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Valdez Fisheries Development Assoc., Inc. v. Alyeska Pipeline Service Company (4/19/2002) sp-5558
Valdez Fisheries Development Assoc., Inc. v. Alyeska Pipeline Service Company (4/19/2002) sp-5558
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
VALDEZ FISHERIES DEVELOPMENT )
ASSOCIATION, INC., ) Supreme Court Nos. S-
8280/8549
)
Appellant/Cross-Appellee, ) Superior Court No.
) 3AN-95-3500 CI
v. )
) O P I N I O N
ALYESKA PIPELINE SERVICE )
COMPANY, ) [No. 5558 - April 19, 2002]
)
Appellee/Cross-Appellant. )
_____________________________________)
)
SEA HAWK SEAFOODS, INC., )
) Supreme Court Nos. S-
8330/8549
Appellant/Cross-Appellee, )
)
v. )
)
ALYESKA PIPELINE SERVICE )
COMPANY, )
)
Appellee/Cross-Appellant. )
_____________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, John Reese, Judge.
Appearances: Rebecca S. Copeland, Koval &
Featherly, P.C., Anchorage, for
Appellant/Cross-Appellee Valdez Fisheries
Development Association, Inc. Michael T.
Schein, Maltman Reed North Ahrens & Malnati,
John G. Young, Young deNormandie & Oscarsson,
and Kevin P. Sullivan, Sullivan & Thoreson,
Seattle, Washington for Appellant/Cross-
Appellee Sea Hawk Seafoods, Inc. James E.
Torgerson and Andrew F. Behrend, Heller
Ehrman White & McAuliffe LLP, Anchorage, for
Appellee/Cross-Appellant Alyeska Pipeline
Service Company.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
BRYNER, Justice, dissenting.
I. INTRODUCTION
We address here claims arising from a letter sent and
statements made by Alyeska Pipeline Service Company during
negotiations for a proposed three-way transaction involving
Alyeska, Sea Hawk Seafoods, Inc., and Valdez Fisheries
Development Association, Inc. Because Valdez Fisheries complaint
against Alyeska did not state a claim on which relief could be
granted, we hold that it was not error to dismiss Valdez
Fisheries claims. And because there are no genuine issues of
material fact, we hold that it was not error to dismiss Sea Hawks
claims on summary judgment. We therefore affirm in all respects.
II. FACTS AND PROCEEDINGS
I. In December 1993 James McHale, an Alyeska Pipeline Service
Company manager, made a presentation to the Valdez City Council
asking the city to provide a wildlife rehabilitation center for
Alyeskas use in event of an oil spill.1 In a later city council
meeting, Alyeska faced strong opposition from the business
community, which wanted Alyeska to obtain the center from the
private sector rather than the city. Raymond Cesarini, president
of Sea Hawk Seafoods, then suggested to McHale that Alyeska buy
Sea Hawks plant for use as a rehabilitation center. McHale said
that Alyeska was already thinking favorably of using Valdez
Fisheries Development Association for the project and suggested
that Sea Hawk contact Valdez Fisheries.
Cesarini then offered to sell Sea Hawks plant to Valdez
Fisheries so Valdez Fisheries could use the plant in its proposal
to Alyeska. In January 1994 Cesarini again spoke with Alyeskas
McHale. McHale again stated that Alyeska was thinking favorably
of using [Valdez Fisheries] for the project and suggested that
Cesarini speak with Valdez Fisheries about a win, win
arrangement whereby Sea Hawk would sell its processing plant to
[Valdez Fisheries] and [Valdez Fisheries] in turn would lease the
plant to Alyeska. McHale described the arrangement as mutually
beneficial because it would allow Alyeska to meet its
environmental obligations, Sea Hawk to absolve itself of existing
liabilities, and Valdez Fisheries to have a source of income to
help support its fish hatchery operations.
Cesarini met with McHale for a third time in mid-
January 1994 and expressed concern about selling the plant to
Valdez Fisheries rather than directly to Alyeska because of
Valdez Fisheries financial problems. Cesarini declared that
McHale confirmed that [Valdez Fisheries] would get the Alyeska
contract, utilizing the Sea Hawk plant. Cesarini later declared
that McHale also promised me that, if for any reason Alyeska did
not lease the Sea Hawk plant from [Valdez Fisheries], . . .
Alyeska would lease the Sea Hawk plant directly from Sea Hawk on
the same terms and conditions.
In January 1994 Alyeska sent many companies, including
Valdez Fisheries, a letter soliciting proposals for the wildlife
rehabilitation center. Soon thereafter Valdez Fisheries and Sea
Hawk signed an agreement for the sale of the Sea Hawk facility to
Valdez Fisheries for $2.5 million, contingent upon Alyeska
awarding the wildlife rehabilitation center contract to Valdez
Fisheries. The Sea Hawk-Valdez Fisheries sales agreement was not
to become effective until Valdez Fisheries gave Sea Hawk written
notice that Alyeska had approved Valdez Fisheries proposal to
lease the property to Alyeska as a wildlife rehabilitation
center. The contract permitted Sea Hawk to revoke the agreement
before the effective date upon five-days notice. After the
effective date, Sea Hawk would no longer be able to revoke the
agreement, but the purchase price would increase $500 per day
until closing.
Valdez Fisheries submitted a wildlife rehabilitation
center proposal to Alyeska on January 25, 1994. In April 1994
Alyeska informed all bid applicants, including Valdez Fisheries,
that it was unable to select a contractor from the proposals
received; it invited bidders to reconsider the cost proposed and
if [their] review result[ed] in a cost reduction, [to] please
submit a revised cost proposal. Valdez Fisheries then submitted
a revised proposal, offering three alternative leases, a five-
year lease at $43,000 per month, a seven-year lease at $40,000
per month, or a ten-year lease at $35,000 per month.2
By letter of May 6, 1994 Alyeska responded to Valdez
Fisheries bid submittals stating:
We have completed our review of the revised
proposals received in response to our
invitation TAPS/5890 for A150 Wildlife
Rehabilitation Center.
This is to inform you that based on a
thorough evaluation of all factors, you have
been selected as the winning bidder. Your
proposal was deemed to best meet our
requirements for this facility.
We intend to begin the process of negotiating
a contract as soon as possible. For your
planning purposes, we would like to begin
discussions the week of May 16, 1994. You
will be contacted by telephone to schedule
the place and time to meet.
We look forward to a successful association
between our two companies. This facility
will be a welcome addition to our oil spill
contingency program.[3]
(Emphasis added.)
Valdez Fisheries faxed a copy of Alyeskas letter to Sea
Hawk; Valdez Fisheries and Sea Hawk thereafter acted as if the
effective date of their contract for sale had been triggered.
In June 1994 Alyeska and Valdez Fisheries began meeting
to negotiate the contract. Valdez Fisheries prepared a draft of
the lease agreement and sent it to Alyeska to serve as a
framework for the meetings to follow. But at a July 7, 1994
meeting, Alyeska advised Valdez Fisheries that it was reanalyzing
the costs of the wildlife rehabilitation center and declined to
discuss further the finalization of the lease agreement. At this
meeting, Alyeska also asked Valdez Fisheries about the status of
[the] negotiations with Sea Hawk.
In a July 29, 1994 letter, Alyeska advised Valdez
Fisheries not to expend funds on developing the center until
Alyeska notified it to proceed. The letter also included a
revised program and facility space requirements. On August 8,
1994 Alyeska sent Valdez Fisheries a letter stating that Alyeska
had chosen to pursue other avenues to accomplish our objective
and that further negotiations are unnecessary.
Sea Hawk sued Valdez Fisheries alleging breach of
contract and promissory estoppel. Valdez Fisheries answered and
filed a third-party complaint against Alyeska, claiming, among
other things, breach of contract and promissory estoppel. Sea
Hawk then asserted direct claims against Alyeska. Superior Court
Judge John Reese ultimately dismissed all of Valdez Fisheries
claims against Alyeska under Alaska Civil Rule 12(b)(6), and
granted summary judgment to Alyeska on Sea Hawks claims. The
case between Valdez Fisheries and Sea Hawk went to trial, and the
jury returned a large verdict for Sea Hawk. Sea Hawk and Valdez
Fisheries have since settled their disputes, leaving the Sea Hawk-
Alyeska disputes and the Valdez Fisheries-Alyeska disputes.
