Alaska Supreme Court Opinions made Available by Touch N' Go Systems and Bright Solutions

Touch N' Go, the DeskTop In-and-Out Board makes your office run smoother. Visit Touch N' Go's Website.
  This site is possible because of the following site sponsors. Please support them with your business.

You can search the entire site. or go to the recent opinions, or the chronological or subject indices.

Arctic Tug & Barge, Inc. v. Raleigh, Schwarz & Powell (4/10/98), 956 P 2d 1199

     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)
264-0608, fax (907) 264-0878.


an Alaska corporation,        )    Supreme Court No. S-7908
               Appellant,     )    Superior Court No.
                              )    3AN-95-2341 CI
     v.                       )
               Appellee.      )    [No. 4963 - April 10, 1998]

          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                     Joan M. Woodward, Judge.

          Appearances: Roy Longacre, Longacre &
Associates, Anchorage, for Appellant.  Peter J. Maassen, Ingaldson
Maassen, P.C., Anchorage, for Appellee.

          Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.

          COMPTON, Justice.

          Arctic Tug & Barge, Inc. (Arctic) appeals a partial final
judgment dismissing its third-party claim against Raleigh, Schwarz
& Powell, Inc. (Raleigh).  Raleigh, an insurance broker, procured
coverage for Alaska Corporation (Alaska) on materials that Alaska
had hired Arctic to transport.  The materials came to harm, Alaska
sued Arctic, and Arctic impled Raleigh.  Arctic claimed that
Raleigh had negligently misrepresented to it the terms of the
insurance policy that Raleigh had procured for Alaska, and had
thereby exposed Arctic to unexpected liability for subrogated
claims.  The superior court granted Raleigh summary judgment, and
Arctic appeals.  Finding no genuine dispute as to whether Raleigh
owed Arctic any duty at all, we affirm.
          Alaska's president, William Olday, hired Arctic to take
equipment belonging to Alaska [Fn. 1] from Anchorage to Kodiak
Island. Arctic told Olday that its insurance covered only its own
vessels and that "it was standard or customary for the customer to
provide insurance for [its own] equipment or cargo."
          Alaska asked its broker, Raleigh, to procure insurance
for its equipment.  Olday affied that Alaska "never requested that
[Arctic] be made an additional insured or beneficiary."  Raleigh's
employee John Elliott spoke to underwriters, perhaps discussing
waivers of subrogation with one of them, but ultimately procuring
from another a policy that did not waive subrogation. [Fn. 2] 
          Raleigh and Arctic communicated only once.  Raleigh
contacted Arctic to say that Alaska's insurance company needed
information on the barge that Arctic would use to transport
Alaska's equipment.  Arctic's president, Debra Pickworth, had an
employee fax the information to Elliott.  Pickworth did not ask why
the underwriter needed the information, and Elliott had no further
discussion with any Arctic employee.
          Sailing on a stormy night, Arctic's tug and barge met
rough seas en route to Kodiak with Alaska's equipment.  Much of the
equipment was lost overboard or damaged.
          Alaska sued Arctic for negligence, breach of contract,
and unseaworthiness.  Arctic brought a third-party complaint
against Raleigh.  It claimed that the policy Raleigh had procured
for Alaska "was deficient and did not provide the necessary
coverage to Arctic . . . [who,] [a]s a result of the deficiencies
in the insurance contract . . . has incurred damages."  Raleigh
moved for summary judgment, noting Arctic's failure to mention a
legal theory entitling it to relief.  Arctic's opposition
introduced the theory that Raleigh had committed negligent
misrepresentation by failing to disclose to Arctic that the policy
did not waive subrogation.  The superior court granted Raleigh
summary judgment.  It made that judgment final, and thus
appealable, under Alaska Civil Rule 54(b). [Fn. 3]  Arctic appeals.
     A.   Standard of Review and Summary of Issues
          We review summary judgments de novo.  Drawing all
reasonable inferences in favor of the nonmovant, we determine
whether the parties genuinely dispute any facts material to a
viable legal theory and, if not, whether the undisputed facts
entitle the movant to judgment as a matter of law.  See Maddox v.
River & Sea Marine, Inc., 925 P.2d 1033, 1035 (Alaska 1996). 
Arctic claims that there are genuine disputes of material fact, and
that, based on the facts that are not disputed, its negligent-
misrepresentation claim is legally viable.
     B.   Arctic Has Identified No Factual Issues that Are Both
Genuinely Disputed and Material to Its Negligent-Misrepresentation
Claim against Raleigh.

