41(e) proceedings because an attorney substitution did not occur in the year before the
notice of dismissal at issue in that case. See id. at 1053 (explaining procedural history
of case).
       16
              Id. (emphasis added).
       17
             Discovery exchanges, for example, are not docketed and do not qualify as
Rule 41(e) proceedings.

                                            -8-                                        7667
support for its position in Novak v. Orca Oil Co., when we held that a party’s motion to
disqualify its opponent’s attorney was a proceeding that precluded dismissal.18 But
Highlight’s substitution of counsel is far more passive than a motion to disqualify an
opposing party’s attorney. A motion to disqualify is an offensive action with potential
to disrupt the other party’s litigation capacity. 19 It moves the ball, even if only
sideways. Highlight’s substitution of counsel, in contrast, left the litigation both
substantively and procedurally in exactly the same place it was before. Highlight argues
that, as an LLC, it was required by law to seek replacement counsel.           But the
requirement of being represented by counsel does not transform the mere act of
changing counsel into the kind of act that reflects “serious determination” to move the
dispute towards resolution. Instead, this requirement should have prompted better
communication between Highlight and its attorney. A substitution of counsel, without
more, is not a “proceeding” that precludes dismissal under Civil Rule 41(e).
      B.     The Superior Court Did Not Abuse Its Discretion By Ruling That
             Highlight Lacked Good Cause For Its Failure To Prosecute.
             Highlight argues that the superior court should have excused its failure to
prosecute because the COVID-19 pandemic hindered its ability to pay its attorney and
move forward with the litigation. We conclude the superior court did not abuse its
discretion when it determined that the pandemic was not “good cause” for Highlight’s
delays.
             The superior court should not dismiss a case under Civil Rule 41(e) “when
there is a reasonable excuse for the lack of prosecution.”20 But a dilatory party must

      18
             875 P.2d at 760.
      19
            Id. (explaining that the motion to disqualify “related to [the appellant’s]
counterclaim and reflected that the counterclaim was not stagnant”).
      20
            Power Constructors, 811 P.2d at 1054 (citing Brown v. State, 526 P.2d
1365 (Alaska 1979)).

                                          -9-                                     7667
explain why there was “good cause” for its failure to prosecute; conclusory statements
do not suffice.21
              Although it is easy to imagine how a global pandemic could create
“unusual factors mitigating [a plaintiff’s] responsibility for the delay in prosecuting his
complaint,” the plaintiff must be able to point to evidence of those special
circumstances in the record.22 We agree with the superior court that Highlight failed to
show how the COVID-19 pandemic justified its undiligent prosecution. The superior
court began by noting that COVID-19 had affected litigants, counsel, and the court
system but did not, by itself, excuse undiligent prosecution. It observed that Highlight
had been dilatory since 2019 — well before the onset of the pandemic and the
withdrawal of its attorney. It also noted that the attorney’s replacement, Martin, had
represented Highlight in its original action (which was also dismissed for failure to
prosecute) and should have been familiar with the case, implying that Martin had time
to get the case on track before Valdez Creek moved to dismiss roughly two months
later.
              We see no abuse of discretion in the court’s reasoning.           The only
indication on the record that COVID-19 impacted Highlight’s ability to prosecute is an
unsworn statement from Norton that “COVID has complicated [his transactions with
his attorney] a great deal because [the attorney] requested that [Norton] put together

         21
              See id. (rejecting good cause argument because appellant did not explain
why it needed sixteen months to prepare case for litigation or why it did not take any
action of record during this period); Willis v. Wetco, Inc., 853 P.2d 533, 535-36 (Alaska
1993) (rejecting good cause argument because appellant did “not explain[] what aspect
of his damages were continuing to accumulate, or why the time [was] any more ‘ripe’
for trial now than earlier . . . [and] there [was] no support for this excuse”).
         22
             See Brown, 526 P.2d at 1368 (“The record in this case evidences special
circumstances. It shows continual efforts on the part of appellant to pursue his claim
and a series of unusual factors mitigating appellant’s responsibility for the delay in
prosecuting his complaint.”).

                                           -10-                                      7667
funds that are substantial.” But Highlight did not explain how COVID-19 impacted its
finances or why it failed to prosecute its claims for months before the pandemic began.
We have affirmed a finding of good cause when the plaintiff could not appear for his
deposition or hearings because he may have been incarcerated in Canada. 23 By contrast,
the causal relationship between the COVID-19 pandemic and Highlight’s failure to
prosecute is not self-evident. The superior court did not abuse its discretion by rejecting
Highlight’s claim of good cause given the scant evidence put forward. 24
       CONCLUSION
              For the reasons above, we AFFIRM the superior court’s order dismissing
Highlight’s claims for lack of prosecution.

       23
              Brown, 526 P.2d at 1367.
       24
              See Power Constructors, 811 P.2d at 1054 (requiring “reasonable excuse
for the lack of prosecution” (citing Brown, 526 P.2d at 1368)).

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