Valdez Fisheries appeals the Rule 12(b)(6) dismissal of
its contract and promissory estoppel claims against Alyeska, the
denial of leave to amend the third-party complaint to assert
newly discovered claims, the refusal to sanction Alyeska for
improper discovery conduct, and the limitation of Valdez
Fisheries damages to its out-of-pocket costs in negotiating with
Alyeska. Sea Hawk appeals the summary judgment dismissing its
claims of promissory estoppel, negligent misrepresentation and
omission, third-party beneficiary, and breach of duty to
negotiate in good faith. Alyeska appeals the superior courts
denial of Alyeskas request for an enhanced attorneys fees award.
III. DISCUSSION
A. Standard of Review
A. We review the dismissal of Valdez Fisheries claims for
failure to state a claim de novo.4 We only consider the material
contained in the pleadings of Valdez Fisheries,5 construing the
third-party complaint against Alyeska in the light most favorable
to Valdez Fisheries, and presume the pleadings allegations to be
true.6 We will affirm the dismissal of Valdez Fisheries third-
party complaint for failure to state a claim only if it appears
beyond doubt that Valdez Fisheries can prove no set of facts
which would entitle them to relief.7
We review the dismissal of Sea Hawks claim on summary
judgment de novo.8 A summary judgment movant must establish that
there are no genuine issues of material fact and that it is
entitled to judgment as a matter of law.9 We draw all reasonable
inferences in favor of Sea Hawk the nonmoving party.10
B. It Was Not Error To Dismiss Valdez Fisheries Contract Claim
Under Civil Rule 12(b)(6).
The superior court granted Alyeskas Civil Rule 12(b)(6)
motion and dismissed Valdez Fisheries contract claim, holding
that no contract was formed. Valdez Fisheries argues that this
was error because its third-party complaint against Alyeska
alleged an agreement with terms that are sufficiently definite
and certain for contract formation.
Rule 12(b)(6) dismissal is appropriate where the
complaint, given the benefit of all reasonable inferences,
presents no set of facts justifying recovery.11 A valid contract
requires unequivocal acceptance by the offeree.12 We therefore
look to see whether Valdez Fisheries third-party complaint
directly or inferentially contains any factual allegations which
could be considered an unequivocal expression of acceptance.
The pertinent allegations are found in the text of
Alyeskas May 6, 1994 winning bid letter, set out verbatim in the
third-party complaint.13 The letters second paragraph contains
the language most strongly supporting Valdez Fisheries contract
claim. It states, you have been selected as the winning bidder.
But this language does not unequivocally express acceptance
because it is susceptible to at least two alternative
interpretations. These words could mean either we accept your
bid as written, or we have chosen you as the contractor with whom
we will negotiate. The remainder of the letter fully resolves
this ambiguity. The letters next paragraph, also set out in the
third-party complaint, states that [w]e intend to begin the
process of negotiating a contract as soon as possible. This
passage requires a conclusion that Alyeska was not communicating
an unequivocal acceptance of a Valdez Fisheries offer.
Moreover, Valdez Fisheries proposal contained three
alternative lease proposals that differed significantly with
respect to the duration and monthly rent for any lease. Even if
we were to interpret Alyeskas letter to say unequivocally that we
accept your offer, we could not say which of the three offers it
was accepting, and whether Alyeska was agreeing to lease the
property for five years, seven years, or ten years, with monthly
rent payments of $43,000, $40,000, or $35,000, respectively.
Duration and price are important contract terms.14 Such great
differences in important contract terms preclude finding a
meeting of minds.15 The significant differences in the
alternatives confirm that the May 6 letter was not an unequivocal
acceptance but, at most, was an agreement to negotiate.16
Valdez Fisheries argues that an internal Alyeska
document a May 1994 Authorization for Expenditure obtained in
discovery after the contract claim was dismissed resolves the
ambiguity and substantiates Alyeskas intent to accept one
particular offer. Valdez Fisheries theorizes that the
Authorization for Expenditure set out the material price and
duration terms by choosing the five-year, $43,000 payment
alternative, thus removing any uncertainty about the contract
terms. But Alyeska did not send this document to Valdez
Fisheries in 1994. Indeed, Valdez Fisheries asserts on appeal
that Alyeskas execution of the [Authorization] was unknown to
Valdez Fisheries until 1997. Therefore, this internal memorandum
could not have communicated to Valdez Fisheries Alyeskas
acceptance of one of the offers and it could not have made
certain terms that were otherwise unenforceably uncertain.17
Finally, Valdez Fisheries complaint does not permit a
reasonable inference that other facts not specifically plead
might demonstrate unequivocal acceptance. We could hypothesize
that Alyeska might have communicated acceptance via some other
unspecified document sent in the period between the winning bid
letter and the termination of contract negotiations.18 In this
case, however, the superior court was not required to make such a
strained inference to salvage Valdez Fisheries complaint.19
We cannot hold parties to a standard that requires them
to effectively plead evidence prior to conducting discovery.20
But even without discovery, Valdez Fisheries should have had
access to any documents that might have supported its claim that
Alyeska accepted an offer. As explained above, documents not
transmitted to Valdez Fisheries before Alyeska terminated
contract negotiations could not demonstrate unequivocal
acceptance.21
Further, to the extent that Valdez Fisheries argues
that dismissal of its contract claim was premature because it was
entered prior to discovery, this argument must be rejected
because subsequent litigation allowed Valdez Fisheries to correct
any pleading deficiency and avoid any prejudice. Although the
court dismissed the contract claim in 1995, it did not enter
final judgment for Alyeska until July 1997. In the interim,
Valdez Fisheries engaged in extensive discovery on its remaining
claims, including its promissory estoppel and promise-to-
negotiate claims. Because these claims depended upon similar
facts, Valdez Fisheries effectively remained free to continue
discovery that might have helped it revive its dismissed contract
claim.
Valdez Fisheries indeed discovered facts which it
relied upon in 1997 when it sought to revive its contract claim
in its proposed second amended third-party complaint. But the
second amended third-party complaint and the supporting motion
papers submitted after eighteen additional months of discovery
and investigation failed to point to any Alyeska document
transmitted in 1994 to Valdez Fisheries, other than the winning
bid letter discussed above, that arguably constituted an
unequivocal acceptance of one of Valdez Fisheries three offers.22
Thus, even assuming the Rule 12(b)(6) dismissal was premature, it
did not prejudice Valdez Fisheries. Valdez Fisheries had ample
opportunity before final judgment to amend and reinstate its
contract claim if it discovered relevant facts supporting that
claim.
While the [Rule 12(b)(6)] threshold may be low, it is
real and it is the plaintiffs burden to take the step which
brings his case safely into the next phase of litigation.23 The
facts alleged in the original and the second amended third-party
complaints do not permit an inference of unequivocal acceptance.
Because there was no acceptance, there is no contract upon which
Valdez Fisheries can sue. On the face of the pleadings,
therefore, Valdez Fisheries contract claim was fatally flawed.
Accordingly, we affirm the superior courts dismissal of
Valdez Fisheries contract claim and Sea Hawks third-party
beneficiary claims.24
C. As a Matter of Law, the Agreement to Negotiate Fails for
Lack of Specificity.
A. Valdez Fisheries asserts that even if Alyeskas May 6 letter
was not an acceptance of the bid offer, it was a binding
agreement to negotiate. We will enforce agreements to negotiate.25
Participation in negotiations, however, does not necessarily mean
that the parties will be able to agree on mutually-acceptable
terms,26 and we will therefore enforce an agreement to negotiate
only if it contains a more specific way to resolve . . .
differences, such that we are able to discern when the agreement
to negotiate has been breached.27 That standard is not met here.
At best, the proposal and Alyeskas reply letter are evidence of
an agreement to negotiate that fails to spell out a method by
which differences are to be resolved. We therefore affirm the
superior courts dismissal of Valdez Fisheries agreement-to-
negotiate claim.
Even if the agreement-to-negotiate claim were to
proceed, Valdez Fisheries would only be entitled to recover costs
associated with the negotiations themselves. Since an agreement
to negotiate is not an agreement to agree,28 any costs Valdez
Fisheries incurred in anticipation of performance were not
incurred in reasonable reliance on the agreement to negotiate.