          Arctic alleges three genuine disputes of material fact.
None of the three is both genuine and material to Arctic's theory
of Raleigh's liability.  Its theory is that Alaska promised to
insure its equipment completely, protecting Arctic from any
liability, even for its own negligence.  Raleigh, the theory goes,
knew or should have known of that promise when it procured a policy
for its client, Alaska.  It thus had a duty to Arctic to disclose
that it had procured a policy that did not waive subrogation, since
it knew or should have known that Arctic was relying on it to
procure a policy that did.  By breaching that duty to disclose,
Raleigh committed the tort of negligent misrepresentation by
omission.  We discuss that tort fully in Part C below; the key
requirement for present purposes is that the defendant owe the
plaintiff a duty to disclose.
          The first factual dispute that Arctic identifies is with
Alaska, as to "the terms and extent of [Alaska]'s agreement to bear
the risk of loss."  That dispute, though, is only between Arctic
and Alaska, and only indirectly relevant to this appeal.  Even
should Arctic win the dispute -- i.e., show that Alaska did promise
to insure Arctic against liability for its own negligence -- it
would not thereby establish that Raleigh owed it any duty. [Fn. 4] 

          Arctic claims that the second factual dispute concerns
what instructions Alaska gave Raleigh.  There is no such dispute. 
Olday affied that Alaska "never requested that [Arctic] be made an
additional insured or beneficiary"and never asked that the policy
cover Arctic.  Arctic attacks Olday's motives and credibility in
making this statement and derides it as "self-serving,"given its
bearing on the issue of who bore the risk of loss between Alaska
and Arctic -- a crucial issue in the main suit.  Arctic only once
contradicts the substance of the affidavit, however, tentatively
opining in its brief that "Raleigh's instructions [from Alaska]
were probably not clear."  Arctic does not support this speculation
with any evidence. 
          Arctic thus attacks the credibility and motives of
Raleigh's affiant and hints that his affidavit is untrue without
offering any competent contradictory evidence.  We have noted that
such tactics will not suffice to avoid summary judgment.  See
Turnbull v. LaRose, 702 P.2d 1331, 1335 (Alaska 1985) (cautioning
that "fact that a party desires to have an affiant's statements
tested by a jury, in and of itself, will not preclude a grant . . .
[of summary judgment] unless the evidence presented casts
sufficient doubt on the affiant's credibility to create a genuine
issue of material fact") (quoting 10A Charles A. Wright & Arthur
Miller, Federal Practice and Procedure: Civil sec. 2730, at 237 38
ed. 1983) (alteration in original)); see also Miller v. City of
Fairbanks, 509 P.2d 826, 831 (Alaska 1973) ("[T]o put the affiant's
credibility in issue, specific facts must be properly produced."). 
Arctic cannot avoid summary judgment by conclusorily attacking
Olday's credibility. [Fn. 5]
          Arctic's last alleged factual dispute concerns its own
"expectations . . . after Raleigh indicated that it would proceed
with the insurance assignment for the voyage."  Arctic has neither
alleged nor shown that it told Raleigh that it expected Raleigh to
procure a waiver of subrogation.  Its unvoiced, unilateral
expectations are irrelevant to the question of whether Raleigh owed
it a duty of disclosure.
          Arctic has thus shown no genuine dispute relevant to any
material issue.  We must affirm summary judgment unless the
undisputed facts did not entitle Raleigh to judgment as a matter of
law, or unless Arctic is correct to read our precedents to
establish a rule against summary adjudication of the disputed
existence of tort duties.
     C.   Raleigh Was Entitled to Judgment as a Matter of Law
Because It Owed Arctic No Duty to Disclose.

          Arctic charges Raleigh with negligent misrepresentation
by omission.  See Restatement (Second) of Torts sec. 551 (1977). 
have adopted, verbatim, the Restatement's expression of the rule:
          1)   One who fails to disclose to another a
fact that he knows may justifiably induce the other to act or
refrain from acting in a business transaction is subject to the
same liability [as for an affirmative misrepresentation] if, but
only if, he is under a duty to the other to exercise reasonable
care to disclose the matter . . . .

