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Reeves v. Alyeska Pipeline Service Co. (11/22/96), 926 P 2d 1130
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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) 264-0607, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
JOHN REEVES, )
) Supreme Court No. S-6527
Appellant, )
) Superior Court No.
v. ) 4FA-93-956 CI
)
ALYESKA PIPELINE SERVICE ) O P I N I O N
COMPANY, )
)
Appellee. ) [No. 4431 - November 22, 1996]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Charles R. Pengilly and Mary E. Greene,
Judges.
Appearances: Thomas V. Van Flein, Law Office
of Thomas V. Van Flein, Beverly Hills,
California, and David H. Call, Call, Barrett &
Burbank, Fairbanks, for Appellant. Lawrence
R. Trotter and Mindy R. Kornberg, Alyeska
Pipeline Service Company, Anchorage, and Sally
J. Kucko, Groh, Eggers & Price, Anchorage, for
Appellee.
Before: Rabinowitz, Matthews, and Compton,
Justices. [Moore, Chief Justice, and
Eastaugh, Justice, not participating.]
PER CURIAM
I. INTRODUCTION
This case raises issues concerning the protection of
ideas. It arises out of John Reeves' claims that in 1991 Alyeska
Pipeline Service Company (Alyeska) appropriated his idea for a
visitor center at a popular turnout overlooking the Trans-Alaska
Pipeline. The superior court granted summary judgment to Alyeska.
We reverse in part and remand for further proceedings.
II. FACTS AND PROCEEDINGS
In 1985 Alyeska created a visitor turnout at Mile 9 of
the Steese Highway between Fox and Fairbanks. (EN1) The turnout
had informational signs and provided visitors a view of the Trans-
Alaska Pipeline. Before Alyeska constructed the turnout, visitors
gained access to the pipeline by a nearby road and trespassed on
the Trans-Alaska Pipeline right-of-way.
John Reeves, owner of Gold Dredge No. 8, a tourist
attraction outside Fairbanks and near the turnout, contacted
Alyeska in January 1991 to discuss a tourism idea he had. He spoke
with Keith Burke, Alyeska's Fairbanks Manager. After receiving
Burke's assurance that the tourism idea was "between us," Reeves
orally disclosed his idea to build a visitor center at the turnout.
He proposed that Alyeska lease him the land and he build the
center, sell Alyeska merchandise, and display a "pig" (EN2) and a
cross-section of pipe.
Burke told him the idea "look[ed] good" and asked Reeves
to submit a written proposal, which Reeves did two days later. The
proposal explained Reeves' idea of operating a visitor center on
land leased to him by Alyeska. The proposal included plans to
provide small tours, display a "pig," pipe valve, and section of
pipe, sell refreshments and pipeline memorabilia, and plant corn
and cabbage.
After submitting the proposal, Reeves met with Burke once
again. At this meeting Burke told Reeves the proposal looked good
and was exactly what he wanted. In Reeves' words, Burke told him,
"We're going to do this deal, and I'm going to have my Anchorage
lawyers draw it." Reeves claimed he and Burke envisioned that the
visitor center would be operating by the 1991 summer tourist
season.
Reeves alleges that Alyeska agreed during this meeting
(1) to grant access to the turnout for twenty years; (2) to allow
Reeves to construct and operate an information center; and (3) to
allow Reeves to sell merchandise and charge a $2.00 admission fee.
Reeves stated that, in exchange, he agreed to pay Alyeska ten
percent of gross receipts.
Over the next several months, Burke allegedly told Reeves
that the deal was "looking good" and not to worry because it takes
time for a large corporation to move. However, in spring 1991,
Burke told Reeves that the visitor center was such a good idea that
Alyeska was going to implement it without Reeves. By August 1991
Alyeska had installed a portable building at the turnout to serve
as a visitor center; it built a permanent log cabin structure in
1992.
The members of the Alyeska Pipeline Club North (APCN)
operated the visitor center and sold T-shirts, hats, and other
items. (EN3) APCN does not charge admission. A section of
pipeline and a "pig" are on display. APCN employees provide
information and answer visitors' questions. Members of APCN had
suggested in 1987 that Alyeska create a visitor center at the
turnout. However, Alyeska had rejected the idea at that time.
Before meeting with Reeves, Burke did not know that APCN's visitor
center idea had been raised and rejected by Alyeska in 1987.
Approximately 100,000 people visited the visitor center
each summer in 1992 and 1993. It grossed over $50,000 in sales
each year. The net profit for 1993 was calculated to be $5,000-
$15,000. APCN received all the profit.
Reeves filed suit in May 1993. By amended complaint, he
alleged a variety of tort and contract claims. Judge Charles R.
Pengilly granted Alyeska's motion for summary judgment on all
claims; Reeves appeals. Reeves also appeals the superior court's
denial of Reeves' motion to compel production of Burke's daily
calendar.
III. DISCUSSION
We will review a grant of summary judgment de novo and
will adopt the rule of law that is most persuasive in light of
precedent, reason, and policy. Department of Health and Social
Serv. v. Alaska State Hosp. and Nursing Home Ass'n, 856 P.2d 755,
759-60 (Alaska 1993); Guin v. Ha, 591 P.2d 1281, 1284 (Alaska
1979). We are not bound by the trial court's reasoning and may
affirm a grant of summary judgment on any alternative ground
appearing in the record. Far North Sanitation, Inc. v. Alaska Pub.
Util. Comm'n, 825 P.2d 867, 869 n.2 (Alaska 1992). To succeed on
summary judgment a movant must show that there are no genuine
issues of material fact and that it is entitled to judgment as a
matter of law. Zeman v. Lufthansa German Airlines, 699 P.2d 1274,
1280 (Alaska 1985). In determining whether there is a genuine
issue of material fact, all "reasonable inferences of fact from
proffered materials must be drawn against the moving party . . .
and in favor of the non moving party." Kiester v. Humana Hosp.
