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.
 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Reeves v. Alyeska Pipeline Service Co. (7/19/2002) sp-5596

Reeves v. Alyeska Pipeline Service Co. (7/19/2002) sp-5596

     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

JOHN REEVES,                  )
                              )    Supreme Court No. S-9168 /9267
         Appellant/Cross-Appellee,      )
                              )    Superior Court No.
          v.                  )    4FA-93-956 CI
                              )
ALYESKA PIPELINE SERVICE CO., )    O P I N I O N
                              )
     Appellee/Cross-Appellant.     )     [No.  5596  -  July  19,
2002]
________________________________)


          Appeal  from the Superior Court of the  State
          of  Alaska, Fourth Judicial District, Charles
          R. Pengilly, Judge.

          Appearances:  Thomas V. Van Flein, Marcus  R.
          Clapp,   Clapp,  Peterson  &  Stowers,   LLC,
          Anchorage, and David H. Call, Fairbanks,  for
          Appellant/Cross-Appellee.  David  A.  Devine,
          Groh    Eggers,    LLC,    Anchorage,     for
          Appellee/Cross-Appellant.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Bryner,  and Carpeneti, Justices.  [Eastaugh,
          Justice, not participating.]

          BRYNER, Justice.
          FABE,  Chief  Justice,  with  whom  MATTHEWS,
          Justice, joins, dissenting.


I.   INTRODUCTION

          John Reeves developed an idea to build a visitor center

at   a   turnout  overlooking  the  Trans-Alaska  Pipeline   near

Fairbanks.  He described his idea to Alyeskas Fairbanks  manager,

Keith  Burke,  in return for Burkes promise not to use  the  idea

without  allowing  Reeves to participate in  its  implementation.

Yet Alyeska subsequently ceased dealing with Reeves and proceeded

to build the visitor center on its own.  Reeves sued Alyeska, and

a jury awarded him damages under various alternative contract and

tort  theories.   The  questions presented  here  center  on  the

validity  of  the  special  verdict finding  Alyeska  liable  for

breaching its disclosure agreement with Reeves and on the measure

of  damages  for  that breach.  We hold that the special  verdict

correctly  established Alyeskas liability for  breach.   We  also

hold  that the special verdict on Reevess implied contract  claim

correctly  determined  the  issue of damages.   But  because  the

superior court awarded damages on a different claim addressed  in

the special verdict, we remand for entry of a modified judgment.1

II.  FACTS AND PROCEEDINGS

          We  described the salient historical facts in Reeves v.

Alyeska Pipeline Service Co. (Reeves I):

               In   1985   Alyeska  created  a  visitor
          turnout  at  Mile  9  of the  Steese  Highway
          between  Fox and Fairbanks.  The turnout  had
          informational signs and provided  visitors  a
          view  of  the Trans-Alaska Pipeline.   Before
          Alyeska  constructed  the  turnout,  visitors
          gained  access to the pipeline  by  a  nearby
          road   and  trespassed  on  the  Trans-Alaska
          Pipeline right-of-way.
          
               John Reeves, owner of Gold Dredge No. 8,
          a  tourist  attraction outside Fairbanks  and
          near   the  turnout,  contacted  Alyeska   in
          January  1991  to discuss a tourism  idea  he
          had.   He  spoke  with Keith Burke,  Alyeskas
          Fairbanks  Manager.  After  receiving  Burkes
          assurance  that the tourism idea was  between
          us, Reeves orally disclosed his idea to build
          a visitor center at the turnout.  He proposed
          that  Alyeska lease him the land and he build
          the  center,  sell  Alyeska merchandise,  and
          display a pig and a cross-section of pipe.
          
               Burke  told  him the idea look[ed]  good
          and   asked   Reeves  to  submit  a   written
          proposal,  which Reeves did two  days  later.
          The  proposal  explained  Reeves[s]  idea  of
          operating a visitor center on land leased  to
          him  by Alyeska.  The proposal included plans
          to  provide small tours, display a pig,  pipe
          valve, and section of pipe, sell refreshments
          and  pipeline memorabilia, and plant corn and
          cabbage.
          