Turnbull, 702 P.2d at 1334 (quoting Restatement (Second) of Torts
sec. 551) (emphasis added); see also Matthews v. Kincaid, 746 P.2d
470, 471 n.2 (quoting "if, but only if he is under a duty to the
other"proviso).  Raleigh was entitled to a judgment as a matter of
law because Arctic has identified no genuinely disputed facts
suggesting that Raleigh owed it any duty at all.
          As we have seen, Raleigh did not know of Arctic's
reliance on it to procure a waiver of subrogation.  Arctic
nonetheless suggests that Raleigh had a legal duty to disclose
because, even if it did not know of Arctic's reliance, it
reasonably should have known -- i.e., it should have inferred that
Arctic was relying on it. [Fn. 6]  Assuming arguendo that a party
can incur a duty to disclose under section 551 without actually
knowing of another's reliance, Arctic has alleged no facts from
which Raleigh reasonably should have inferred Arctic's reliance.
          A Michigan case offers an instructive contrast.  In
United States Fidelity & Guaranty Co. v. Black, 313 N.W.2d 77
(Mich. 1981), a developer, Black, repeatedly complained to an
insurance broker about how much personal liability the broker's
client, an underwriter, was requiring Black to assume to indemnify
the underwriter before it would underwrite bonds for a project. 
See id. at 79 80.  Before signing an indemnity agreement, Black
insisted on measures to limit that liability and asked the broker
if the other indemnitors had signed agreements.  See id. at
80 81, 88.  The broker stated his mistaken belief that they had. 
He later learned of his error but did not disclose it to Black, who
eventually signed.  See id. at 80 81, 89.  When Black charged the
broker with silent fraud, a tort like negligent misrepresentation
that also requires a duty to disclose, see id. at 88, the Michigan
Supreme Court granted relief.  It reasoned that Black (and his
partner Haughey)
          had discussed with [the broker] their concern
over their potential liability under the indemnity agreement and
were openly attempting to limit this liability . . . . [The
broker's employees] . . . knew, or reasonably should have known,
that Black and Haughey were relying on the[ir] representations . .
. .
               [T]he agents had a duty to disclose
          . . . . because they knew that [Black and
Haughey] were very concerned with whether all of the other parties
had signed [the indemnity agreements] . . . .

Id. at 88 89 (citing Restatement (Second) of Torts sec. 551)
          The court stressed Black's repeated expressions of
concern about potential liability to the broker; Arctic mentioned
no concerns about potential liability to Raleigh in their one very
brief contact.  Black's questions and comments should have led the
broker to infer his reliance, and in comparison they highlight the
untenability of Arctic's claim that Raleigh should have inferred
Arctic's silent reliance from the circumstances of this case.
     D.   This Court's Precedents Do Not Bar a Summary Judgment
that No Tort Duty Exists between Two Parties.