Alaska, Inc., 843 P.2d 1219, 1222 (Alaska 1992) (quoting Sea Lion
Corp. v. Air Logistics of Alaska, 787 P.2d 109, 116 (Alaska 1990)).
Reeves sued Alyeska on claims of breach of oral contract,
promissory estoppel, breach of implied contract, quasi-contract
(unjust enrichment and quantum meruit), breach of the covenant of
good faith and fair dealing, breach of license and/or lease
agreement, and various torts related to the contractual
relationships alleged.
This case presents several questions of first impression
concerning the protection of business ideas. Reeves claims that
Alyeska contracted for both the disclosure and use of his idea.
Alyeska maintains that Reeves' "idea" was not novel or original and
that an Alyeska employee had proposed an identical idea in 1987.
Therefore, Alyeska argues that most of Reeves' claims fail because
his idea was not novel or original. Alyeska also argues that
Reeves' claims are barred by the statute of frauds. Before
reaching the merits of Reeves' claims we must first briefly discuss
the law relating to the protection of ideas and the roles of
novelty and originality.
A. Protection of Ideas
The law pertaining to the protection of ideas must
reconcile the public's interest in access to new ideas with the
perceived injustice of permitting some to exploit commercially the
ideas of others. See 3 David Nimmer, Nimmer on Copyright sec.
16.01, at 16-2 to 16-3 (1994). Federal law addresses the
protection of new inventions and the expression of ideas. Federal
patent law protects inventors of novel, nonobvious, and useful
inventions by excluding others from "making, using, or selling the
invention" for a period of seventeen years. Bonito Boats, Inc. v.
Thunder Craft Boats, Inc., 489 U.S. 141, 150 (1989). Federal
copyright law protects an individual's tangible expression of an
idea, but not the intangible idea itself. 17 U.S.C. sec. 102(b)
(1988). Copyright law creates a monopoly for the author that
allows him or her to benefit economically from the author's
creative efforts. It does not create a monopoly on the idea from
which the expression originates; the idea remains available for all
to use. Nimmer, supra, sec. 16.01, at 16-2 to 16-3. Reeves'
claims do not fall under these federal protections because his idea
is not a new invention, nor is it expressed in a copyrighted work.
Nevertheless, federal law is not the only protection available to
individuals and their ideas.
Creating a middle ground between no protection and the
legal monopolies created by patent and copyright law, courts have
protected ideas under a variety of contract and contract-like
theories. See Nimmer, supra, sec.sec. 16.02-16.06 (discussing and
compiling cases that have applied or rejected theories of property,
express contract, implied contract, quasi-contract, and
confidential relationships to protect ideas). These theories
protect individuals who spend their time and energy developing
ideas that may benefit others. It would be inequitable to prevent
these individuals from obtaining legally enforceable compensation
from those who voluntarily choose to benefit from the services of
the "idea-person." See Nimmer, supra, sec. 16.01, at 16-3. The
California Supreme Court expressed this concept in the following
manner:
Generally speaking, ideas are as free as the
air and as speech and the senses, and as
potent or weak, interesting or drab, as the
experiences, philosophies, vocabularies, and
other variables of the speaker and listener
may combine to produce, to portray, or to
comprehend. But there can be circumstances
when neither air nor ideas may be acquired
without cost. The diver who goes deep in the
sea, even as the pilot who ascends high in the
troposphere, knows full well that for life
itself he, or someone on his behalf, must
arrange for air (or its respiration-essential
element, oxygen) to be specifically provided
at the time and place of need. The theatrical
producer likewise may be dependent for his
business life on the procurement of ideas from
other persons as well as the dressing up and
portrayal of his self-conceptions; he may not
find his own sufficient for survival.
Desny v. Wilder, 299 P.2d 257, 265 (Cal. 1956). The scope of idea
protection, although primarily raised in the entertainment field,
is not limited to that industry; it may also apply to business and
scientific ideas. See Nimmer, supra sec. 16.01 n.7.
We have not had occasion to address these theories in the
context of the protection of ideas. (EN4) In addressing each of
Reeves' claims we must determine whether the special nature of
ideas affects the application of traditional contract and contract-
like claims. In making these determinations we are mindful of the
competing policies of retaining the free exchange of ideas and
compensating those who develop and market their ideas. On the one
hand, protecting ideas by providing compensation to the author for
their use or appropriation rewards the idea person and encourages
the development of creative and intellectual ideas which will
benefit humankind. On the other hand, protecting ideas also
inevitably restricts their free use, potentially delaying or
restricting the benefit any given idea might confer on society.
See Nimmer, supra, sec. 16.01.
Reeves argues that requiring novelty and originality, as
did the trial court, erroneously imports property theories into
contract-based claims. He contends that so long as the parties
bargained for the disclosure of the idea, the disclosure serves as
consideration and the idea itself need not have the qualities of
property. Alyeska argues that novelty and originality should be
employed as limiting factors in idea cases because these cases are
based on a theory of idea as intellectual property. Alyeska
contends that in order to be protected, an idea must have "not been
suggested to or known by the public at any prior time."
We find that the manner in which requirements such as
novelty or originality are applied depends largely on which theory
of recovery is pursued. Thus, we will address the parties'
arguments concerning novelty as they apply to each of Reeves'
theories of recovery.
B. Express Contract Claims
Reeves argues that he and Alyeska entered into three
different oral contracts: (1) a confidentiality or disclosure
agreement by which Alyeska promised not to use Reeves' idea without
his participation, if Reeves disclosed the idea; (EN5) (2) a lease
agreement by which Alyeska promised to lease the turnout to Reeves
in exchange for a percentage of the center's profits; and (3) a
memorialization agreement by which Alyeska promised to commit the
agreement to writing.
Alyeska argues that Reeves alleged a single contract
which "consisted of an agreement to keep Reeves' idea confidential,
an agreement to lease land and an agreement to reduce the terms of
the prior agreement to writing." It contends that to allow Reeves
to argue he had three independent contracts would be inconsistent
with his position at summary judgment and should therefore be
precluded on appeal.