               After  submitting  the proposal,  Reeves
          met  with Burke once again.  At this  meeting
          Burke  told  Reeves the proposal looked  good
          and was exactly what he wanted.  In Reeves[s]
          words, Burke told him, Were going to do  this
          deal,  and  Im  going to  have  my  Anchorage
          lawyers draw it.  Reeves claimed he and Burke
          envisioned that the visitor center  would  be
          operating by the 1991 summer tourist season.
          
               Reeves   alleges  that  Alyeska   agreed
          during  this meeting (1) to grant  access  to
          the  turnout for twenty years; (2)  to  allow
          Reeves   to   construct   and   operate    an
          information  center; and (3) to allow  Reeves
          to   sell  merchandise  and  charge  a  $2.00
          admission  fee.   Reeves  stated   that,   in
          exchange,  he  agreed  to  pay  Alyeska   ten
          percent of gross receipts.
          
               Over  the  next  several  months,  Burke
          allegedly  told   Reeves that  the  deal  was
          looking  good  and  not to worry  because  it
          takes  time for a large corporation to  move.
          However,  in  spring 1991, Burke told  Reeves
          that  the visitor center was such a good idea
          that  Alyeska  was  going  to  implement   it
          without  Reeves.  By August 1991 Alyeska  had
          installed a portable building at the  turnout
          to  serve  as a visitor center;  it  built  a
          permanent log cabin structure in 1992.
          
               The members of the Alyeska Pipeline Club
          North (APCN) operated the visitor center  and
          sold  T-shirts, hats, and other items.   APCN
          does  not  charge admission.   A  section  of
          pipeline  and  a  pig are on  display.   APCN
          employees  provide  information  and   answer
          visitors  questions.   Members  of  APCN  had
          suggested  in  1987  that  Alyeska  create  a
          visitor  center  at  the  turnout.   However,
          Alyeska  had rejected the idea at that  time.
          Before  meeting with Reeves,  Burke  did  not
          know  that APCNs visitor center idea had been
          raised and rejected by Alyeska in 1987.
          
               Approximately 100,000 people visited the
          visitor center each summer in 1992 and  1993.
          It  grossed over $50,000 in sales each  year.
          The net profit for 1993 was calculated to  be
          $5,000-$15,000.    APCN  received   all   the
          profit.[2]
          
          In  response to Alyeskas decision to use his  idea  for

          the visitor center without allowing him to participate in the

venture,  Reeves  filed suit against Alyeska in  May  1993.3   He

alleged  breach of oral contract, promissory estoppel, breach  of

implied  contract, quasi-contract (unjust enrichment and  quantum

meruit),  breach of the covenant of good faith and fair  dealing,

breach  of license or lease agreement, and various torts  related

to  the  alleged  contractual relationships.4  In pressing  these

claims, Reeves basically asserted two distinct theories: (1) that

Alyeska  had  verbally given him a lease to develop  the  visitor

center   or  at  least  had entered into a  binding  contract  to

memorialize  the terms of a lease; and (2) that,  in  return  for

disclosing  his  idea  to  Burke, Alyeska  had  promised  not  to

implement  or further disclose Reevess idea without allowing  him

to participate in the implementation.5

          Superior  Court  Judge  Charles  R.  Pengilly   granted

Alyeskas  motion for summary judgment on all claims  as  to  both

theories; Reeves appealed.6  In Reeves I, we affirmed the summary

judgment  order  as  to all claims asserted under  Reevess  first

theory, holding that the statute of frauds barred enforcement  of

any  oral  lease  agreement or any agreement  to  memorialize  in

writing  the  alleged contract to implement Reevess participation

in  the  visitor  center.7   But we reversed and remanded  as  to

claims  under  Reevess theory that Alyeska  breached  an  alleged

disclosure agreement  that is, Alyeskas alleged promise  that  if

Reeves  disclosed  his idea, Alyeska would  not  use  it  without

including  Reeves in the venture.8  In support of this theory  on

remand,  Reeves  asserted claims for breach of express  contract,

breach   of   implied  contract,  promissory   estoppel,   quasi-

contract/unjust enrichment, and various related torts.9

          After  a  two-week trial, the superior court  submitted

five  alternative claims to the jury:  (1) express contract,  (2)

implied-in-fact  contract, (3) promissory  estoppel,  (4)  quasi-

contract/unjust  enrichment,  and (5)  misrepresentation.   Judge

Pengilly gave the jury special verdict questions on each  of  the

          claims for relief.  The jury returned a verdict finding on the

issue of liability that

          Alyeska  promised  not to use Reevess idea without
          allowing him to participate in its implementation;
          
          Alyeska broke this promise;
          
          Alyeska used Reevess idea; and
          
          Alyeska   derived  actual  benefit  from   Reevess
          disclosure of his idea.
          