Further, any costs incurred in preparing the bid were incurred
before Alyeska agreed to negotiate. They are therefore not
recoverable under this theory.
Sea Hawk also argues that it has a claim against
Alyeska for breach of the duty to negotiate. Like Sea Hawks
third-party beneficiary claim against Alyeska, this claim depends
upon Valdez Fisheries claim because Alyeska never entered into
any agreement to negotiate with Sea Hawk. Therefore, our
rejection of Valdez Fisheries duty-to-negotiate claim requires us
to affirm the dismissal of Sea Hawks duty-to-negotiate claim.
D. The Superior Court Did Not Err in Dismissing Valdez
Fisheries Promissory Estoppel Claims.
Valdez Fisheries makes two separate promissory estoppel
arguments. First, it argues that Alyeskas congratulations, you
are the winning bidder letter constituted a promise; second, it
argues that Alyeska orally promised that if it accepted [Valdez
Fisheries] proposal, it would lease the Sea Hawk facility from
[Valdez Fisheries]. Under Alaska law, a promise that induces
action will bind the promisor only if it satisfies all four
elements of promissory estoppel:
(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.[29]
We address each alleged promise separately.
1. The alleged written promise contained in Alyeskas May 6
letter
When a promissory estoppel claim is made in conjunction
with a breach of contract claim, the actual promise element of
promissory estoppel is analytically identical to the acceptance
required for a contract.30 Were it otherwise, promissory
estoppel, which is intended to enable courts to enforce contract-
like promises made unenforceable by technical defects or
defenses,31 would become a device by which parties could be held
to contracts they did not accept. As we have already held,
Alyeskas May 6 letter did not accept an offer to contract. It
therefore was not an actual promise, and thus fails as a matter
of law to satisfy the actual promise element of promissory
estoppel.
The letter is also deficient as a promise to negotiate.
Regarding negotiations, the letter states only that [w]e intend
to begin the process of negotiating a contract as soon as
possible. This is a statement of present intent, not a promise.32
This statement therefore also fails as a matter of law to satisfy
the actual promise element of promissory estoppel.
Moreover, even treating this statement as a promise, it
would not be sufficiently definite to allow enforcement. At
best, it is a promise to begin negotiations. It appears from the
third-party complaint that negotiations were begun. To be
enforceable, a promise to negotiate must spell out the method by
which a court will determine whether or not the promise was
breached.33 Although Davis v. Dykman34 considered only a contract
to negotiate, not promissory estoppel, its reasoning is
instructive here. Since the third-party complaint does not plead
facts which, if accepted as true, establish a breached promise to
negotiate, we affirm the superior courts dismissal of Valdez
Fisheries promissory estoppel claims based on Alyeskas May 6
letter.
2. McHales alleged promise
1. Valdez Fisheries third-party complaint alleged that Alyeskas
McHale promised in a January 1994 conversation with David Cobb,
Valdez Fisheries business manager, that if Alyeska approved
[Valdez Fisheries] proposal as best meeting Alyeskas
requirements, Alyeska would lease the facility from [Valdez
Fisheries].35 Alaskas statute of frauds renders certain
agreement[s], promise[s], or undertaking[s] . . . unenforceable
unless [they are] in writing . . . .36 The alleged oral promise
at issue here falls under the statute of frauds because it is an
agreement for leasing for a longer period than one year . . . or
of any interest in real property . . . .37
The Restatement (Second) of Contracts provides that
promissory estoppel can bind a promisor notwithstanding the
statute of frauds.38 In Alaska Democratic Party v. Rice, we
endorsed this view as to employment contracts.39 We explicitly
limited this holding to employment contracts, perhaps in
recognition of the frequency of oral employment agreements and
the extent to which the main terms of an employment contract are
generally well understood.40 The present case is markedly
different because the duration of the alleged promise is
indiscernible.
The statute of frauds serves many purposes. First, it
provides certain, consistent, and predictable principles to guide
negotiators.41 It recognizes the inherent evidentiary worth of
written evidence, and the potential injustice created by relying
on the memories of interested parties to provide the exact
language of an agreement, which is necessary to discern the
limits of the promise.42 It also recognizes the natural tendency
of peoples memories to contour the words they recall to fit their
understanding of the agreement.43 The statute of frauds
encourages people to commit their agreements to writing, and the
process of putting the agreement in writing helps impress upon
them the importance of their agreements.44 It reduces litigation
over alleged oral contracts.45 Finally, a limited application of
exceptions to the statute of frauds preserves the legislative
intent behind the statute, and gives effect to the legislative
judgment that the benefits conferred by the statute outweigh the
potential injustice produced by its application.46
The facts here implicate the concerns motivating the
statute of frauds. We therefore decline to extend Alaska
Democratic Party to cases involving the sale or lease of real
estate, in which the purported oral agreement is ambiguous as to
key terms. In such circumstances, promissory estoppel cannot be
used to defeat the statute of frauds requirement that a writing
memorialize the parties agreement. We therefore affirm the
superior courts dismissal of Valdez Fisheries promissory estoppel
claims as to the oral promise.
E. The Superior Court Did Not Err in Dismissing Sea Hawks
Promissory Estoppel Claims on Summary Judgment.
Sea Hawk argues that the superior court erred by
failing to apply promissory estoppel to negate the effect of the
statute of frauds. It reasons that dismissing Sea Hawks
promissory estoppel claim is inconsistent with our holding in
Alaska Democratic Party that a promise is enforceable
notwithstanding the statute of frauds if it meets the other
elements of a promissory estoppel claim.
The superior court granted Alyeska summary judgment on
Sea Hawks promissory estoppel claims. Sea Hawk alleges that
McHale specifically promised . . . that [Valdez Fisheries] would
get the Alyeska contract . . . if Sea Hawk sold its plant to
[Valdez Fisheries]. Sea Hawk also alleges that Alyeska promised
that if for any reason Alyeska did not lease the Sea Hawk plant
from [Valdez Fisheries], Alyeska would lease the Sea Hawk plant
directly from Sea Hawk on the same terms and conditions. Thus we
have alleged promises for the lease of real estate, with
substantial ambiguity as to terms.
The first alleged promise, that Alyeska would lease
from Valdez Fisheries, is ambiguous as to the duration and price.
It appears to report present intentions rather than promise
future actions, and as such it is unenforceable.47 This reading
is supported by the second alleged promise, made in the same
conversation, which clearly anticipates Alyeskas refusal to lease
from Valdez Fisheries. The second promise is also ambiguous as
to the duration and price of the lease, and presumes that a
complete, unambiguous agreement would be reached between Alyeska
and Valdez Fisheries, and that Sea Hawk could simply step into
Valdez Fisheries shoes.
Moreover, the promises alleged by Sea Hawk were oral,
and implicate the same statue of frauds concerns as the oral
promises made to Valdez Fisheries. We hold that promissory
estoppel cannot be used to defeat the statute of frauds
requirement that an agreement for a lease with a term that
exceeds one year must be in writing where, as here, the purported
oral agreement contains substantial ambiguity as to key terms.
We therefore affirm the superior courts grant of summary judgment
on Sea Hawks promissory estoppel claims.
F. The Superior Court Permissibly Declined to Sanction Alyeska
for Its Conduct in Discovery.
Valdez Fisheries contends that it was error not to
sanction Alyeska for failing to produce crucial smoking gun
documents until less than a month before trial. Valdez Fisheries
argues that Alyeskas internal Authorization for Expenditure is
particularly significant. The Authorization for Expenditure is
an internal Alyeska request for funding for the wildlife
rehabilitation center. It summarizes the project, gives reasons
for the project, and lists the project costs as $2,580,000 for a
five-year lease with a renewal option. McHale signed the
Authorization for Expenditure, although the signature lines for
the approving president and vice-president are blank. Valdez
Fisheries argues that the Authorization for Expenditure proves
which of the three leasing options Alyeska chose, and thus
removes any uncertainty about the contract terms.
The superior court declined to sanction Alyeska,
holding that the information contained in the document is not
new, doesnt seem to be critical, does not support the claim for
relief against Alyeska and there was no improper discovery
conduct. We review discovery sanctions for abuse of discretion48
and findings of fact for clear error.