We disagree with Alyeska's analysis. Reeves has
consistently argued that there were three agreements. It is of
minor importance that he sometimes refers to these agreements as "a
single binding contract." If any of the alleged agreements
possesses the necessary elements to form a contract, Reeves is
entitled to seek damages for breach of that agreement. We must
analyze the legal relationships created by the parties' words and
actions rather than the semantic tags the parties attach to their
arguments. (EN6) We consider each of the three alleged agreements
in turn. (EN7) Before returning to a discussion of the protection
of ideas, we must determine whether the statute of frauds, AS
09.25.010, defeats any of Reeves' claims.
1. The Disclosure Agreement
Reeves alleges that in exchange for the disclosure of his
idea, Alyeska promised to keep the idea confidential and not to use
the idea without entering into a contract with Reeves to implement
the idea. Reeves' deposition testimony, when all inferences are
taken in his favor, supports the existence of a disclosure
agreement. Reeves testified that in his early conversations with
Burke, he told Burke that he was in the tourism industry and had an
idea that would help Alyeska. Reeves stated that Burke told him
the idea "was between us." Reeves testified that he "didn't offer
anything to Keith Burke until [Reeves] was told by [Burke] that we
had a deal. This was between me and him, and this was going no
place else." Reeves also testified that Burke had promised
confidentiality and that Reeves believed that he and Burke had a
"done deal."
Alyeska does not respond separately to Reeves' disclosure
agreement claim. It instead argues that, notwithstanding Reeves'
assertion there were three agreements, Reeves actually alleged only
one contract, which included a purported twenty-year lease
agreement. It argues that the statute of frauds applies because
the alleged agreement concerns a lease for a period longer than one
year and because performance would not be completed within one
year. (EN8)
We conclude that the statute of frauds does not apply to
the alleged disclosure agreement. That alleged agreement was to be
completed within one year. If Alyeska chose to implement the idea,
it was to enter into a lease agreement with Reeves by the summer
tourist season. Moreover, Reeves' disclosure to Alyeska
constituted full performance of his side of the contract for
disclosure. The statute of frauds consequently does not apply. AS
09.25.020(1); See Carter v. Hoblit, 755 P.2d 1084, 1088 (Alaska
1988) (holding statute of frauds did not bar claim because party
fully performed his obligation under the agreement); Blaustein v.
Burton, 88 Cal. Rptr. 319, 335 (Cal. App. 1970).
2. The Lease Agreement
Reeves claims he had an oral contract with Alyeska to
lease the turnout for twenty years. Reeves concedes that this
agreement falls within the scope of the statute of frauds because
it was for a long-term lease that could not be performed within one
year. AS 09.25.010(a)(1),(6). Reeves argues, however, that two
exceptions to the statute of frauds apply: first, he performed
fully his contract duties, and second, Alyeska should be estopped
from asserting the statute of frauds.
Alaska recognizes an exception to the statute of frauds
if "there has been full performance on one side accepted by the
other in accordance with the contract." AS 09.25.020. Reeves
first asserts that by revealing his idea and drafting and
submitting the written proposal, he performed his side of the
agreement, at least insofar as he could before Alyeska breached the
agreement.
We disagree. Rather than looking to his duties under the
alleged lease agreement, Reeves argues he performed by disclosing
his idea. However, he previously argued that disclosing the idea
was the consideration for the disclosure agreement. If the three
agreements are to stand as separate contracts, as Reeves argues,
his act of disclosing the idea cannot also serve as full
performance of the lease agreement.
Submitting the written proposal does not constitute full
performance either. Reeves submitted the proposal as a preparatory
act for a possible future agreement. The proposal itself states,
"I propose to lease from Alyeska . . . ." (Emphasis added.) This
language indicates that the parties had not yet entered into a
lease agreement by the time the proposal was created. A reasonable
juror could not conclude that submitting the proposal constituted
performance of a future lease contract. Moreover, the alleged
lease agreement imposed three specific duties on Reeves. As argued
by Reeves, Alyeska was to grant Reeves access and lease the turnout
to him for twenty years, allow him to construct and operate an
information center, and allow him to sell merchandise and charge
admission. Reeves states, "In exchange, Reeves agreed (1) to pay
Alyeska 10% of his gross receipts . . . (2) explain the positive
aspects of the pipeline to visitors . . . and (3) commence in the
summer of 1991." (Emphasis added.) Reeves did not perform or
partially perform any of those duties. Thus, his full performance
argument fails.
Reeves next contends that Alyeska should be estopped from
asserting the statute of frauds. He argues that because it was
Alyeska's duty to draft the contract, it should not be allowed to
benefit from its failure to perform.
We have never specifically adopted a promissory estoppel
exception to the statute of frauds. However, other jurisdictions
recognize this exception. (EN9) It also is recognized in the
Restatement (Second) of Contracts sec. 139 (1981), which states in
part:
Enforcement by Virtue of Action in Reliance
(1) A promise which the promisor should
reasonably expect to induce action or
forbearance on the part of the promisee or a
third person and which does induce the action
or forbearance is enforceable notwithstanding
the Statute of Frauds if injustice can be
avoided only by enforcement of the promise.
The remedy granted for breach is to be limited
as justice requires.
The Restatement's second illustration of section 139 is based on
Alaska Airlines, Inc. v. Stephenson, 217 F.2d 295 (9th Cir. 1954).
See Restatement (Second) of Contracts sec. 139 Reporters Note
(1981) (explaining that the second illustration to section 139 is
based on Stephenson). Reeves argues that his reliance on Alyeska's
promise to prepare a draft and execute a written contract is
comparable to the facts of Stephenson.
In Stephenson, an airline pilot had tenure rights that
guaranteed his position following a six-month leave of absence.