          Arctic argues that summary judgment was inappropriate
because our precedents establish that questions of the existence or
scope of a tort duty are peculiarly within "the province of the
jury."  We have made statements suggesting a strong presumption
along such lines.  See, e.g., Maddox, 925 P.2d at 1035 ("As a
general rule, issues of negligence such as [the scope of seller's
duty to warn buyer of dangerous defect] are not susceptible to
summary judgment due to the highly circumstantial judgments
required in their determination . . . .") (citing Webb v. City &
Borough of Sitka, 561 P.2d 731, 735 (Alaska 1977)); id. at 1036 n.5
(noting "general rule against summary judgment in cases determining
whether a duty exists"); Swenson Trucking & Excavating, Inc. v.
Truckweld Equip. Co., 604 P.2d 1113, 1118 19 (Alaska 1980)
(reversing summary judgment regarding duty to detect defect while
repairing truck) (quoting Webb, 561 P.2d at 735 ("[I]ssues of
negligence are generally not susceptible to summary determination
. . . .")).  But Arctic reads Maddox too categorically.  We have
elsewhere held it appropriate to summarily adjudge disputed
questions of tort duty when the undisputed facts support only one
reasonable inference.  See Smith v. State, 921 P.2d 632, 634
(Alaska 1996) ("The 'precise nature and extent' of a duty 'is a
question of law which can be decided at the summary judgment
stage.'") (quoting Mulvihill v. Union Oil Co., 859 P.2d 1310, 1314
n.4 (Alaska 1993)).  
          Our precedents concern two sorts of questions of tort
duty.  In cases where no one disputes the existence of a duty
running from one party to another, we have disfavored summary
adjudication of the precise scope of that duty, or of whether
particular conduct did or did not breach it (i.e., constitute
negligence).  See, e.g., Maddox, 925 P.2d at 1036 39 (noting
seller's undisputed duty to buyer to warn of, or make safe,
products dangerous for their intended use, and reversing summary
judgment on fact-specific questions of whether particular use was
foreseeable, and particular danger obvious); Webb, 561 P.2d at
733 35 (abolishing common-law distinctions between trespassers,
licensees, and invitees; finding that city as landowner had duty to
foreseeable sidewalk users to maintain sidewalk "in a reasonably
safe condition in view of all the circumstances"; and reversing
summary judgment because "issues of negligence are generally not
susceptible to summary determination").  This is particularly so
when the scope of the duty poses a fact-specific question,
involving policy and "circumstantial judgments"that our legal
system reserves for the jury.  See Maddox, 925 P.2d at 1035 36.
          On the other hand, summary judgment is proper where the
only reasonable inference from the undisputed facts is that one
party owed another no duty whatsoever -- or owed a duty clearly and
vastly narrower in scope than the one that the other party asserts
in opposing summary judgment.  See Mulvihill, 859 P.2d at 1313 14
(holding that couple who drove drunken coworker home, tried to
dissuade him from driving, and left, after which he did drive and
had fatal accident, had undertaken limited duty to get him home
safely and could not reasonably be found to have undertaken much
broader duty to ensure that he not drive again that night); Estate
of Breitenfeld v. Air-Tek, Inc., 755 P.2d 1099, 1102 03 (Alaska
1988) (holding that firm undertook narrow duty to procure
replacement part for airport safety system but did not undertake
much broader task of ensuring system's overall effectiveness in
interim, so as to owe duty to pilot killed in crash before
replacement part arrived).
          Most recently, Smith involved the state's liability to
the family of a child poisoned by excessive fluoride in a town for
whose water fluoridation system the state had taken a disputed
amount of responsibility.  See Smith, 921 P.2d at 633 34.  The
parties contested whether the state had undertaken only to replace
a few parts in the system, which it did well, or had undertaken the
much broader task of ensuring the system's proper functioning,
which, if so, it did not do with due care.  See id. at 634. 
Although we reversed a summary judgment in the state's favor,
because we found a genuine dispute as to which duty it had in fact
undertaken, we made clear that we did not do so because summary
judgment was categorically inappropriate on a question of tort
duty.  See id. at 635 ("Where reasonable people could not differ
over the nature and extent of the act undertaken, summary judgment
is appropriate.").
          We thus hold that summary judgment is appropriate on a
question of duty in a tort case, like this, where the only
reasonable inference from the undisputed facts is that no tort duty
existed between one party and another. [Fn. 7]  Such a judgment is
not barred by our precedents disfavoring summary adjudication of
questions of tort duty -- both because those precedents express
disfavor rather than a categorical rule of law, [Fn. 8] and because
the rule of thumb in those precedents arose in cases involving
questions of the disputed scope or fulfillment, not the existence,
of a tort duty.
          We do not mean, in noting this difference, to establish
a talismanic distinction between questions of the "existence"and
the "scope"of tort duties.  The standard for summary judgment is
the same in either type of case: there must be no genuine dispute
of material fact and the movant must be entitled to judgment as a
matter of law.  See, e.g., Maddox, 925 P.2d at 1035; Breitenfeld,
755 P.2d at 1102.  Summary judgment is neither freely given in the
former type of case nor strictly forbidden in the latter.  The
difference we observe among our precedents merely reflects the fact
that, as a practical matter, it is much harder to show that there
are no genuinely disputed material facts when the existence of a
duty is clear and the question is of its precise scope, or whether
given conduct fulfilled it.  Our statements disfavoring summary
judgment in such cases do not establish a separate rule of law from
the normal summary judgment standard, but a rule of thumb to remind
courts of that practical observation. [Fn. 9]  That rule has no
application in a case, like this, where no evidence tends to
suggest that any duty has arisen between a defendant and plaintiff.
          We therefore AFFIRM the judgment below.


Footnote 1:

          Some of the equipment belonged to its subcontractor and
coplaintiff Merwin Arneson, d/b/a Mat-Su Aggregate. This opinion
jointly refers to Alaska and Mat-Su as "Alaska."

Footnote 2:

     A waiver of subrogation would have, as a practical matter,
protected Arctic from liability by ensuring that, if Arctic
negligently harmed Alaska's equipment, Alaska's underwriter would
reimburse Alaska for its property loss without acquiring Alaska's
right to sue Arctic for damages.