Valdez Fisheries argument that the Authorization for
Expenditure is a smoking gun depends on its theory that it
provides the missing terms of the lease agreement. As a matter
of law, the document is not itself an acceptance because it was
never communicated to Valdez Fisheries the offeror. Valdez
Fisheries argues that the document manifests Alyeskas intent as
to terms. But the specific terms considered internally by
Alyeska are irrelevant absent an acceptance.
Valdez Fisheries has not demonstrated that the superior
court erred in concluding that the information provided by the
newly produced evidence, including the Authorization for
Expenditure, was not critical and did not support the claims
against Alyeska. We conclude that it did not abuse its
discretion by declining to impose sanctions. We therefore affirm
the oral order declining to sanction Alyeska.
G. The Superior Court Did Not Improperly Deny Leave to Amend
Valdez Fisheries Third-Party Complaint.
Valdez Fisheries moved to amend its third-party
complaint against Alyeska, arguing that various internal Alyeska
documents supplied the contract terms, and that Alyeska
misrepresented the status of the project. The superior court
found that the proposed amendment would assert new claims for the
tort of misrepresentation and for punitive damages, but that the
facts giving rise to these claims were largely coexistent with
the facts giving rise to Valdez Fisheries prior claims, and that
there was no adequate reason why Valdez Fisheries had not
previously asserted the proposed new claims. Noting that trial
was to begin in seven weeks, it also found that the resulting
cost and preparation time would unduly prejudice Alyeska. It
therefore denied the motion to amend. Valdez Fisheries argues
that it was error not to grant its motion.
We review the denial of leave to amend for abuse of
discretion.49 We will reverse the superior courts order only if
we are left with a definite and firm conviction that it erred in
its ruling.50
Alaska Civil Rule 15(a) provides that leave [to amend]
shall be freely given when justice so requires. Leave to amend is
liberally granted in Alaska.51 But the superior court retains
discretion to deny leave to amend on the eve of trial in a
situation like this.52
This was Valdez Fisheries third attempt to amend its
claims against Alyeska. Valdez Fisheries argues that the claims
were newly discovered, but the superior court found that they
were based on facts already known to Valdez Fisheries. This
finding was not clearly erroneous. Although Valdez Fisheries
discovered new details during depositions it took in 1997, and
requested and received documents from Alyeska concerning these
details, the main thrust of the information was not new. We
therefore affirm the superior courts denial of leave to amend the
third-party complaint.
Because we have affirmed the superior courts holdings,
Valdez Fisheries has no remaining claims against Alyeska. It is
therefore unnecessary for us to reach the question whether the
superior court erred in limiting Valdez Fisheries damages to its
costs associated with negotiations.
H. The Superior Court Did Not Err in Dismissing Sea Hawks
Negligent Misrepresentation and Omission Claim.
Sea Hawk argues that it was error to dismiss its claim
that Alyeska misrepresented its intentions to lease the Sea Hawk
facility. Sea Hawk alleges that in January 1994 McHale made
promises to Sea Hawk although he knew that Alyeska harbored
internal misgivings about the project. Holding that there was no
duty to disclose, the superior court dismissed this claim on
summary judgment.
The four elements of the tort of negligent
misrepresentation are:
First, the party accused of the
misrepresentation must have made the
statement in the course of his [or her]
business, profession or employment, or in any
other transaction in which [s/]he has a
pecuniary interest. Second, the
representation must supply false information.
Third, there must be justifi[]able reliance
on the false information supplied. Finally,
the accused party must have failed to
exercise reasonable care or competence in
obtaining or communicating the
information.[53]
We do not see how McHale and Cesarinis casual
conversations in January 1994, some four months before Alyeska
sent its May 6 winning bid letter to Valdez Fisheries proposal,
could have created an ongoing duty to advise Sea Hawk of Alyeskas
June 1994 misgivings. Sea Hawk has not demonstrated a genuine
dispute about whether McHales alleged January 1994 assurances
were false when made. A statement made as to future intentions
and actions is not a misrepresentation if it is accurate when it
is made, even if future events render it inaccurate.54
Sea Hawk argues that once Alyeska represented its
intentions in January, it had a duty to alert Sea Hawk if its
intentions changed. Such a holding would stretch the negligent
misrepresentation doctrine in Alaska. We have held that [a] duty
to disclose is rarely imposed where the parties deal at arms
length . . . .55 The dealings between Alyeska and Sea Hawk, as
evidenced by the infrequency of their conversations, were at arms
length. Sea Hawk has consequently not demonstrated that a
reasonable jury could find that Sea Hawks alleged reliance on
these four-month-old assurances was reasonable. There is no
issue of fact about whether Alyeska misled Sea Hawk after Alyeska
allegedly changed its intentions, because Sea Hawk had not
claimed that it made post-change attempts to obtain Alyeskas
confirmation of McHales alleged January representations to Sea
Hawk.
Because we find that the evidence in the record would
support a limited duty at best, and because Sea Hawks actions in
reliance were not reasonable given the limited nature of this
duty, we affirm the superior courts dismissal of Sea Hawks
negligent misrepresentation and omission claim on summary
judgment.
I. It Was Not an Abuse of Discretion to Deny Alyeskas Request
for Attorneys Fees Exceeding the Usual Twenty Percent.
Alyeska argues on cross-appeal that the superior court
erred by awarding Alyeska twenty percent of the fees it had
incurred,56 rather than enhanced fees under a percentage exceeding
twenty percent.57 We will not reverse an award of costs and fees
absent a clear abuse of discretion.58 We will not find a clear
abuse of discretion unless the award is arbitrary, capricious,
manifestly unreasonable, or the result of an impermissible
motive.59 An award that tracks the scheduled fee award of Alaska
Civil Rule 82 is presumptively valid.60
Alyeska has not demonstrated that awarding twenty
percent of its fees was arbitrary, capricious, or manifestly
unreasonable. Alyeskas arguments demonstrate, at best, that
reasonable minds could disagree about the appropriate amount.
The record reveals vigorous litigation which the superior court
did not find to be vexatious. Alyeska has not shown that the
record compels a finding that Valdez Fisheries and Sea Hawks
actions were excessively litigious or vexatious, and has hence
failed to demonstrate a clear abuse of discretion. We therefore
affirm the superior courts award of attorneys fees.
IV. CONCLUSION
For these reasons we AFFIRM in all respects.
BRYNER, Justice, dissenting.
I disagree with the courts conclusion that Valdez
Fisheries third-party complaint against Alyeska was properly
dismissed under Alaska Rule of Civil Procedure 12(b)(6).
Civil Rule 12(b)(6) permits the court to dismiss a
complaint that fails to state a viable claim.1 We have
frequently held that motions to dismiss are disfavored2 and have
urged that complaints be give[n] . . . the benefit of the doubt.3
In determining whether a claim is sufficiently stated, courts
must read the complaint in the light most favorable to the
claimant and deem all alleged facts and reasonable inferences
arising therefrom as if they were true.4 A complaint that is
merely vague or lacks detail is not fatally flawed;5 instead, it
suffices if the allegations provide for relief on any possible
theory.6 Hence, a complaint will withstand challenge under Rule
12(b)(6) as long as it set[s] forth allegations of fact
consistent with and appropriate to some enforceable cause of
action and provides a framework for future evidence demonstrating
entitlement to the requested relief.7 A complaint should not be
dismissed unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle
him to relief 8 or unless the complaint itself rules out the
possibility that a valid claim exists.9
In applying these principles to a given case, we must
also bear in mind Alaskas traditionally lenient notice pleading
standards. Civil Rule 8 simply requires that a complaint include
(1) a short and plain statement of the claim showing that the
pleader is entitled to relief, and (2) a demand for judgment for
the relief the pleader seeks.10 The rule further advises that
[e]ach averment of a pleading shall be simple, concise and
direct. No technical forms of pleading or motions are
required.11 We have not construed this rule to require details
of evidence that a claimant will offer to establish a claim; to
the contrary, we have emphasized that the rule is satisfied by a
brief statement that give[s] the defendant fair notice of the
claim and the grounds upon which it rests.12
Disregarding these well-established principles, the
court holds Valdez Fisheries breach-of-contract claim facially
deficient for neglecting to affirmatively plead specific facts
that unequivocally establish the elements of a valid contract.13
More particularly, because it notes that [a] valid contract
requires unequivocal acceptance by the offeree, the court
demands that Valdez Fisheries third-party complaint directly or
inferentially [must] contain[ ] . . . factual allegations [that]
could be considered an unequivocal expression of acceptance.14
By effectively requiring that Valdez Fisheries third-party
complaint be dismissed for failing to particularly plead all
facts justifying recovery, the courts ruling inverts the usual
principle that condones dismissal under Rule 12(b)(6) only where
the complaint . . . presents no set of facts justifying
recovery. 15 The courts ruling also conflicts with Civil
Rule 8s lenient notice pleading requirement. Great Western
Savings Bank v. George W. Easley Co., J.V.16 usefully illustrates
the conflict. There Great Western appealed an award in favor of
Easley for breach of contract, arguing that the contract claim
should have been kept from the jury because Easleys complaint
failed to allege a necessary element for a valid contract
consideration.17 We rejected that argument, unequivocally ruling
that Civil Rule 8 does not require a complaint to affirmatively
plead contract elements:
Alaska is a notice pleading state.