217 F.2d at 296. He took leave to explore a job opportunity with
Alaska Airlines and moved to Anchorage. Id. As the six months
neared completion, he sought definite employment from Alaska
Airlines. Id. Alaska Airlines orally agreed to employ him for two
years and to put the employment agreement in writing. Id. at 297.
However, Alaska Airlines never executed a written agreement and it
fired Stephenson within one year. Id. In the subsequent breach of
contract action, the court held that the airline could not assert
the statute of frauds because Stephenson had detrimentally relied
on the oral agreement to put the employment agreement into writing.
Id. at 298. It stated that "[when one looks at the Restatement of
Contracts] one must conclude that there was an intention to carry
promissory estoppel (or call it what you will) into the statute of
frauds if the additional factor of a promise to reduce the contract
to writing is present." Id.
Reeves argues that he relied detrimentally on Alyeska to
draw up the agreement by not hiring his own lawyer to draw it up,
by revealing the idea, and by typing and submitting the written
proposal.
We conclude that Reeves did not rely on Alyeska's promise
to the extent necessary to prevent the application of the statute
of frauds. Promissory estoppel requires a substantial change in
position on the part of the promisee in reliance on the promise.
Zeman, 699 P.2d at 1284. Although there is evidence of some change
in position, Reeves' actions in reliance on Alyeska's promise to
memorialize the agreement are insufficient to estop Alyeska from
asserting the statute of frauds.
First, the idea was not disclosed in reliance on the
alleged lease agreement; disclosure occurred before an oral lease
agreement could have existed. Reeves has presented no evidence
that Alyeska agreed to enter into a lease before Burke heard
Reeves' idea. Therefore, although disclosing the idea changed
Reeves' position, the idea was not disclosed in reliance on the
lease agreement or memorialization agreement. Second, Reeves did
not materially change his position when he forwent hiring his own
attorney to draft the document. Reeves has presented no evidence
that Alyeska would have executed a written contract if Reeves had
provided one. Third, Reeves could not have typed and submitted the
written proposal in reliance on the alleged lease agreement because
the proposal was submitted before the promise was made.
In the absence of any substantial change in position, the
promissory estoppel exception to the statute of frauds does not
apply. Reeves' claim based on an express contract for a lease was
properly dismissed on summary judgment.
3. The Memorialization Agreement
Reeves argues that the agreement to memorialize the
contract does not fall within the statute of frauds because
performance was to be completed within one year. He argues that
Alyeska promised to "memorialize the agreement and prepare the
documents for execution." Assuming that Alyeska's alleged promise
to prepare the documents included the related promise to execute
the documents, the statute of frauds applies. (EN10)
Legal authorities agree generally that when parties
promise to execute a written memorandum of a contract, if the
underlying contract falls under the statute of frauds, the promise
to execute the written contract also falls under the statute of
frauds. See, e.g., Orthomet, Inc. v. A.B. Medical, Inc., 990 F.2d
387, 391 (8th Cir. 1993) ("[A]n agreement to subsequently enter
into a written contract must also satisfy the statute of frauds.");
2 Arthur L. Corbin, Corbin on Contracts sec. 283, at 31-34 (1950);
(EN11) 3 Samuel Williston, Williston on Contracts sec. 524A, 691-92
(1960). (EN12) We agree with the weight of authority and
hold that an oral promise to execute a written contract, where a
written contract is necessary to satisfy the statute of frauds,
must itself satisfy the statute of frauds. To hold otherwise would
allow the statute of frauds to be circumvented merely by asserting
that the parties orally agreed to put the contract in writing.
C. Implied-in-Fact Contract
The trial court's opinion did not address whether Reeves
established a contract implied-in-fact. (EN13) Reeves argues that
he "submitted uncontroverted evidence sufficient to find as a
matter of law that Alyeska's actions established a contract implied
in fact." We conclude that Alyeska failed to carry its burden of
showing that it is entitled to judgment as a matter of law on this
claim. Zeman, 699 P.2d at 1280.
Reeves has made out a prima facie case for an implied
contract. We have held that an implied-in-fact contract, like an
express contract, is based on the intentions of the parties. "It
arises where the court finds from the surrounding facts and
circumstances that the parties intended to make a contract but
failed to articulate their promises and the court merely implies
what it feels the parties really intended." Martens v. Metzgar,
524 P.2d 666, 672 (Alaska 1974) (quoting Hill v. Waxberg, 237 F.2d
936, 939 (9th Cir. 1956)).
In Aliotti v. R. Dakin & Co., 831 F.2d 898, 902 (9th Cir.
1987), the court listed the requirements for demonstrating an
implied-in-fact contract under California law:
[O]ne must show: that he or she prepared the
work; that he or she disclosed the work to the
offeree for sale; under all circumstances
attending disclosure it can be concluded that
the offeree voluntarily accepted the
disclosure knowing the conditions on which it
was tendered (i.e., the offeree must have the
opportunity to reject the attempted disclosure
if the conditions were unacceptable); and the
reasonable value of the work.
There are three primary factual scenarios under which
ideas may be submitted to another. See Nimmer, supra sec. 16.05.
The first involves an unsolicited submission that is involuntarily
received. Id. at 16-33. The idea is submitted without warning; it
is transmitted before the recipient has taken any action which
would indicate a promise to pay for the submission. Id. at 16-33
to 16-34. Under this scenario, a contract will not be implied.
Desny, 299 P.2d at 270; Nimmer, supra, sec. 16.05[B], at 16-34.
The second involves an unsolicited submission that is
voluntarily received. Nimmer, supra, sec. 16.05[C], at 16-36. In
this situation, the idea person typically gives the recipient
advance warning that an idea is to be disclosed; the recipient has
an opportunity to stop the disclosure, but through inaction allows
the idea to be disclosed. Id. at 16-36 to 16-37. Under California
law, if the recipient at the time of disclosure understands that
the idea person expects to be paid for the disclosure of the idea,
and does not attempt to stop the disclosure, inaction may be seen
as consent to a contract. Desny, 299 P.2d at 267; Donahue v. Ziv
Television Programs, Inc., 54 Cal. Rptr. 130, 139 (Cal. App. 1966).