Footnote 3:

     Raleigh thereafter moved for full attorney's fees and a
sanction under Civil Rules 11, 82, and 95.  Raleigh showed that
Arctic had contacted it two weeks before the end of the two-year
period of limitation for civil claims, asking Raleigh to sign an
agreement to toll the period pending Arctic's investigation of
whether to sue.  Raleigh declined.  Arctic filed its complaint two
days before the period would have run without having investigated
its case against Raleigh or identified a viable legal theory.  The
court awarded Raleigh full fees and a further $1,000 sanction,
finding Arctic's negligent-misrepresentation theory "not well
grounded in fact and warranted by . . . law"and deeming it
vexatious for Arctic to have raised it for the first time in
opposing summary judgment.  Arctic has not challenged the award and
sanction on this appeal.

Footnote 4:

     Even if Alaska was bound to have Raleigh insure Arctic against
its own negligence, that would only give Arctic a claim against
Alaska, for breach of contract, if it failed to do so.  See Dresser
Indus., Inc. v. Foss Launch & Tug Co., 560 P.2d 393, 395 (Alaska
1977) (holding that parties to a marine bailment contract can
"provide by express terms that one party is responsible for
procuring full insurance for the benefit of both parties [and is
thus] responsible for the total risk of loss").  Dresser notes that
"provisions exempting a party from liability for [its] own
negligence must be clearly set forth."  Id.  Even if Arctic can
meet this standard in its suit against Alaska -- a question on
which we express no view -- that would not give it a negligent-
misrepresentation claim against Raleigh.  Arctic could only
possibly have such a claim if Alaska did tell Raleigh to obtain a
waiver, Raleigh knew or should have known that Arctic was relying
on it to do so, and yet it failed either to do so or to warn Arctic
that it had not.

Footnote 5:

     Arctic notes that Elliott obtained "at least one insurance
quote which would have protected [Arctic]"and suggests that this
act is "highly probative . . . as to his instructions [from
Alaska]."Arctic also suggests that Alaska's alleged agreement to
bear all risk of loss makes it likely that Alaska told Raleigh to
obtain a policy waiving subrogation.  Such thin reeds of
circumstantial evidence, though, can not make up for the lack of
any direct evidence that Alaska ever told Raleigh to procure a
waiver of subrogation.

Footnote 6:

     Section 551 suggests that liability for negligent failure to
disclose can arise only between two parties engaged "in a business
transaction"with one another.  See Restatement (Second) of Torts
sec. 551(2) ("One party to a business transaction is under a duty
. . . to the other . . . .").  Since Raleigh transacted business
only with Alaska, its client, it is hard to see how Arctic comes
within section 551's protective ambit.  We nonetheless assume
arguendo that the "duty"required by section 551 could in some case
arise between an insurance broker and a company whom the broker's
client hires to ship goods for which the broker procures insurance.

Footnote 7:

     As we noted above, summary judgment is also appropriate in
cases, like Mulvihill and Breitenfeld, where a party owed another
a narrow duty, but no jury could reasonably infer from the
undisputed facts that it owed a vastly, qualitatively broader duty,
as claimed by the other.

Footnote 8:

     We see the dangers of a categorical approach in Arctic's
unduly literal reading of a statement that suggests a flat ban on
summary adjudication of questions of tort duty.  See Maddox v.
River & Sea Marine, Inc., 925 P.2d 1033, 1036 n.5 (Alaska 1996)
("This court has previously applied the general rule against
summary judgment in cases determining whether a duty exists . . . . 
The same circumstantial judgments are required . . . as in other
negligence cases.") (citing Saddler v. Alaska Marine Lines, Inc.,
856 P.2d 784, 787 (Alaska 1993)) (emphasis added).  While Saddler
did turn on whether a duty existed, Maddox did not.  The issue in
Maddox, as the bulk of our opinion made clear, was not the
existence but the scope of a duty, and whether particular conduct
satisfied it.  See id. at 1036 ("The outcome of this case turns
upon the scope of a seller's duty to protect the customer from
hazards potentially posed by the seller's product.") (emphasis
added).  Read in context, our passing reference to "whether a duty
exists"did not reject our precedents allowing summary judgment
when, as here, the undisputed facts inescapably show that one party
simply owed the other no duty.

Footnote 9:

     And in some cases it is unclear whether a dispute concerns the
existence or the scope of a duty; one can frame it either way.  If
we implied that different rules of law apply to "existence"and
"scope"cases, competent lawyers on each side of future tort cases
might focus on framing every dispute as involving the "existence"
or "scope"of a duty, as suited their respective clients.  In some
cases, the resultant semantic battles would shed more metaphysical
heat than light.