Alaska R. Civ. P. 8(a). The rules merely
require a short and plain statement of
the claim that will give the defendant
fair notice of what the plaintiffs claim
is and the grounds upon which it rests.
Easley Companys second amended complaint
alleged that Great Western had a
contractual obligation to make direct
payments to Easley Company. It further
alleged that Great Western breached this
contract and that Easley Company
suffered damages. Easley Companys
complaint sufficiently put Great Western
on notice of the claims against it and
of the grounds upon which they rested.
There was no need to allege
consideration. The second amended
complaint satisfied the requirements of
Civil Rule 8(a).[18]
Great Western thus allows breach-of-contract claims to go forward
without specifically pleading the elements of contract formation,
making it clear that a complaint gives the defendant sufficient
notice if it generally alleges that a contract existed and was
breached in a way that damaged the plaintiff.19
In demanding that a complaint specifically plead all
contract elements, then, the courts opinion today ignores the
plain language of Civil Rule 8 and overturns settled precedent
that interprets Rule 8 to eschew particularized pleading of
contract elements. Furthermore, the opinion implicitly conflicts
with Alaska Civil Rule 9, which does require particularized
pleading for certain special matters, but conspicuously does not
extend its particularized pleading requirement to contract
elements.20 Indeed, Rule 9(c) effectively requires defendants to
plead the absence of contract elements, stating that claimants
need only aver the performance or occurrence of conditions
precedent generally, while explicitly assigning to defendants the
duty to plead denial of performance or occurrence of conditions
precedent specifically and with particularity.21
In the present cases, paragraph 59 of Valdez Fisheries
third-party complaint alleges that
[a] valid and enforceable contract was made
between Alyeska and [Valdez Fisheries]
pursuant to which [Valdez Fisheries] agreed
to acquire and modify the Sea Hawk Facility
in Valdez according to certain and stated
specifications and Alyeska agreed to lease
the modified facility from [Valdez Fisheries]
on certain and stated terms.
Under Civil Rule 8s notice pleading standards, this paragraph
alone pleads the existence of a contract with sufficient clarity
to place Valdez Fisheries contract claim beyond reach of a Rule
12(b)(6) motion. To my knowledge, this court has never before
ruled that a complaint for breach of contract must, in addition
to pleading that a contract existed and was breached,
affirmatively recite all necessary contract elements; nor has
this court previously suggested that the element of acceptance
must be described by specific factual allegations [that] could
be considered an unequivocal expression of acceptance.22 The
courts newly adopted specific-pleading requirement is a sharp
break from our settled law and will surely come as a rude
surprise to many Alaska lawyers who have drafted, and currently
have pending, contract complaints that rely on Alaskas hitherto
flexible and common-sense pleading requirements.
But even under todays newly declared specific-pleading
standard, I think that Valdez Fisheries third-party complaint
states a facially viable claim for breach of contract. In my
view, the court mischaracterizes the winning bid letter as
containing the complaints only pertinent allegations of Alyeskas
acceptance. Paragraph 48 of the third-party complaint quotes
Alyeskas winning bid letter, prefacing the quotation by simply
describing it as a response to Valdez Fisheries earlier bid
submittals. The prefatory language says nothing else: it neither
explicitly nor implicitly purports to characterize the May 26,
1994, letter as Alyeskas unequivocal acceptance let alone as
Valdez Fisheries sole evidence of acceptance.
In the next paragraph, though, the third-party
complaint does specifically allege an acceptance an event that
this paragraph implicitly alleges occurred on June 3, 1994, a
full month after Alyeskas winning bid letter:
On June 3, 1994, representatives of
Alyeska and [Valdez Fisheries] met at
Alyeskas offices in Anchorage, Alaska. The
matters discussed at this meeting included
the planning and scheduling of the project
and the contract structure. At this meeting,
the attorneys for Alyeska and [Valdez
Fisheries] discussed the preparation of a
document incorporating the terms that had
been proposed by [Valdez Fisheries] and
accepted by Alyeska. The attorney[]s agreed
that the appropriate document would be a
lease agreement. [Valdez Fisheries] asked
Alyeska if Alyeska had a boilerplate lease
agreement that the parties could use as a
framework for the agreement. Alyeska replied
that it did not have such a document,
whereupon [Valdez Fisheries] agreed to
provide a boilerplate draft of the
document.[23]
Two paragraphs later, in paragraph 51, the complaint
alleges that Valdez Fisheries sent Alyeska a boilerplate draft to
serve as the contracts framework. In its ensuing paragraphs
paragraphs 52-54 the complaint describes Alyeskas subsequent
acts reneging on its contractual commitment. And as already
noted above, the complaint then proceeds to repeat its specific
allegation of acceptance in paragraph 59 by realleging the
existence of [a] valid and enforceable contract . . . between
Alyeska and [Valdez Fisheries] pursuant to which . . . Alyeska
agreed to lease the modified facility from [Valdez Fisheries] on
certain and stated terms. Like the language of paragraph 49,
this language pleads an unequivocal acceptance; and nothing in
this language purports to confine its allegation of acceptance to
the winning bid letters language or to negate paragraph 50s
allegation that an acceptance occurred at or around the time of
the June 3 meeting.
Of course I recognize that a complaint can become
vulnerable to dismissal under Rule 12(b)(6) if it affirmatively
pleads too much and establishes a fatal flaw some specific fact
whose existence categorically precludes recovery and demonstrates
that there is some insuperable bar to relief.24 But my reading
of the entire third-party complaint in the light most favorable
to Valdez Fisheries (the reading that we must adopt for purposes
of evaluating the propriety of a Rule 12(b)(6) dismissal)25 fails
to reveal any such affirmatively stated fatal flaw. Valdez
Fisheries undeniably does quote Alyeskas winning bid letter; so
too, it relies on the letter as part of its claim for breach of
contract damages; but the third-party complaint nowhere touts the
winning bid letter as an unequivocal acceptance per se, and it
never implicitly or explicitly disclaims the existence of other
evidence that would prove Alyeskas unequivocal acceptance.
To the extent that the courts opinion gleans any
insuperable bar from the complaint inferentially, the court
necessarily violates the interpretive rule that requires it to
give Valdez Fisheries the benefit of all reasonable inferences in
determining whether its complaint passes muster under Rule
12(b)(6).26 When read in its entirety and taken as true, then,
the third-party complaint meets even the newly imposed and
unjustifiably stringent demand for allegations that directly or
inferentially could be considered an unequivocal expression of
acceptance.27
Yet the courts opinion nonetheless refuses to discuss
or even to acknowledge any allegation of acceptance in the
complaint other than Alyeskas winning bid letter. The opinion
rests its refusal to consider anything but the winning bid letter
on two related legal assumptions: The opinion assumes that an
unequivocal acceptance could not occur unless Valdez Fisheries
alleged that Alyeska specifically agreed to accept one of Valdez
Fisheries three alternative lease proposals28 and it further
assumes that the statute of frauds would bar any oral acceptance
by Alyeska.29 Yet neither assumption bears up to scrutiny.