This view has been criticized as unfairly placing a duty
on the recipient to take active measures to stop the submission.
Nimmer, supra sec. 16.05[C], at 16-38. The critics argue that
inaction generally should not be considered an expression of
consent to a contract. Id.
We believe that a contract should not be implied under
this scenario. An implied-in-fact contract is based on
circumstances that demonstrate that the parties intended to form a
contract but failed to articulate their promises. Martens, 524
P.2d at 672. Only under exceptional circumstances would inaction
demonstrate an intent to enter a contract. (EN14)
The third scenario involves a solicited submission.
Nimmer, supra sec. 16.05[D], at 16-40. Here, a request by the
recipient for disclosure of the idea usually implies a promise to
pay for the idea if the recipient uses it. Desny, 299 P.2d at 267;
Nimmer, supra sec. 16.05[D] at 16-40. Nimmer states,
The element of solicitation of plaintiff's
idea by defendant is therefore of great
importance in establishing an implied
contract. If defendant makes such a request,
even if he attempts to frame the request in
ambiguous or exculpatory language, most courts
will nevertheless imply a promise to pay if
the idea is used.
Id. at 16-40 to 16-41.
Reeves argues that Alyeska solicited his idea. He
alleges that Burke asked him what the idea was, and later requested
a written proposal. He contends that the request and Alyeska's
later use of the idea created an implied contract for payment.
These allegations are sufficient to survive summary judgment. A
reasonable fact-finder could determine that Burke's actions implied
a promise to pay for the disclosure of Reeves' idea. A fact-finder
could also determine that Reeves volunteered the idea before Burke
took any affirmative action that would indicate an agreement to pay
for the disclosure. These possible conclusions present genuine
issues of material fact.
Relying largely on cases from New York, Alyeska argues
that novelty and originality should be required in an implied-in-
fact claim. Reeves responds that we should follow California's
example and not require novelty as an essential element of this
sort of claim.
Idea-based claims arise most frequently in the
entertainment centers of New York and California, but New York
requires novelty, whereas California does not. (EN15) Compare
Murray v. National Broadcasting Co., 844 F.2d 988, 993-94 (2d
Cir.), cert. denied, 488 U.S. 955 (1988), with Donohue, 54 Cal.
Rptr. at 140.
We prefer the California approach. An idea may be
valuable to the recipient merely because of its timing or the
manner in which it is presented. Cf. Donohue, 54 Cal. Rptr. at
140. In Chandler v. Roach, 319 P.2d 776 (Cal. App. 1957), the
court stated that "the fact that the [recipient of the idea] may
later determine, with a little thinking, that he could have had the
same ideas and could thereby have saved considerable money for
himself, is no defense against the claim of the [idea person].
This is so even though the material to be purchased is abstract and
unprotected material." Id. at 781.
Implied-in-fact contracts are closely related to express
contracts. Each requires the parties to form an intent to enter
into a contract. It is ordinarily not the court's role to evaluate
the adequacy of the consideration agreed upon by the parties.
Carroll v. Lee, 712 P.2d 923, 926-27 (Ariz. 1986). The bargain
should be left in the hands of the parties. If parties voluntarily
choose to bargain for an individual's services in disclosing or
developing a non-novel or unoriginal idea, they have the power to
do so. The Desny court analogized the services of a writer to the
services of a doctor or lawyer and determined there was little
difference; each may provide a product that is not novel or
original. Desny, 299 P.2d at 266. It held that it would not
impose an additional requirement of novelty on the work. Although
Reeves is not a writer, his ideas are entitled to no less
protection than those of writers, doctors, or lawyers. Therefore,
Reeves should be given the opportunity to prove the existence of an
implied-in-fact contract for disclosure of his idea.
D. Promissory Estoppel
Reeves claims that the trial court erred in granting
summary judgment to Alyeska on his promissory estoppel claim. He
argues that there were genuine fact questions. Alyeska argues that
Reeves presented no evidence of detrimental reliance.
Under Alaska law, a promissory estoppel claim has four
requirements:
1) The action induced amounts to a substantial
change of position;
2) it was either actually foreseen or
reasonably foreseeable by the promisor;
3) an actual promise was made and itself
induced the action or forbearance in reliance
thereon; and
4) enforcement is necessary in the interest of
justice.
Zeman, 699 P.2d at 1284. Reference to a set formula does not
determine whether particular promises and actions satisfy the
requirements of promissory estoppel; all circumstances are to be
considered. Id.; 1A Corbin, supra, sec. 200, at 216.
Reeves contends that in reliance on promises made by
Alyeska in context of separate disclosure, lease, and
memorialization agreements, he took two actions that changed his
position: he disclosed the idea, and he failed to hire an attorney
to draft the contract. Although forbearance may sometimes be
considered an action that changes one's position, Zeman, 699 P.2d
at 1284, Reeves' failure to hire an attorney did not amount to a
substantial change of position. As noted above, even if Reeves had
presented a written contract to Alyeska, no evidence permits an
inference Alyeska would have executed it.
By disclosing his idea, however, Reeves substantially
changed his position. Once he disclosed the idea, Reeves' ability
to bargain for terms was significantly reduced. It was reasonably
foreseeable that a promise of confidentiality and a promise to
allow Reeves to participate in any use of the idea would induce
disclosure. There was evidence permitting an inference Alyeska's
alleged promises induced the disclosure. Consequently, genuine
fact disputes exist regarding the first three requirements for
promissory estoppel.
