BUSINESS LAW
Supreme Court of Alaska (2024)
Jack Jeffrey
In Baker v. Duffus, 542 P.3d 1153 (Alaska 2024), the supreme court held that (1) for a transaction to be exempt from the Unfair Trade Practices and Consumer Protection Act (UTPA) because it is a real estate transaction, the transfer of an interest in real property is required and (2) the UTPA can apply to parties with a fiduciary relationship provided they also engage in arms-length commercial transactions. (Id. at 1156–58). Baker and Duffus were business partners in a real estate development company. Baker agreed to provide the company accounting and bookkeeping services through a separate company that he owned independently. (Id at 1155). However, Baker ultimately withdrew money for work that was not done, failed to make capital contributions, and wrote over $300,000 in unauthorized checks to himself, his company, and his wife’s company. (Id.). This left the real estate development company devoid of capital, and Baker and Duffus were sued for defaulting on a loan. (Id.). Duffus filed cross-claims against Baker alleging he defrauded the company and the bank and violated the UTPA. (Id.). Baker moved for partial summary judgment arguing that the UTPA claims were inapplicable to the case because real estate transactions were exempted from UTPA coverage and because his claims did not develop “from the conduct of trade or commerce” mandated by the UTPA. (Id.). The jury found for Duffus and Baker appealed. (Id.). The supreme court held that for a real estate transaction to be exempt from the UTPA, it must involve the transfer of an interest in real property, and Baker’s conduct did not. (Id. at 1156). Rather, Baker’s conduct merely interfered with future goals comprising the unrealized transfer of undeveloped property. (Id.). The supreme court further held that the UTPA applies to parties with a fiduciary relationship provided they also engage in arms-length transactions like Baker’s use of his own separate corporation here. (Id. at 1157–58). In the end, the supreme court affirmed, holding that the UTPA applied to Baker’s conduct because it did not involve the transfer of an interest in real property and was the product of an unfair, arms-length commercial transaction. (Id. at 1156–59).
