Johnson v. Albin Carlson (Alaska 2025): Mandatory Consideration of Less-Severe Discovery Sanctions & Flexible Proof of Construction Damages

Introduction

The Alaska Supreme Court’s opinion in Morris O. Johnson Jr. d/b/a Johnson Construction Company v. Albin Carlson & Co. (Nos. S-18615/18625; Slip Op. 7773, 13 June 2025) is a sprawling, fact-intensive construction dispute arising from the building of a remote Forest Service trail bridge in the Chugach National Forest. It addresses four recurrent themes in commercial litigation:

1. When discovery violations warrant claim-ending sanctions;
2. When subcontract provisions constitute enforceable conditions precedent to payment;
3. Which of the accepted methods—actual cost, jury-verdict, total cost, or modified total cost—may be used to prove damages in construction cases; and
4. From what point prejudgment interest should accrue for extra-work claims.

The Court reverses some damage findings, clarifies several doctrinal tests, and, most significantly, establishes that trial courts must explicitly weigh less-severe alternatives before precluding an entire damages claim as a discovery sanction. That requirement gives this decision precedential heft well beyond construction litigation.

Summary of the Judgment

• Discovery Sanctions – The superior court abused its discretion by barring the subcontractor’s snowmachine and principal-labor claims without first considering milder sanctions; the Court remands for a new damages evaluation on those items.
• Contract Interpretation – Two subcontract clauses (certified payrolls and final-payment documentation) were not conditions precedent; therefore, the contractor could not rely on them to deny all payment for extra work.
• Damage Methodology – The jury-verdict method remains available where actual costs are unavailable, even if the claimant’s own recordkeeping is deficient; the Court expressly rejects a rigid requirement that the claimant prove it was “unable” to keep better records.
• Specific Awards – Certain equipment, crane-overwintering, and snowmachine awards are upheld; the personal-labor and boat awards are recalculated or vacated.
• Prevailing-Party Status – Because the damage totals will change on remand, the Rule 68 prevailing-party determination and the associated $91,000 attorney-fee award are vacated.
• Prejudgment Interest – Interest runs from the first concrete monetary demand (7 June 2017) because only then was the debt ascertainable.

Detailed Analysis

1. Precedents Cited

The Court integrates and extends several prior Alaska and federal authorities:

Johnson extends these principles by:

• Requiring explicit consideration of lesser sanctions before preclusion (merging Khalsa and Urban into a single mandatory step);
• Permitting the jury-verdict method despite deficient recordkeeping, so long as reliable secondary evidence exists;
• Clarifying that absence of “magic words” and the parties’ conduct can defeat a claimed “condition precedent.”

2. Legal Reasoning

2.1 Discovery Sanctions Doctrine

The Superior Court’s sanction was rooted in Alaska R. Civ. P. 37(b) & (c). The Supreme Court held that:

A court abuses its discretion if it imposes claim-ending sanctions without (a) determining whether the discovery failure was “willful,” and (b) making findings that lesser measures—continuance, monetary sanctions, adverse inference—would be ineffective.

Here, time still remained before the rescheduled trial, making milder cures feasible. The Court’s insistence on an express proportionality analysis creates a clear roadmap for future discovery rulings.

2.2 Conditions Precedent v. Mere Covenants

PAC argued that two subcontract clauses were conditions precedent barring any recovery. The Court applied a stringent test (“plain, unambiguous language or clear implication”) and found:

• No “if,” “subject to,” or similar conditional language;
• Course of performance: PAC previously paid several invoices without the documents;
• Other clauses expressly labeled “condition precedent,” showing the parties knew how to do so.

Therefore, the clauses were ordinary covenants; their breach, if any, was partial and did not excuse PAC’s duty to pay for extra work.

2.3 Damage-Proof Methodology

The Court restated Alaska’s four permissible methods and reaffirmed the preference hierarchy. Key holdings:

1. Total-Cost Method – Still “universally disfavored”; available only if claimant meets the four-part test from Frank Coluccio Construction. Johnson did not meet it, but that failure is not fatal if another method can be used.
2. Jury-Verdict Method – Remains available when a more reliable method is not realistically available. The Court rejects the federal “justifiable inability” gloss; contractor negligence in recordkeeping does not automatically bar jury-verdict proof.
3. Actual-Cost Method – Preferred but not mandatory unless the contract expressly so requires (North Pacific distinguished).

2.4 Specific Damage Items

The Court carefully winnowed each category:

• Cranes – $99,000 affirmed (cost equivalence of avoiding second mobilizations).
• Other Heavy Equipment – $0 affirmed (no agreement and wildly shifting estimates).
• Snowmachines & Principal Labor – Claims reinstated; factual findings exist but need formal damages entry.
• Boat Use – $10,000 award vacated as speculative; must be recalculated on remand.

2.5 Prejudgment Interest

Interest begins when the debtor knows—or should know—the amount owing. Because payment was on a time-and-materials basis and Johnson supplied no breakdown until 7 June 2017, earlier accrual dates (contract signing, last day on site) were rejected.

3. Impact of the Judgment

This decision will resonate in three principal arenas:

1. Discovery Practice – Judges across Alaska must now:
   • Identify the precise discovery violation;
   • Explicitly weigh lesser sanctions on the record;
   • Find willfulness before imposing claim-ending measures.
   Litigators will marshal arguments and evidence for proportional remedies, knowing appellate scrutiny is exacting.
2. Construction Litigation – Contractors gain flexibility:
   • Failure to keep immaculate cost records will no longer automatically doom recovery;
   • Owners cannot invoke loosely drafted “paperwork” clauses as conditions precedent.
   Conversely, owners may tighten contract language to include unequivocal condition-precedent wording and explicit actual-cost mandates.
3. Contract Drafting & Risk Allocation – The case illustrates the peril of “incorporate-by-reference” change clauses without clear billing mechanics. Sophisticated parties are likely to:
   • Define change-order procedures in greater detail;
   • State unequivocally whether documentation is a payment condition;
   • Provide fallback hourly/equipment schedules for time-and-materials extras.

Complex Concepts Simplified

• Condition Precedent – A contractual trigger that must occur before the other party’s duty arises. Think of it as a “gate” that must open before money flows.
• Discovery Sanction – A penalty imposed for violating disclosure obligations (e.g., barring testimony or dismissing claims).
• Time-and-Materials Contract – Payment based on actual hours worked and materials used, rather than a fixed bid.
• Jury-Verdict Method – A pragmatic way to estimate damages when precise numbers are unavailable; courts consider expert opinions, comparable projects, and any surviving records.
• Rule 68 Offer of Judgment – A cost-shifting tool: if the offeree ultimately wins less than 90 % of the offer, it pays a share of the offeror’s fees.

Conclusion

Johnson v. Albin Carlson is a significant procedural and substantive milepost in Alaska jurisprudence. Its chief legacy is a heightened safeguard against disproportionate discovery sanctions, mandating that trial courts articulate why lesser remedies are inadequate before extinguishing claims. The decision also recalibrates the balance between contractual precision and equitable recovery in construction disputes, allowing courts to use fair approximations (jury-verdict method) where meticulous records are missing but credible evidence remains. Parties, attorneys, and judges involved in complex commercial cases will rely on this precedent for clearer guidance on sanctions, contract conditions, and damages proof.