          The  special verdict then separately addressed  Reevess

alternative  claims for breach of express and  implied  contract,

promissory   estoppel,  quasi-contract/unjust   enrichment,   and

misrepresentation.  The courts instructions on damages as to each

of  the  alternative claims, and the jurys respective  awards  on

those claims, are as follows:

          On  the  express contract claim, the  trial  court
          instructed  the  jury  to  base  its  compensatory
          damages  award  on the amount necessary  to  place
          Reeves  in  the same position that he  would  have
          been in had Alyeska kept its promise to allow  him
          to participate in implementing the visitor center.
          The jury returned an award of $2,989,000.
          
          As  to the implied contract claim, the court asked
          the jury to determine damages in the amount of the
          value of the idea to Alyeska.  The jury returned a
          verdict of  $1,820,000.
          
          On  Reevess promissory estoppel claim,  the  court
          gave   an   instruction  similar  to  its  implied
          contract  instruction,  directing  the   jury   to
          measure damages in the amount of the value of  any
          benefit [Reeves] conferred upon Alyeska.  The jury
          returned  a  verdict  identical  to  its   implied
          contract verdict: $1,820,000.
          
          On Reevess quasi-contract/unjust enrichment claim,
          the  court  instructed the jury to  determine  the
          amount  of the value of the benefit which  Alyeska
          has  unjustly  retained.   The  jury  returned   a
          verdict for $4,809,000.
          
          Last,  the  court instructed the jury  on  Reevess
          claim  for  misrepresentation.   The  instructions
          required the jury to find that Alyeska had engaged
          in  intentional misrepresentation, asking the jury
          to  decide,  did  [Burke]  intend  to  break  that
          promise at the time he made it?  The verdict  form
          provided   for  both  compensatory  and   punitive
          damages.   To  determine compensatory damages  for
          misrepresentation,  the  court  used  a   standard
          similar to the one it employed for Reevess express
          contract claim, instructing the jury, as nearly as
          possible,  [to] place [Reeves] in the position  he
          would have occupied had it not been for [Alyeskas]
          misrepresentation.   The jury  declined  to  award
          compensatory  damages,  finding  that  Reeves  had
          failed  to  prove  intentional  misrepresentation.
          But   the   jury   nevertheless   awarded   Reeves
          $7,500,000 in punitive damages.
          
          After  the  jury returned these verdicts, Reeves  moved

for  entry of judgment reflecting the compensatory awards on both

his express contract claim  $2,989,000  and his unjust enrichment

claim   $4,809,000  as well as the award of punitive damages  for

misrepresentation  $7,500,000.  The superior court  only  awarded

compensatory   damages   on  Reevess   express   contract   claim

$2,989,000  and struck the punitive damages award.

          Reeves appeals; Alyeska cross-appeals.

III. DISCUSSION

     A.   The Disclosure Agreement Was Enforceable.

          On  appeal,  Reeves  challenges the  courts  denial  of

punitive  damages and its limited award of compensatory  damages.

But on cross-appeal Alyeska asserts that we need not decide these

damages   issues,   because   the   disclosure   agreement    was

unenforceable.   Pointing  to Reevess  admission  at  trial  that

Alyeska  never  promised  to pay him  any  specified  amount  for

disclosure  of his idea  or even an unspecified reasonable  value

Alyeska  argues  that the disclosure agreement  lacked  essential

terms, was unenforceably vague, and so was merely an agreement to

agree.  But we rejected a similar argument in Reeves I.