The fourth requirement, that enforcement is necessary in
the interest of justice, presents fact questions that ordinarily
should not be decided on summary judgment. State v. First Nat'l
Bank of Ketchikan, 629 P.2d 78, 82 n.4 (Alaska 1981). The record
demonstrates that this issue presents fact questions. It is
therefore necessary to remand Reeves' promissory estoppel claim
based on his disclosure of the idea in reliance on promises of
confidentiality and participation. (EN16)
E. Quasi-Contract Claim
Reeves argues that Alyeska was unjustly enriched because
it solicited and received Reeves' services, ideas, and opinions
without compensating Reeves. He argues that the trial court erred
in granting summary judgment to Alyeska on his quasi-contract cause
of action. (EN17)
We have required the following three elements for a
quasi-contract claim:
1) a benefit conferred upon the defendant by
the plaintiff;
2) appreciation by the defendant of such
benefit; and
3) acceptance and retention by the defendant
of such benefit under such circumstances that
it would be inequitable for him to retain it
without paying the value thereof.
Alaska Sales and Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska
1987). Quasi-contracts are "judicially-created obligations to do
justice." Id. "Consequently, the obligation to make restitution
that arises in quasi-contract is not based upon any agreement
between the parties, objective or subjective." Id.
The trial court understood Reeves to be arguing that his
idea was a property right that was stolen by Alyeska. Reeves,
however, argues that "Alyeska took Reeves' concept, proposal and
services without any payment to Reeves." (Emphasis added.)
Reeves' quasi-contract claims must be divided into two categories.
His claim that Alyeska appropriated his idea for a visitor center
is necessarily a property-based claim that seeks recovery for the
value of the idea itself; Reeves seeks a recovery based on "his"
idea. His claims that Alyeska benefitted from his proposal and
services, however, do not necessarily rely on the visitor center
idea being property; these claims are based on his services of
disclosing and drafting the proposal. The property and non-
property claims are treated differently.
An idea is usually not regarded as property because our
concept of property implies something that can be owned and
possessed to the exclusion of others. Desny, 299 P.2d at 265;
Nimmer, supra, sec. 16.02, at 16-5. To protect an idea under a
property theory requires that the idea possess property-like
traits. Courts consider the elements of novelty or originality
necessary for a claim of "ownership" in an idea or concept. See
Murray, 844 F.2d at 993-94, cert. denied, 488 U.S. 955 (1988); Fink
v. Goodson-Todman Enterprises, 88 Cal. Rptr. 679, 690 (Cal. App.
1970); Garrido v. Burger King Corp., 558 So.2d 79, 84 (Fla. App.
1990); Eenkhoorn v. New York Telephone Co., 568 N.Y.S.2d 677, 678
(N.Y. Sup. 1990); Nimmer, supra, sec. 16.03[B]. These elements
distinguish protectable ideas from ordinary ideas that are freely
available for others to use. It is the element of originality or
novelty that lends value to the idea itself.
If the idea is not distinguished in this manner, its use
cannot satisfy the requirements of a quasi-contract claim. The
idea, even if beneficial to the defendant, cannot be conferred if
the plaintiff has no right of possession. With no right of
possession, the idea cannot be said to have been conferred by the
plaintiff. (EN18) Nimmer, supra, sec. 16.03[B]. Despite Reeves'
protestations, the idea of establishing a visitor center near the
pipeline is neither original nor novel. (EN19)
Nevertheless, not all of Reeves' quasi-contract claims
require that his idea be considered property and consequently novel
or original. Reeves argues that Alyeska was unjustly enriched "by
Reeves' efforts on its behalf, not merely on the 'concept that
[Reeves'] idea was intellectual property.'" Therefore, we must
analyze whether the parties' transactions give rise to a quasi-
contract.
The facts alleged by Reeves demonstrate that Burke
specifically asked Reeves to draw up a proposal and that Alyeska
was going to "do this deal." There is also evidence Reeves was
familiar with the Fairbanks summer tourist industry and had special
expertise in that area. These facts present a genuine issue of
fact as to whether Alyeska benefited from Reeves' experience or his
written plan. Thus, there is a question of fact whether Reeves'
idea had value to Alyeska in its timing or in how it was presented,
rather than in its novelty or originality. Reeves' endorsement of
the idea, in combination with his experience in the Fairbanks
tourism industry, may have also been valuable to Alyeska. The fact
that Alyeska rejected a similar idea in 1987 may indicate that some
feature of Reeves' plan or presentation caused Alyeska to go
forward with a visitor center. If Reeves' services unjustly
enriched Alyeska, he should be compensated for the value of those
services. (EN20)
F. Reeves' Claim for Breach of the Implied Covenant of Good
Faith and Fair Dealing
The trial court granted summary judgment to Alyeska on
Reeves' claim for breach of the implied covenant of good faith and
fair dealing. It stated that although the covenant of good faith
and fair dealing is implied in every contract governed by Alaska
law, it concluded that this claim must fail because it believed
that no contract existed. See Guin v. Ha, 591 P.2d 1281, 1291
(Alaska 1979) (recognizing the covenant of good faith and fair
dealing implied in all contracts); O.K. Lumber Co. v. Providence
Washington Ins. Co., 759 P.2d 523, 526 (Alaska 1988) (declining to
recognize a tort duty of good faith and fair dealing independent of
the contractual relationship). (EN21) Reeves argues that because
there is evidence of three distinct contracts, the claim of breach
of the covenant of good faith and fair dealing raises a factual
question for the jury. See 3A Corbin, supra sec. 654B, at 96 (1960
& supp. 1994) ("Good faith always involves questions of fact.").
Because we hold that there is evidence of a contract for disclosure
of the idea, we must remand Reeves' claim for good faith and fair
dealing in regard to that agreement.
G. Reeves' Tort Claims
The trial court granted summary judgment to Alyeska on
Reeves' tort claims of fraud and negligent misrepresentation
because Reeves cited no evidence of detrimental reliance. Because
Reeves presented evidence of detrimental reliance in regard to
disclosing the idea, we remand the fraud and negligent
misrepresentation claims which are based on a disclosure agreement.
However, the trial court did not err in dismissing the tort claims
that are dependent on the lease or memorialization agreements.