First, the opinion broadly posits that an unequivocal
acceptance could not have occurred and therefore no valid
contract could possibly have arisen unless Alyeska specifically
accepted, and communicated its acceptance of, one of Valdez
Fisheries three alternative lease proposals:
Even if we were to interpret Alyeskas letter
to say unequivocally that we accept your
offer, we could not say which of the three
offers it was accepting, and whether Alyeska
was agreeing to lease the property for five
years, seven years, or ten years, with
monthly rent payments of $43,000, $40,000, or
$35,000, respectively. Duration and price
are important contract terms. Such great
differences in important contract terms
preclude finding a meeting of minds. The
significant differences in the alternatives
confirm that the May 6 letter was not an
unequivocal acceptance but, at most, was an
agreement to negotiate.[30]
The opinion further professes that the court would be incapable
of determining the legal consequences of a breach, even if a
contract could somehow have arisen: We likewise do not see how a
court could enforce the alleged contract. Based on the proposal
and Alyeskas response, a court could not order specific
performance or calculate damages for breach.31
But universally recognized contract law contradicts
these assumptions. Professor Corbin expressly describes the kind
of agreement at issue here as a commonly accepted and routinely
enforced alternative contract:
An alternative contract is one in which a
party promises to render some one of two or
more alternative performances either one of
which is mutually agreed upon as the
bargained-for equivalent given in exchange
for the return performance by the other
party. The choice among these alternatives,
the power of election, is usually given to
the promisor; but it need not be. If the
option is in the promisor, he has power to
discharge his contractual duty by performing
either alternative. . . . The breach of such
a contract consists either in a repudiation
of [the promisors] contractual duty by the
promisor or in [the promisors] failure to
perform any and all of the alternatives
provided in the contract.[32]
And according to Corbin, [f]or such a breach the measure of
damages recoverable by the promisee is the value of that
alternative that is the least burdensome and expensive to the
promisor.33
This court has expressly recognized the validity of
alternative contracts on at least two past occasions.34 And
there appears to be no reason why the same kind of agreement
would not be enforceable in this case. Here, Valdez Fisheries
unequivocally offered Alyeska the choice of any one of three
alternative lease provisions, each one definite and unambiguous
in its own right and all equally and unconditionally acceptable
to Valdez Fisheries. Alyeskas winning bid letter may not itself
have been an unequivocal acceptance because it only proposed to
negotiate Valdez Fisheries offer. But if Alyeska later gave
Valdez Fisheries an unequivocal commitment to proceed with a
contract that allowed Alyeska its choice of these three
alternatives as paragraph 49 of the third-party complaint
implicitly alleges Alyeska did at the June 3, 1994, meeting then
Alyeska would have entered into a valid and enforceable
alternative contract, notwithstanding its reservation of the
right to elect alternatives. And correspondingly, upon Alyeskas
subsequent breach, Valdez Fisheries would be entitled to recover
damages measured by the shortest of the three lease proposals
(and, presumably, by any reasonably foreseeable consequential
damages that Valdez Fisheries incurred as a result of Alyeskas
breach of that provision).35
The second assumption driving the courts refusal to
acknowledge any allegation of acceptance in the third-party
complaint, other than paragraph 48s reference to the winning bid
letter, rests on the statute of frauds. Referring to its
discussion of the statute of frauds in connection with the
separate estoppel claim that Valdez Fisheries bases on McHales
alleged verbal promises, the opinion reasons that any oral
communications [concerning the alleged Alyeska/Valdez Fisheries
contract] would be unavailing under the statute of frauds even if
they were unequivocal expressions of acceptance.36 Yet this
assertion lacks merit for two independent reasons: it overstates
the statute of frauds substantive requirements, and it relies on
an impermissible procedural theory for dismissal under
Rule 12(b)(6).
The statute of frauds reflects pragmatic concerns, and
so has been uniformly interpreted to place substance over form.
As Professor Corbin emphasizes, it has not been construed to
require a formal or complete written contract and should be
flexibly applied on a case-by-case basis to accept any writing
that realistically dispels the danger of fraud:
[W]e should always be satisfied with some
note or memorandum that is adequate, when
considered with the admitted facts, the
surrounding circumstances, and all
explanatory and corroborative and rebutting
evidence, to convince the court that there is
no serious possibility of consummating a
fraud by enforcement.[37]
Alaska has followed Professor Corbins view of the statute,
holding that a writing, even if not formal or complete, satisfies
the statute as long as it avoids any serious possibility that
enforcing the contract would result in perpetrating a fraud.38
Under this practical view of the statute, it might be
perfectly sensible to bar the promissory estoppel claim that
Valdez Fisheries bases exclusively on McHales alleged verbal
promise: that promise was at most an informal, non-contractual,
and unauthorized oral assurance made even before Alyeska issued
its invitation to bid; and it is evidently unsupported by any
reasonably contemporary corroborating notation. By contrast,
when the statutes flexible analysis is applied to Valdez
Fisheries direct contract claim against Alyeska, the outcome
changes dramatically: for if Alyeskas Authorization for
Expenditure is viewed in conjunction with Alyeskas invitations to
bid, Valdez Fisheries specific responses, Alyeskas winning bid
letter, the parties subsequent correspondence relating to the
June 3, 1994, meeting, and the boilerplate contract that Valdez
Fisheries then sent to Alyeska, the Authorization for Expenditure
would easily satisfy the statute of frauds basic goal of erasing
all serious possibility of consummating a fraud by enforcement.39
And by so doing, it would allow Valdez Fisheries to prove its
claim through any otherwise admissible evidence of an oral
acceptance. The fact that Alyeskas Authorization for Expenditure
was internally generated and was never communicated to Valdez
Fisheries certainly might preclude the authorization itself from
being deemed a valid acceptance. But this same fact would have
no bearing on the Authorizations ability to satisfy the separate
and distinctly narrower concerns of the statute of frauds, thus
opening the door to proof of an oral acceptance.
And in any event, because the third-party complaint
does not categorically rule out the possibility of a written
acceptance, Alyeska cannot properly invoke the statute of frauds
as a basis for a Rule 12(b)(6) dismissal. As this court has
previously recognized, even though the statute of frauds is
generally considered an affirmative defense, it can sometimes be
properly raised by a motion to dismiss under Rule 12(b)(6) but
only when this defense is unequivocally established on the face
of the complaint, as, for example, when the complaint defeats
itself by explicitly alleging a sale of land based on an oral
agreement.40 By contrast, in any more equivocal circumstances
for example, even when a plaintiffs opposition to the motion to
dismiss framed its arguments as though only an oral agreement was
asserted as the basis for relief we have specifically held that
if the complaint did not clearly allege [the fact of an oral
agreement,] . . . dismissal could be viewed as inappropriate for
that reason.41 Here, then, because the third-party complaint did
not clearly allege an oral acceptance, dismissal for violation of
the statute of frauds could properly be granted before summary
judgment.
For these reasons, I would hold that Valdez Fisheries
third-party complaint sets forth a facially plausible claim for
breach of contract that could not properly be dismissed under
Rule 12(b)(6).42 I therefore dissent from the courts decision to
affirm the superior courts order dismissing the claim.
_______________________________
1 We describe the facts for purposes of these appeals
taking all permissible inferences in favor of Valdez Fisheries
and Sea Hawk Seafoods.
2 This is how Valdez Fisheries third-party complaint
described its offer.
3 This is how Valdez Fisheries third-party complaint
described Alyeskas response.
4 Christiansen v. Melinda, 857 P.2d 345, 346 n.2 (Alaska
1993) (citing Kollodge v. State, 757 P.2d 1024, 1026 n.4 (Alaska
1988)).
5 Kollodge, 757 P.2d at 1026 (citation omitted).
6 Id. (citation omitted).
7 Shooshanian v. Wagner, 672 P.2d 455, 461 (Alaska 1983)
(citation omitted).
8 Reeves v. Alyeska Pipeline Serv. Co., 926 P.2d 1130,
1134 (Alaska 1996).
9 Id. (citing Zeman v. Lufthansa German Airlines, 699
P.2d 1274, 1280 (Alaska 1985)).