          We  held there that contract and contract-like theories

may   protect  individuals  who  spend  their  time  and   energy

developing unoriginal or non-novel ideas that others find useful,

because  [i]t  would be inequitable to prevent these  individuals

from  obtaining legally enforceable compensation from  those  who

voluntarily  choose  to benefit from the services  of  the  idea-

person.  10   We further explained that [i]f parties  voluntarily

          choose to bargain for an individuals services in disclosing or

developing a non-novel or unoriginal idea, they have the power to

do  so.11   As Reeves I implicitly recognizes, then, a disclosure

contract  is  not a typical agreement for the sale  of  goods  or

services at an agreed-upon price; rather, it is an agreement  for

disclosure  of an idea in exchange for a promise not to  use  the

idea   without   including   the   disclosing   party   in    its

implementation.

          Other  courts agree with this view.  The Ninth  Circuit

Court of Appeals addressed an analogous situation in Landsberg v.

Scrabble Crossword Game Players, Inc., and squarely rejected  the

same  argument  that  Alyeska advances here.12    In  that  case,

Landsberg  authored a strategy book for winning at  the  game  of

Scrabble;  he  then approached S & R, the makers of the  Scrabble

game,  to obtain permission to use the Scrabble trademark in  his

manuscript.   After  negotiations  regarding  S  &  Rs   possible

publication  of the manuscript were halted, S & R  published  its

own  strategy  book,  which S & R based upon  Landsbergs  idea.13

Landsberg sued.  While finding that Landsbergs idea was not novel

or  original and that S & Rs use of the idea in its book was  not

sufficiently  similar  to Landsbergs manuscript  to  establish  a

copyright  violation, the trial court nonetheless concluded  that

Landsbergs  initial disclosure of his manuscript was confidential

and for the limited purpose of obtaining approval for the use  of

the  Scrabble  mark, and . . . given his expressed  intention  to

exploit  his  manuscript  commercially,  defendants  use  of  any

portion  of  it was conditioned on payment.14  On review  of  the

district  courts  ruling, the Ninth Circuit, applying  California

law,  confirmed that a valid implied-in-fact disclosure  contract

arose  in this context.15  The court further found that a  breach

of  the  contract  could  be  proved by  evidence  sufficient  to

establish  that S & R disclosed or used Landsbergs  idea  without

compensation.16

          Here,  as  in Landsberg, the record contains sufficient

          evidence to support a finding that, in return for Reevess

agreement  to  disclose  his idea, Alyeska  promised  him  either

confidentiality  or  participation in  implementing  the  visitor

center  project.17  This promise is sufficiently  definite  as  a

matter  of  law to establish an enforceable disclosure agreement.

Similarly,  there  can  be  no  question  that  Reeves   produced

sufficient  evidence  to support the jurys finding  that  Alyeska

breached this agreement by unilaterally exploiting Reevess  idea.

We  thus reject Alyeskas assertion that the agreements terms were

too  vague  to  establish Alyeskas liability for  breach  of  its

promise  not  to use Reevess idea without including  him  in  the

venture.

     B.   The  Special  Verdict  for Breach of  Implied  Contract
          Correctly Measured Reevess Damages.
          
          We  must  next  determine  the appropriate  measure  of

damages   for   Alyeskas  breach.   Reeves   insists   that   his

compensatory  damages should have included the  jurys  $4,809,000

award  for  unjust  enrichment.  Alyeska  counters  that  a  non-

original  idea has no intrinsic value and that Reeves I therefore

limits  Reevess  damages  to  the  fair  market  value  of  [his]

services.   But  Reeves  I touched only  briefly  on  the  proper

measure  of  damages  for  breach of  the  disclosure  agreement.

Neither Reeves I nor other case law supports Alyeskas assertion.

          Again,  we  find  appropriate  guidance  in  Landsberg.

After  concluding  that the evidence supported the  trial  courts

finding  that  S  &  R  had  formed and breached  an  enforceable

disclosure agreement with Landsberg, the Ninth Circuit  expressly

rejected S & Rs suggestion that compensation for breach  of  that

contract should be limited to the fair market value of Landsbergs

work;  the court instead accepted Landsbergs contention that  the

proper measure of damages was the value of Landsbergs idea to S &

R   that  is, the profits that S & R (and its publishing partner,

Crown Books) actually realized:

          Landsberg  argues that the contract  was  not

          for the use of his manuscript, but for S & Rs

          refraining   from  using   it   without   his

          permission  . . . .  Landsberg was  therefore

          entitled  under  the  terms  of  the  implied

          contract to more than the fair value of  S  &

          Rs use.  He was entitled to . . . the profits

          from S & Rs exploitation of [his work]. [18]