H. Discovery of Burke's Daily Calendar
Reeves argues that Alyeska should have been compelled to
produce an unredacted copy of Burke's daily calendar. (EN22)
During discovery, Reeves requested "[a]ny desk calendars or other
calendars, diaries, or notes that refer or relate to any meeting or
discussion with plaintiff." Alyeska did not object to the request
and responded by producing a redacted version of Burke's daily
calendar. Alyeska intended the redactions to eliminate any
materials "that were not requested and had no relevancy to the
pending action." The trial court denied Reeves' motion to compel
because it concluded that Alyeska's interpretation of the request
was reasonable. We conclude that the court did not abuse its
discretion in finding that Alyeska's response was reasonable.
IV. CONCLUSION
For the reasons stated above, we REVERSE that part of the
summary judgment entered for Alyeska on Reeves' express contract,
implied contract, promissory estoppel, quasi-contract, breach of
implied covenant of good faith and fair dealing, and related tort
claims based on the alleged disclosure agreement, and REMAND to the
trial court for further proceedings consistent with this opinion.
We AFFIRM the summary judgment entered for Alyeska on the remainder
of Reeves' claims, including those based on the alleged lease and
memorialization agreements. We AFFIRM the trial court's decision
not to compel production of an unredacted version of Burke's daily
calendar.
ENDNOTES:
1. Since Reeves is appealing the grant of Alyeska's motion for
summary judgment, we describe the facts in the light most favorable
to Reeves. Willner's Fuel Distrib., Inc. v. Noreen, 882 P.2d 399,
403 n.7 (Alaska 1994).
2. A "pig" is a device which passes through the pipeline to clean
interior pipe walls, survey interior pipe shape and detect
corrosion.
3. Alyeska Pipeline Club North is a non-profit corporation run by
Alyeska employees. It raises money to fund activities such as
picnics and Christmas parties for Alyeska employees.
4. In Darling v. Standard Alaska Prod. Co., 818 P.2d 677 (Alaska
1991), cert. denied, 502 U.S. 1097 (1992), we concluded that an
inventor failed to establish an unjust enrichment claim because he
relied solely on federal patent protection. In that case we noted
explicitly that the facts of the case did not raise questions
concerning express contracts, quantum meruit, and promissory
estoppel. Id. at 683 n.13.
5. Reeves refers to this agreement as a "confidentiality
agreement." However, Reeves argues that Alyeska not only promised
to keep his idea confidential, but promised not to use the idea
without Reeves' participation. To label this alleged agreement a
"confidentiality agreement" tends to overlook the participation
portion of Alyeska's promise. We will refer to the first alleged
contract as the "disclosure" agreement.
6. We note that the terms "contract," "agreement," and "promise"
sometimes are considered synonymous and at other times are
considered terms of art with specific legal meanings. Compare
Restatement (Second) of Contracts sec. 1, cmt. a (1979) (stating
that "contract" is sometimes used as a synonym for "agreement" or
"bargain") with Restatement (Second) of Contracts sec. 3 (defining
"agreement" as "a manifestation of mutual assent on the part of two
or more persons"). The manner in which Reeves used the terms
"contract" and "agreement" indicates he used them as synonyms
rather than terms of art.
7. Alyeska does not argue explicitly that Reeves' idea must be
novel and original to be the subject of an express contract.
However, some of the cases it cites indicate that an idea that is
not novel may not be protected by an express contract. See Downey
v. General Foods Corp., 286 N.E.2d 257, 259 (N.Y. 1972) ("[W]hen
one submits an idea to another . . . no asserted agreement [may be]
enforced, if the elements of novelty and originality are absent
. . . ."); Garrido v. Burger King Corp., 558 So.2d 79, 84 (Fla.
App. 1990) ("[T]he novelty requirement prevents a person from being
able 'by contract [to] monopolize an idea that is common and
general to the whole world.'") (quoting Soule v. Bon Ami Co., 195
N.Y.S. 574, 575 (N.Y. App. Div. 1922)).
Reeves argues that novelty and originality should not be
required in express contract cases. He argues that California has
rejected those requirements in contract cases. See Desny, 299 P.2d
at 266 ("Even though the idea disclosed may be 'widely known and
generally understood,' . . . it may be protected by an express
contract providing that it will be paid for regardless of its lack
of novelty."). Reeves also notes that New York has recently moved
away from requiring novelty in some express contract cases. See
Apfel v. Prudential-Bache Securities, Inc., 600 N.Y.S.2d 433, 436
(N.Y. App. 1993) (holding that novelty and originality were not
required in cases involving disclosure of ideas in which there was
a post-disclosure contract for the idea).
Because Reeves claims that the consideration he provided
consisted of his services, not the idea itself, we need not
determine whether a non-novel idea by itself may serve as
consideration in an express contract.
8. AS 09.25.010, the statute of frauds, provides in pertinent
part:
(a) In the following cases and under the
following conditions an agreement, promise, or
undertaking is unenforceable unless it or some
note or memorandum of it is in writing and
subscribed by the party charged or by an agent
of that party:
(1) an agreement that by its terms is not
to be performed within a year from the making
of it;
. . . .
(6) an agreement for leasing for a longer
period than one year, or for the sale of real
property . . . .
9. Allen M. Campbell Co. v. Virginia Metal Indus. Inc., 708 F.2d
930, 933-34 (4th Cir. 1983); MacEdward v. Northern Elec. Co., 595
F.2d 105, 109 (2d Cir. 1979); Kubin v. Miller, 801 F. Supp. 1101,
1122 (S.D.N.Y. 1992); Hawaiian Trust Co. v. Cowan, 663 P.2d 634,
637 (Hawaii App. 1983); Levine v. Loma Corp., 661 S.W.2d 779, 781
(Tex. App. 1983); Klinke v. Famous Recipe Fried Chicken, Inc., 616
P.2d 644, 647-48 (Wash. 1980); Wamser v. Bamberger, 305 N.W.2d 158,
160 (Wis. App. 1981).