10 Reeves, 926 P.2d at 1134 (citations omitted).
11 Cooperman v. Individual, Inc., 171 F.3d 43, 47 (1st
Cir. 1999) (citation omitted); Gooley v. Mobil Oil Corp., 851
F.2d 513, 515 (1st Cir. 1988) (interpreting Federal Rule of Civil
Procedure 12(b)(6) and stating that [m]odern notions of notice
pleading notwithstanding, a plaintiff . . . is nonetheless
required to set forth factual allegations, either direct or
inferential, respecting each material element necessary to
sustain recovery under some actionable legal theory); Charles
Alan Wright et al., Federal Practice and Procedure 1216, 156-59
(2d ed. 1990) (stating complaint must contain allegations on
every material point necessary to sustain a recovery . . . or
contain allegations from which an inference fairly may be drawn
that evidence on these material points will be introduced at
trial); see also Blaw Knox Ret. Income Plan v. White Consol.
Indus., Inc., 998 F.2d 1185, 1189-90 (3d Cir. 1993) (affirming
Federal Rule of Civil Procedure 12(b)(6) dismissal because ERISA
complaint that employer breached fiduciary duty did not
specifically allege facts which, if true, would demonstrate that
employer had mismanaged plans or failed to meet statutory funding
obligations); Dworkin v. First Natl Bank of Fairbanks, 444 P.2d
777, 779-80 (Alaska 1968) (holding that Alaska Civil Rule
12(b)(6) dismissal was proper where complaint afforded no factual
basis for inferring requisite elements of equitable mortgage
claim).
12 Davis v. Dykman, 938 P.2d 1002, 1006 (Alaska 1997) (The
formation of a valid contract requires an offer encompassing all
essential terms, unequivocal acceptance by the offeree,
consideration, and an intent to be bound.) (citations omitted).
13 See Ahwinona v. State, 922 P.2d 884, 886 (Alaska 1996)
(interpreting meaning of attached release in affirming Rule
12(b)(6) dismissal). Interpreting the words in a contract is a
question of law [w]here the facts relating to surrounding
circumstances are not in dispute. State v. Fairbanks N. Star
Borough Sch. Dist., 621 P.2d 1329, 1331-32 n.5 (Alaska 1981)
(quoting Natl Bank of Alaska v. J.B.L. & K. of Alaska, Inc., 546
P.2d 579, 586 (Alaska 1976)).
14 See Magill v. Nelbro Packing Co., __ P.3d __ , 2001 WL
995976 at *3-4, Op. No. 5459 at 9 (Alaska, August 31, 2001)
(affirming trial courts conclusion that no profit sharing
agreement had been formed where no evidence of sufficiently
definite price term); Clark v. Greater Anchorage, Inc., 780 P.2d
1031, 1035 (Alaska 1989) (affirming denial of directed verdict
where agreement to procure insurance was sufficiently definite
and certain because, among other things, duration of coverage
could be inferred from past dealings and business customs).
15 See Davis, 938 P.2d at 1006 (stating that an agreement
is not enforceable if its essential terms are not reasonably
certain) (citations omitted).
16 We likewise do not see how a court could enforce the
alleged contract. Based on the proposal and Alyeskas response, a
court could not order specific performance or calculate damages
for breach.
17 Acceptance requires a reasonable manifestation of
assent to the terms of the offer. Restatement (Second) of
Contracts 50 (1979). Except in unusual circumstances not
present here, manifestation of acceptance by promise requires a
reasonable attempt to communicate this promise to the offeror.
See Restatement (Second) of Contracts 56 (it is generally
essential to an acceptance by promise . . . that the offeree
exercise reasonable diligence to notify the offeror of
acceptance); id. at 69 cmt. a (offerees silence or inaction
generally cannot constitute acceptance). Even assuming the
Authorization for Expenditure would have been an acceptance by
promise had Alyeska communicated it to Valdez Fisheries, Alyeska
made no attempt to do so. The Authorization for Expenditure
simply provides no basis for determining that Alyeska manifested
assent to Valdez Fisheries offer. See Zeman, 699 P.2d at 1281-82
(stating that summary judgment on breach of contract claim is
appropriate where no reasonable person could read purported
acceptance as evidencing mutual assent); see also Davis, 938 P.2d
at 1006.
18 As discussed infra at Part III.D.2., any oral
communications would be unavailing under the statute of frauds
even if they were unequivocal expressions of acceptance.
19 Gooley, 851 F.2d at 514 (noting that court[s] need not
conjure up unpled allegations or contrive elaborately arcane
scripts to save a complaint from dismissal).
20 Cooperman, 171 F.3d at 47 (citation omitted).
21 Supra note 18 and accompanying text.
22 Valdez Fisheries argues that it did not obtain the
Authorization for Expenditure until several weeks after the court
denied its proposed second amended complaint. As discussed
above, however, the Authorization for Expenditure could not
support an inference that Alyeska accepted Valdez Fisheries offer
because it was never communicated to Valdez Fisheries.
23 Gooley, 851 F.2d at 515 (citation omitted).
24 Sea Hawk cannot be a third-party beneficiary in the
absence of a valid contract between Alyeska and Valdez Fisheries.
25 See Davis, 938 P.2d at 1008-09 (In theory, an agreement
to negotiate is an enforceable contract in the sense that the
parties can be made to participate in negotiations.).
26 Id.
27 Id. at 1009.
28 See id.
29 Zeman, 699 P.2d at 1284.
30 Brady v. State, 965 P.2d 1, 11 (Alaska 1998).
31 Id. at 10.
32 See id. (drawing distinction between unequivocal
acceptance and comments about timing and capacity such as [w]e
can be prepared to sign . . . make that contract . . . sign that
contract . . . on the day they sign the classification order. ).
33 Davis v. Dykman, 938 P.2d 1002, 1009 (Alaska 1997).
34 938 P.2d 1002, 1009 (Alaska 1997).
35 Alyeska argues that this court cannot consider McHales
alleged promise because it was not set out in Valdez Fisheries
original third-party complaint. But Valdez Fisheries first
amended third-party complaint, which was partially accepted by
the superior court, pleads the McHale promise. The superior
court granted Valdez Fisheries motion to amend some of its
claims, including its good faith/reasonable efforts and
promissory estoppel claims against Alyeska. The McHale promise
is part of the promissory estoppel claims.
36 AS 09.25.010(a).
37 AS 09.25.010(a)(6).
38 Restatement (Second) of Contracts 139 (1981).
39 934 P.2d 1313, 1316-17 (Alaska 1997).
40 Id.
41 See David J. Gass, Michigans UCC Statute of Frauds and
Promissory Estoppel, 74 Mich. B.J. 524, 526 (1995) (listing
general reasons given for statute of frauds in survey of cases).
42 See id. at 527.
43 See id.
44 See id.
45 See id.
46 See id. at 527-28.
47 See Brady, 965 P.2d at 10.
48 Christensen v. NCH Corp., 956 P.2d 468, 473 (Alaska
1998).
49 Betz v. Chena Hot Springs Group, 742 P.2d 1346, 1348
(Alaska 1987).
50 Id.
51 See, e.g., Betz, 742 P.2d at 1348.
52 Neal & Co. v. City of Dillingham, 923 P.2d 89, 95
(Alaska 1996).
53 Bubbel v. Wien Air Alaska, Inc., 682 P.2d 374, 380
(Alaska 1984) (quoting Restatement (Second) of Torts 552(1)
(1977)).
54 Id. at 381.
55 Matthews v. Kincaid, 746 P.2d 470, 472 (Alaska 1987).
56 See Alaska R. Civ. P. 82(b)(2).
57 See Alaska R. Civ. P. 82(b)(3).
58 State v. Alaska Intl Air, Inc., 562 P.2d 1064, 1067
(Alaska 1977).
59 Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d
20, 44 (Alaska 1998) (citations omitted).
60 Reid v. Williams, 964 P.2d 453, 460 (Alaska 1998)
(citation omitted).
1 Rule 12(b) provides:
Every defense, in law or fact, to a
claim for relief in any pleading,
whether a claim, counterclaim, cross-
claim, or third-party claim, shall be
asserted in the responsive pleading
thereto if one is required, except that
the following defenses may at the option
of the pleader be made by motion: . . .
(6) failure to state a claim upon which
relief can be granted . . . . If, on a
motion asserting the defense numbered
(6) to dismiss for failure of the
pleading to state a claim upon which
relief can be granted, matters outside
the pleading are presented to and not
excluded by the court, the motion shall
be treated as one for summary judgment
and disposed of as provided in Rule 56,
and all parties shall be given
reasonable opportunity to present all
material made pertinent to such a motion
by Rule 56.