          Because  of the strong similarities between  these  two

cases,  we  adopt  Landsbergs holding as the proper  measure  for

calculating  damages  here.  As in Landsberg,  the  parties  here

reached  a disclosure agreement without establishing the  precise

value  of  Reevess proposal.  But after agreeing not to  use  the

proposal without including Reeves in its implementation,  Alyeska

breached   its  agreement  and  profited  from  its   breach   by

unilaterally  developing the visitor center.19  Under  Landsberg,

then,  the proper measure of Reevess compensatory damages is  the

profit that Alyeska actually realized by exploiting Reevess idea.

We  thus conclude that the trial court properly rejected Alyeskas

attempt  to  limit  Reevess damages to  the  fair  value  of  his

services.

          But this conclusion next requires us to consider which,

if  any,  of the special verdicts alternative awards reflected  a

correct measure of Reevess compensatory damages.  The trial court

entered  judgment  on the $2,989,000 verdict  for  breach  of  an

express  contract,  which under the courts  instructions,  placed

Reeves  in  the  same position that he would  have  been  in  had

Alyeska  kept  its  promise  to  allow  him  to  participate   in

implementing  the  visitor center.  But by  focusing  on  Reevess

potential lost revenues instead of Alyeskas actual profits,  this

measure  of  damages  necessarily assumed  that  Reeves  had  the

express  contractual right that Reeves I directly precluded   the

right  to  participate in and directly profit from  the  proposed

venture  with Alyeska, rather than merely a right to insist  that

Alyeska  not exploit his proposal without his involvement.20   By

including lost profits that Reeves had no right to realize, then,

          the express contract verdict conflicted with Reeves  I,

impermissibly opening the door to a verdict based on the terms of

a  verbal  lease  that  was legally barred and  never  existed.21

Entry of judgment on this verdict was therefore improper.

          We similarly conclude that the special verdict based on

Reevess unjust enrichment claim used an inappropriate measure  of

compensatory  damages.   In  requiring   the  jury  to  determine

damages  in the amount of the value of the benefit which  Alyeska

has   unjustly   retained,  the  unjust  enrichment   instruction

essentially focused on the maximum potential profit that  Alyeska

might have realized, rather than on Alyeskas actual profits.  The

difference in focus is reflected in the jurys enhanced  award  of

$4,809,000 for unjust enrichment.  As already mentioned, however,

the  disclosure agreement only protected Reeves from unauthorized

use  by Alyeska; it gave him no vested right to maximized profits

in  the  event  Alyeska  breached  the  disclosure  agreement  by

exploiting his proposal.  Moreover, as with the express  contract

claim,  by inviting consideration of Alyeskas potential  profits,

this  measure of damages conflicted with Reeves I by  effectively

inviting  a  verdict  based on evidence  concerning  the  legally

barred  lease agreement.  In addition, because unjust  enrichment

is  a  judicially created quasi-contract remedy meant to  prevent

injustice  where gaps in the law preclude recovery at  law  on  a

contract  theory,  it would be incongruous  to  award  a  greater

recovery  under  this theory than the jury actually  awarded  for

breach  of  implied  contract.22  And finally,  to  award  unjust

enrichment damages in addition to breach of contract damages   as

Reeves   suggests  we  should   would,  under  the  trial  courts

instructions, permit Reeves to receive a double recovery.

          We last consider Reevess implied contract claim.  Under

the  trial courts instructions, the special verdict on this claim

reflected  the  profits that Alyeska actually  derived  from  its

breach  of the disclosure agreement: the amount of the  value  of

the  idea  to Alyeska.  The jury returned an award of  $1,820,000

          using this measure.23  As we explained in Reeves I, a reasonable

fact-finder could determine that Burkes actions implied a promise

to  pay  for disclosure of Reeves[s] idea.24  The jury  found  an

implied  contract  based  on the theory  that  Alyeska  solicited

disclosure  by  promising not to use the  idea  unless  it  first

reached an agreement with Reeves that would allow him to share in

the  profits.   The  verdict thus comports  with  Reeves  I.   It

similarly comports with Landsberg, which would entitle  the  jury

to  base  its  damages calculation on evidence of the  profit  or

benefit that Alyeska realized from the visitor center, as opposed

to  the  theoretical value of Reevess services in developing  and

disclosing  his idea or the potential but unrealized  profits  of

either  Reeves  or  Alyeska.  Assuming that the implied  contract

verdict finds support in the evidence and was not the product  of

procedural  error,  then,  we  conclude  that  it  relied  on  an

appropriate  measure of damages and would support a  valid  final

judgment.  Accordingly, we must next consider whether the implied

contract  verdict  was supported by sufficient  evidence  or  was

flawed by any legal error occurring at trial.