10. It is a question of fact whether Alyeska's alleged promise to
memorialize the agreement included a promise to execute. A
reasonable juror could find from Reeves' account of Burke's
language that the promise to draw up the agreement included a
promise to execute.
11. Professor Corbin's comments are particularly forceful:
If the contract to be executed is within the
statute, the preliminary oral contract is also
held to be within the statute. No action for
damages will lie for its breach, nor in the
absence of "part performance" will a court of
equity enforce it specifically or otherwise.
A refusal to execute the promised memorandum
is not fraud. There are a few cases, hardly
reconcilable with the majority of decisions in
which equity has given relief partly on the
ground that the promisor promised to execute a
sufficient memorandum; but there was other
evidence of "fraud" or there was some sort of
"part performance."
Corbin, supra sec. 283, at 31-34.
12. Professor Williston takes a more moderate approach. He states
that "[t]echnically, the agreement to reduce the main contract to
writing is not within the Statute." 3 Williston, supra sec. 524A,
at 691. Williston nonetheless recognizes that, "[a]s a practical
matter, . . . the enforcement of such an agreement is tantamount to
taking the main contract out of the Statute, . . . and is,
therefore, considered by some courts as 'opposed to the spirit of
the act.'" Id. at 692.
13. The trial court did not mention Reeves' third cause of action
for breach of implied-in-fact contract in the footnote listing the
issues its opinion would address. A review of Reeves' brief in
opposition to summary judgment reveals that Reeves did not
explicitly argue this cause of action. On appeal, however, Reeves
specifically argues this theory of recovery and Alyeska responds to
it. Because Reeves' implied-in-fact contract claim does not
require the development of new facts and is closely related to the
express contract claim, and because Alyeska does not claim waiver,
we will consider Reeves' argument on appeal. See Sea Lion Corp.,
787 P.2d at 115 (stating that new arguments raised on appeal may be
considered if they are "1) not dependent on any new or controverted
facts; 2) closely related to the appellant's trial court arguments;
and 3) could have been gleaned from the pleadings").
14. We recognize the possibility of a rare case in which inaction
could express intent to form a contract. For example, a contract
would be implied if the parties' history of dealings demonstrated
that they had entered into similar contracts in the past, or if it
were proven in a particular field or industry that a recipient's
silence constitutes agreement to pay for an idea upon use.
15. Reeves argues that Apfel v. Prudential-Bache, 600 N.Y.S.2d
433, 436 (N.Y. App. Div. 1993), a recent New York case, has
abandoned the requirements of novelty and originality. In Apfel,
the court held that parties may enter a contract, after disclosure
of the idea, without a requirement of novelty or originality. Id.
However, Apfel does not necessarily eliminate a novelty requirement
in idea cases. The court distinguished cases in which "the buyer
and seller contract for disclosure of the idea with payment based
on use, but no separate post-disclosure contract for use of the
ideas has been made." Id. New York law would appear to require an
express post-disclosure contract in order to succeed on a contract
claim for a non-novel idea.
16. Alyeska argues that a promissory estoppel claim based on an
idea requires a showing of novelty. However, Alyeska does not
explain why novelty is required for a promissory estoppel claim and
none of the cases it cites addresses promissory estoppel claims.
We therefore treat this argument as abandoned. Gates v. City of
Tenakee Springs, 822 P.2d 455, 460 (Alaska 1991).
Reeves also argues promissory estoppel applies because he was
induced to disclose his idea in reliance on promises to lease or
memorialize the contract. We reject that argument because neither
alleged promise could have induced disclosure. An agreement to
lease necessarily assumes that Alyeska was aware of the visitor
center idea, meaning that disclosure must have preceded the
promise. Similarly, there is no evidence the parties entered into
a memorialization agreement before Reeves disclosed the idea.
17. The concepts of quasi-contract, unjust enrichment, contract
implied in law, and quantum meruit are very similar and
interrelated. Alaska Sales & Service, Inc. v. Millet, 735 P.2d
743, 746 n.6 (Alaska 1987). Unjust enrichment is not itself a
theory of recovery. "Rather, it is a prerequisite for the
enforcement of the doctrine of restitution; that is, if there is no
unjust enrichment, there is no basis for restitution." Id. at 746.
Restitution also is not a cause of action; it is a remedy for
various causes of action. Id. Quasi-contract is one of the causes
of action Reeves has pursued.
18. The court correctly granted summary judgment on Reeves'
conversion claim for the same reason. If an idea is not considered
property, it cannot be converted. Pearson v. Dodd, 410 F.2d 701,
707 (D.C. Cir.), cert. denied, 395 U.S. 947 (1969); Thompson v.
Mobil Producing Co., 163 F. Supp. 402, 404 (D. Mont. 1958).
19. There may be some question about whether the idea was novel to
Burke because he had not heard that in 1987 Alyeska Pipeline Club
North had suggested the same idea. Reeves argues that the idea was
novel as to Alyeska because Burke did not know of the rejected 1987
proposal until after he contracted with Reeves. The visitor center
idea was not novel to Alyeska. It was aware of the 1987 visitor
center proposal, and it already operated a visitor center in
Valdez. Burke's ignorance of the specific 1987 proposal does not
make the visitor center idea novel.
20. The value of Reeves' services presents fact issues that should
be determined by the fact-finder.
21. In State, DNR v. Transamerica Premier Ins. Co., 856 P.2d 766,
774 (Alaska 1993), this court distinguished insurance contracts as
an exceptional class of contracts, which created a special
relationship between insurer and insured, and explained that this
unusual relationship justified the creation of an action in tort
for breach of the covenant of good faith and fair dealing. In
contrast to this, we held that, though all contracts include an
implied covenant of good faith and fair dealing, in ordinary
commercial contracts the claim for violation of this covenant
sounds only in contract.
22. This court will review a discovery order for abuse of
discretion. R.E. v. State, 878 P.2d 1341, 1345 (Alaska 1994).
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