2 E.g., Kollodge v. State, 757 P.2d 1024, 1026 (Alaska
1998); Reed v. Municipality of Anchorage, 741 P.2d 1181, 1184
(Alaska 1987); Knight v. American Guard & Alert, Inc., 714 P.2d
788, 791 (Alaska 1986).
3 Knight, 714 P.2d at 791.
4 Kollodge, 757 P.2d at 1026; Guerrero v. Alaska Hous.
Fin. Corp., 6 P.3d 250, 253 (Alaska 2000).
5 Knight, 714 P.2d at 791; see also Shannon v. City of
Anchorage, 429 P.2d 17, 19 (Alaska 1967). (The complaint alleged
that appellee was negligent in failing to fulfill its duty of
furnishing Jacobs ladders for use of [plaintiff]. That was all
that was necessary to state a claim for relief. It was
unnecessary to state the evidential facts upon which such a duty
was founded. . . . If appellee needed more facts, it could call
for them under Civil Rule 12(e) or obtain them by utilization of
the rules relating to discovery.) (citations omitted).
6 Knight, 714 P.2d at 791 (quoting 5 Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure 1357, at 602
(1969)).
7 Linck v. Barokas & Martin, 667 P.2d 171, 173 (Alaska
1983).
8 Shooshanian v. Wagner, 672 P.2d 455, 461 (Alaska 1983)
(quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
9 Guerrero, 6 P.3d at 253-58 (allowing dismissal only if
it was beyond doubt that plaintiff could not factually support a
claim for relief).
10 Alaska R. Civ. P. 8(a).
11 Alaska R. Civ. P. 8(e)(1).
12 Sykes v. Melba Creek Mining, Inc., 952 P.2d 1164, 1168
n.4 (Alaska 1998); cf. Gamble v. Northstore Pship, 907 P.2d 477,
481-83 (Alaska 1995) (stating that [a]n affirmative defense is
adequately pleaded if it provides the opponent fair notice of the
nature of the defense and deeming an answer that stated,
Plaintiffs are barred by estoppel and Plaintiffs are barred by
res judicata as sufficient to raise affirmance as an affirmative
defense because the pleaded defenses invok[ed] some of the same
concerns in general terms).
13 Slip Op. at 8-10.
14 Id. at 8.
15 The opinion expressly acknowledges this principle. See
Slip Op. at 8 (quoting Cooperman v. Individual, Inc., 171 F.3d
43, 47 (1st Cir. 1999) (emphasis added)).
16 778 P.2d 569 (Alaska 1989).
17 Id. at 577-78.
18 Id.
19 See id.
20 For example, Civil Rule 9(a) requires specificity in
pleading capacity, Rule 9(b) requires specificity in pleading
fraud, mistake, and condition of mind, and Rule 9(h) requires
specificity as to items of special damage:
(a) Capacity. It is not necessary to
aver the capacity of a party to sue or be
sued or the authority of a party to sue or be
sued in a representative capacity or the
legal existence of and organized association
of persons that is made a party, except to
the extent required to show the jurisdiction
of the court. When a party desires to raise
an issue as to the legal existence of any
party or the capacity of any party to sue or
be sued or the authority of a party to sue or
be sued in a representative capacity, the
party desiring to raise the issue shall do so
by specific negative averment, which shall
include such supporting particulars as are
peculiarly within the pleaders knowledge.
(b) Fraud, Mistake, Condition of the
Mind. In all averments of fraud or mistake,
the circumstances constituting fraud or
mistake shall be stated with particularity.
Malice, intent, knowledge, and other
condition of mind of a person may be averred
generally.
. . . .
(h) Special Damage. When items of
special damage are claimed, they shall be
specifically stated.
21 Civil Rule 9(c) provides:
Conditions Precedent. In pleading the
performance or occurrence of conditions
precedent, it is sufficient to aver generally
that all conditions precedent have been
performed or have occurred. A denial of
performance or occurrence shall be made
specifically and with particularity.
22 Slip Op. at 8.
23 Emphasis added.
24 5A Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure 1357, at 344 (2d ed. 1990). For a good
example of such a case, see Ahwinona v. State, 922 P.2d 884, 886
(Alaska 1996).
25 Guerrero v. Alaska Hous. Fin. Corp., 6 P.3d 250, 253
(Alaska 2000); Kollodge v. State, 757 P.2d 1024, 1026 (Alaska
1998).
26 See Slip Op. at 8 (quoting Cooperman v. Individual,
Inc., 171 F.3d 43, 47 (1st Cir. 1999)).
27 Slip Op. at 8.
28 See Slip Op. at 8-10.
29 See Slip Op. at 11, note 18; 16-18.
30 Slip Op. at 9-10 (citations omitted).
31 Slip Op. at 10, note 16.
32 5 Arthur Linton Corbin, Corbin on Contracts, 1079, at
453-54 (1964) (citations omitted).
33 Id. at 454; see also Restatement of Contracts 344, at
565 (1933), as quoted in McBain v. Pratt, 514 P.2d 823, 827
(Alaska 1973) (The damages for breach of an alternative contract
are determined in accordance with that one of the alternatives
that is chosen by the party having an election, or, in case of
breach without an election, in accordance with the alternative
that will result in the smallest recovery.).
34 See Uchitel Co. v. Telephone Co., 646 P.2d 229, 236-37
(Alaska 1982); McBain v. Pratt, 514 P.2d at 827.
35 See sources cited supra note 33.
36 See Slip Op. at 11, note 18.
37 2 Arthur Linton Corbin, Corbin on Contracts 498, at
681 (1950) (citations omitted), as quoted in Fleckenstein v.
Faccio, 619 P.2d 1016, 1020 (Alaska 1980).
38 Merdes v. Underwood, 742 P.2d 245, 253 (Alaska 1987);
Fleckenstein v. Faccio, 619 P.2d at 1020.
39 2 Arthur Linton Corbin, Corbin on Contracts 498, at
681 (1950) (citations omitted), as quoted in Fleckenstein v.
Faccio, 619 P.2d at 1020.
40 See Martin v. Mears, 602 P.2d 421, 427-28 (Alaska
1979).
41 Id. (emphasis added).
42 The opinions alternative theory of harmless error is
unpersuasive because it impermissibly regards Valdez Fisheries
proposed amended third-party complaint as if it had been
submitted as a response to a summary judgment motion.
Here, Alyeska never filed a summary judgment motion and
submitted no materials outside the pleadings in seeking dismissal
under Rule 12(b)(6). Valdez Fisheries, in turn did not submit
any materials outside the pleadings when opposing Alyeskas
motion, and had no duty to do so. Instead, it properly contended
that dismissal under 12(b)(6) would be improper because its third-
party complaint satisfied Rule 8 by alleging that Valdez
Fisheries and Alyeska had entered a contract to lease the Sea
Hawk facility and that Alyeska had later repudiated that
contract. Valdez Fisheries also properly maintained that it had
never alleged that the details contained in its complaint were
exhaustive; that it had not yet been given the opportunity to
present evidence demonstrating the existence of the contract
because Alyeska had not filed a motion for summary judgment; and
that conversion of the dismissal motion to one for summary
judgment would therefore be premature.
In response to these arguments, the superior court
dismissed Valdez Fisheries contract claim under Rule 12(b)(6)
without looking beyond the pleadings, relying on the narrow (and
legally incorrect) theory that a complaint must specifically
allege all steps of contract formation and that Valdez Fisheries
third-party complaint failed to allege the required information.
Even if the superior court had elected to look beyond the
complaint and convert Alyeskas Rule 12(b)(6) motion into a motion
for summary judgment, moreover, the court would have been obliged
to give Valdez Fisheries notice of its intent to do so and a
reasonable opportunity to present all material made pertinent to
such a motion by Rule 56. Alaska R. Civ. P. 12(b)(6). Given
these circumstances, it is fundamentally unfair to treat Valdez
Fisheries proposed amended complaint as a proxy for a formal
response to a summary judgment motion that Alyeska steadfastly
declined to file. The opinions harmless error theory essentially
condones a Rule 12(b)(6) dismissal by going beyond the pleadings
without giving Valdez Fisheries fair notice or a reasonable
opportunity to present all pertinent materials.
