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If there was a lawsuit against her, she would definitely win and you would have to pay because she did not break any rules. You did. The narrowness of the path means nothing. Your dog went to her's. He didn't go to Juneau. He was on a leash. It was YOUR responsibilty to keep your dog away from other people/dogs, and the woman with her dog on a leash, walking, minding her own busines has NO blame whatsoever. You didn't leash your dog, you let him go to another dog that you don't even know, the dog got upset, and you are blaming the other owner. Makes no sense at all.
That is correct. I don't know about laws everywhere, but here, if your dog is off-leash where it isn't supposed to be, you are not only in violation of the law and will be fined, but you will also be held responsible for anything and everything your dog does while off-leash. It is also legal here to hit, kick, club, mace, or shoot an off-leash animal on your property, or if it is threatening a person, livestock, wildlife or an animal you own. "Threatening" is a matter of interpretation ... if a dog come running up to me and my leashed dog, I am perfectly within my rights to squirt the dog in the face with pepper spray or mace (which I carry while walking my dogs, BTW). If an off-leash dog enters my uncle's horse corrals, even if it is just sniffing around and "wanting to say hello" to the horses, he is perfectly within his legal rights to shoot the dog. It happens.