     C.    Substantial  Evidence Supports  the  Implied  Contract

Verdict.

          Alyeska  insists  that  the  trial  court  should  have

granted  its  motion for remittitur or a new  trial  because  the

jurys awards were excessive under any reasonable measure.25

          Remittitur  is  only  proper when  a  jury  returns  an

otherwise proper verdict awarding an amount of damages  that  the

evidence  cannot reasonably support.26  We may not use remittitur

to  reduce  an award below the maximum possible award sustainable

by  the  evidence,27  and  we review the  denial  of  a  judgment

notwithstanding  the  verdict  only  to  determine  whether   the

evidence,  when viewed in the light most favorable  to  the  non-

moving party, is such that reasonable persons could not differ in

their  judgment of the facts.28  Moreover, [t]he grant or refusal

of  a motion for a new trial rests in the sound discretion of the

          trial court, and we will not disturb a trial courts decision on

such  a  motion except in exceptional circumstances to prevent  a

miscarriage of justice.29  We will uphold a refusal  to  grant  a

new  trial  if  there  is  an evidentiary  basis  for  the  jurys

decision.30

          Alyeskas  argument thus requires us to inquire narrowly

whether  any  record evidence, viewed favorably to Reeves,  might

reasonably support the jurys implied contract award.31   We  find

ample  evidence in the record.  Reevess tourism expert, Dr. Lorin

Toepper, testified that the visitor center generates both revenue-

producing  activities and non-revenue-producing activities,  such

as   improving  public  relations  and  fostering  goodwill.   He

estimated the centers overall actual value to Alyeska as  falling

within  the range of $2.8 to $26 million, depending on the number

of visitors.

          Moreover,  although  Reevess  other  expert,  economist

Francis  Gallela,  primarily addressed  a  different  measure  of

damages  Alyeskas unjust enrichment from the center between  1991

and  1998  his testimony, when viewed in the light most favorable

to  Reeves,  provided additional corroboration  to  Dr.  Toeppers

estimate  of Alyeskas profits.32  Given this testimony,  we  find

substantial  evidence to sustain the jurys finding of  $1,820,000

in  damages on the implied contract claim.  And finally, we  note

that  other courts faced with the task of determining the maximum

amount   of  damages  supportable  by  the  record  in  analogous

contractual  settings have upheld reasonable approximation[s]  of

damages, especially where the difficulties in determining damages

arise in large part from [the defendants] own [breach].33

     D.    Any  Evidentiary  Error Did  Not  Affect  the  Implied

Contract Verdict.

          It  remains  to  be  seen whether the  verdict  is  the

product of procedural error.  Over Alyeskas objection, the  trial

court  admitted extensive evidence concerning the proposed  terms

of  the lease agreement between Reeves and Alyeska, Reevess plans

          for developing and operating the visitor center, the actual value

of  the center that Alyeska developed, and its potential value to

both  Reeves  and  Alyeska.  Alyeska argues  that  this  evidence

should  have  been  excluded because it  was  irrelevant  to  the

matters  properly  at issue after our remand  in  Reeves  I:  the

existence, terms, and breach of the disclosure agreement, as well

as Reevess resulting damages.  We agree in part.

