Court Opinion

ID: 5165898
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:33:57.682163+00
Date Added: 2024-06-11T08:25:51.203171
License: Public Domain

RABINOWITZ, Justice,
with whom COMPTON, Justice, joins, concurring in part and dissenting in part.
I agree with the court’s holding that the Trails satisfied the “change in use” provision found in AS 34.03.225(a)(4) (governing eviction of mobile homes from mobile home parks). I disagree with the court’s interpretation of the good faith requirement of AS *30934.03.320 and therefore dissent from Part II.C of the opinion.1
In interpreting AS 34.03.320, the court adopts an objective standard for determining whether the Trails acted in good faith. Alaska Statute 34.03.360(5) defines “good faith” as “honesty in fact in the conduct of the transaction concerned.” The court reasons,
Under the statutory definition of good faith, if the Trails honestly decided to change the use of space 147 — in other words, if they acted with “honesty in fact” in undertaking the change in use — their underlying motives for doing so were immaterial.
I think this holding is incorrect for the following reasons.
First, in interpreting a statute we generally favor a reading of the statute which gives effect to all its provisions. Homer Elec. Ass’n v. Towsley, 841 P.2d 1042,1045 (Alaska 1992). If the trailer park owner must violate one of the other substantive provisions of the chapter in order to violate AS 34.03.320, then this section is superfluous. For example, in the present ease, if the Sharpes had a remedy under the “change in use” provision they would not have needed to argue that the Trails had acted in bad faith.2
Second, a majority of other jurisdictions have held that the identically worded good faith requirement in the Uniform Commercial Code3 is independently actionable and requires a subjective inquiry into the motivations of the contracting parties.4 For example, in Reid v. Key Bank of Southern Maine, Inc., 821 F.2d 9 (1st Cir.1987), the court held that the defendant bank had violated its duty to perform in good faith by requiring accelerated payment of the plaintiffs loan even though the loan agreement provided that the bank could do so at will. In upholding the following jury instruction, the court focused on the subjective definition in UCC § 1-201(19):
One acts with good faith, in general, when one acts honestly.
Good faith means that one acts without any improper motivation. One acts with the truth and not for some ulterior motive that is unconnected with the substance of the agreement in question when one is acting with good faith.
Id. at 14-15 & n. 2. Under the court’s view in the present case, AS 34.03.320 does not require a similar search for “an ulterior motive.”
Finally, the court’s construction of AS 34.03.360(5) deviates from this court’s precedents. In both Mitford v. de Lasala, 666 P.2d 1000, 1007 (Alaska 1983) and Hagans, Brown & Gibbs v. First National Bank of Anchorage, 783 P.2d 1164, 1168 (Alaska 1989), we engaged in subjective inquiries into the motivations of the defendants in order to determine if they had breached the implied covenants of good faith and fair dealing in their respective contracts. In Luedtke v. *310Nabors Alaska Drilling, Inc., 834 P.2d 1220, 1224 (Alaska 1992), we expanded the analysis, holding that the UCC covenant of good faith and fair dealing imposes both an objective and subjective standard. Only recently in Hillman v. Nationwide Mutual Fire Insurance Co., 855 P.2d 1321, 1324 (Alaska 1993), did we deviate from this course by holding that in order to recover for the tort of bad faith in first party insurance cases, the insured must prove objective bad faith on the part of the insurer. Because the weight of authority suggests that good faith is comprised of both subjective and objective components, I am of the view that the holding in Hillman should be limited to its facts.
In conclusion, I think that case law supports a reading of AS 34.03.320 which makes a good faith requirement independently actionable; that the duty to act in good faith whether implied contractually or imposed statutorily requires more than mere compliance with the letter of the law; and that determining whether a party has fulfilled such a duty requires a subjective inquiry into the motivation of the party in acting as they did. This is precisely the evidence which the Sharpes proffered in their affidavits to demonstrate that a genuine issue of material fact prevented the entry of summary judgment.5 I would therefore reverse the superior court’s order granting summary judgment against the Sharpes on their claim under AS 34.03.320 and remand the ease to afford the Sharpes an opportunity to present evidence to the superior court on the issue of the Trails’ good faith under AS 34.03.320 and AS 34.03.360(5).

. AS 34.03.320 provides:
Obligation of good faith. Every duty under this chapter and every act that must be performed as a condition precedent to the exercise of a right or remedy under this chapter imposes an obligation of good faith in its performance or enforcement. The aggrieved party has a duty to mitigate damages.

. In note 5 of its opinion, the court suggests that. the good faith provision may require a subjective inquiry in a narrow set of cases where the letter of the law has been satisfied but where the owner’s motive is "independently impermissible (e.g., racial discrimination) or otherwise violated public policy (e.g., retaliatory conduct).” This interpretation of the statute runs up against the same objection. Retaliatory conduct is prohibited by AS 34.03.310, and it is tautological that conduct which is independently impermissible, must be impermissible because it runs afoul of another statute or the constitution.

. The official commentary to § 1.302 of the Uniform Residential Landlord and Tenant Act (AS 34.03) states that the good faith requirement was adapted from § 1-203 of the Uniform Commercial Code. The UCC provides that an implied duty of good faith exists in the performance of every contract. UCC § 1-203 (AS 45.01.203).

. See Reid v. Key Bank of Southern Maine, Inc., 821 F.2d 9, 13 (1st Cir.1987) (listing jurisdictions which have allowed recovery on theories of breach of good faith); see also K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 761 (6th Cir.1985) (suit under New York law). Contra Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F.Supp. 666, 677 (N.D.Ga.1982), ajfd, 747 F.2d 708 (11th Cir.1984) (interpreting Georgia law); Chandler v. Hunter, 340 So.2d 818, 821 (Ala.App.1976).

. The Sharpes argue that the Trails changed the use of the lot which the Sharpes mobile home was on because the Trails had moved into a house located nearby and did not like the appearance of the "double-wide” mobile home. Debbie Sharpe stated by affidavit that "Mrs. Trail had often complained of the 'unsightliness' of our mobile home.”