          Under the Alaska Rules of Evidence, irrelevant evidence

is inadmissible,34 but the test of relevance is lenient: evidence

is  relevant if it has any tendency to make the existence of  any

fact  that  is of consequence to the determination of the  action

more  or  less probable than it would be without the  evidence.35

Even  so,  much of the disputed evidence seems irrelevant:  under

the  scope of the disclosure agreement we described in  Reeves  I

and under our holding today concerning the measure of damages for

the agreements breach, evidence of Reevess personal plans for the

visitor  center, the proposed terms of the lease, and the centers

potential  but  unrealized value to both Reeves and  Alyeska  had

little  or  no  tendency to make any fact of consequence  to  the

determination  of  the  action more or  less  probable;  to  this

extent,  the  evidence  should  not  have  been  admitted.    Yet

regardless of any potential to prejudice this evidence posed with

respect to Reevess other claims, it had no obvious effect on  the

implied  contract  claim: as previously noted, the  trial  courts

instructions on this claim limited the jurys award of damages  to

the value that Alyeska actually realized from its exploitation of

Reevess  idea, not on the ideas potential value to either  Reeves

or Alyeska.  Because the disputed evidence had no logical bearing

on  the jurys determination of the existence, scope, or breach of

the disclosure agreement or on the jurys determination of profits

Alyeska  actually realized from the disclosure agreements breach,

any  error  in  admitting the evidence was  harmless  as  to  the

implied contract claim.

     E.   The Superior Court Properly Struck the Punitive Damages

Verdict.

          We  last  consider the issue of punitive damages.   The

jury  returned  a verdict for punitive damages of  $7,500,000  in

connection with Reevess misrepresentation claim, despite  finding

that  Reeves  had  failed  to  prove all  necessary  elements  of

misrepresentation.  The superior court struck the  award.  Reeves

nonetheless argues that the court erred by striking the award  in

its  entirety  without the option of a remittitur or  new  trial.

Claiming  that  this  ruling  violated  his  state  and   federal

constitutional   right  to  a  trial  by   jury,   Reeves   seeks

reinstatement of the verdict.

          1.   The  jury  verdict does not reflect a  finding  of
               negligent  misrepresentation.
               
          The  trial court instructed the jury to award  punitive

damages  only  if  it  found all of the elements  of  intentional

misrepresentation.  Unless the jury found each element in Reevess

favor,  the verdict form precluded it from awarding any  form  of

damages    including  punitive  damages   on  Reevess  claim   of

misrepresentation.  The jury found that Burke did not  intend  to

break  his  promise at the time that he made it;  the  jury  thus

awarded  Reeves  no  compensatory damages for  misrepresentation.

Yet the jury awarded Reeves $7,500,000 in punitive damages on the

same claim.

          Reeves  seeks  to  explain this seemingly  inexplicable

verdict  by  arguing  that the jury made sufficient  findings  of

negligent  misrepresentation  to sustain  an  award  of  punitive

damages;  and  he  further  insists  that  punitive  damages  are

available  for an intentional breach of contract if  the  conduct

giving  rise to the breach is also a tort  even a tort  based  in

ordinary negligence.  These arguments are unpersuasive.

          Although Reeves listed negligent misrepresentation as a

cause of action in his second amended complaint, filed after  the

Reeves  I remand to the trial court for further proceedings,  the

jury  instructions and special verdict form omitted reference  to

negligent  misrepresentation  and  focused  on  the  elements  of

intentional  misrepresentation.  Specifically, the  jury  verdict

form asked:  Did [Burke] intend to break that promise [not to use

Reevess  idea  without  allowing  him  to  participate   in   its

implementation] at the time he made it?  The jury responded,  No.

Based  on  this  answer, the jury declined to award  compensatory

damages for misrepresentation, finding that Alyeskas acts did not

satisfy the required elements of misrepresentation.

          Reeves  nonetheless  argues  that  the  jurys  findings

suffice   to   establish   that   Alyeska   committed   negligent

misrepresentation.  Reeves cites as support the jury  forepersons

explanation,  upon questioning by the trial judge concerning  the

basis for the punitive damages award, that the jury believed that

Burke  developed an intent to deceive soon after he entered  into

the  disclosure agreement with Reeves.36  Reeves suggests that  a

judgment for negligent misrepresentation should automatically  be

entered  on  a lesser-included-tort theory whenever  a  plaintiff

fails   to   prove   the   necessary  elements   of   intentional

misrepresentation  but establishes the elements  of  a  negligent

misrepresentation claim that was not properly submitted.  But the

law provides no support for this novel proposal.

          Moreover, even accepting Reevess proposal for arguments

sake,  his  claim  must fail because the jurys  verdict  did  not

amount to a finding of negligent misrepresentation. The following

elements  are  required to establish negligent misrepresentation:

(1) the party accused of the misrepresentation must have made the

statement   in   the  course  of  his  business,  profession   or

employment,  or  in  any other transaction  in  which  he  has  a

pecuniary  interest,  (2) the representation  must  supply  false

information,  (3) there must be justifiable reliance on the false

information supplied, and (4) the accused party must have  failed

to  exercise  reasonable  care  or  competence  in  obtaining  or

communicating the information. 37

          Although  Reeves failed to object to the absence  of  a

          jury instruction on negligent misrepresentation, he did object to

the  element  of intentional misrepresentation  that  focused  on

whether Burkes promise not to exploit Reevess idea was false when

made:  I dont see why misrepresentation . . . [or] fraud would be

dependent  upon occurrence in time.  But our case law provides  a

reason  that  applies equally to both intentional  and  negligent

misrepresentation:

          to  establish  liability under  [a  negligent
          misrepresentation] theory it is not enough to
          demonstrate that subsequent occurrences  made
          an     originally-accurate     representation
          ultimately false.  For a representation to be
          actionable, both under the Alaska cases . . .
          and under the Restatement, the representation
          must be false when made.[38]
          
Thus,  for Burkes promise to be actionable as a misrepresentation

whether  intentional  or negligent  the promise  must  have  been

false   when   it  was  made.   The  instruction  on  intentional

misrepresentation was accurate in this regard, and Reeves  failed

to request any instruction at all on negligent misrepresentation.

Because  the  jury  found against Reeves on his misrepresentation

claim,  the  trial  court did not err in  striking  the  punitive

damages claim.

          2.   Punitive damages may not be awarded for breach  of
               contract involving an unproved tort.
               
          Reeves also suggests that even if the jury did not find

all  elements  of  misrepresentation in his favor,  the  evidence

presented  at  trial  supports  entering  judgment  for  punitive

damages on his contract claims.39  But we follow the Restatements

position that [p]unitive damages are not recoverable for a breach

of contract unless the conduct constituting the breach is also  a

tort  for which punitive damages are recoverable.40  In this case

the  jury failed to find for Reeves on all elements of his single

tort claim, misrepresentation.

          Reeves  nevertheless  refers to evidence  presented  at

trial  that  he  alleges  established  destruction  of  evidence,

intentional  misconduct  directed  at  lawful  operations,  false

          testimony, and defamation.  But these claims were not presented

to  the  jury as separate tort theories that could have supported

his  claim  for  punitive damages, and it would  be  improper  to

speculate  that the jury found that these torts were established,

much  less that they warranted an award of punitive damages.   An

award of punitive damages requires an express jury finding that a

tort  involving outrageous conduct was committed.  The  jury  did

not make such a finding here.

          3.   Denial of punitive damages did not violate Reevess
               right to a jury trial.
               
          Finally, Reeves argues that the trial courts failure to

enter  judgment  on the jurys award of punitive damages  violated

his  right  to  trial by jury.  But this argument hinges  on  the

incorrect  assumption that the court struck  a  punitive  damages

award  that  was lawfully and appropriately found  by  the  jury.

Reeves fails to recognize that the jury returned its award  after

misconstruing  or disregarding the instructions  on  the  special

verdict  form.   Hence, the jury did not lawfully award  punitive

damages.   The trial court thus had appropriate legal grounds  to

strike  the  award for punitive damages; it did not  reweigh  the

evidence or otherwise interfere with the jurys verdict.

IV.  CONCLUSION

          We  AFFIRM the superior courts order striking  punitive

damages.   Because  the special verdict on the  express  contract

claim incorporates an improper measure of damages and because the

judgment  entered  by  the  superior court  based  its  award  of

compensatory damages on the express contract verdict,  we  VACATE

the  judgment.  The proper measure of damages for breach  of  the

disclosure  agreement in this case is the value  of  the  benefit

that  Alyeska  enjoyed  as a result of  its  breach.   The  jurys

alternative  special  verdict  on  the  implied  contract   claim

establishes compensatory damages under this measure, is supported

by  the  evidence,  and is not affected by any procedural  error.

Accordingly,  we REMAND for entry of a modified judgment  on  the

implied contract claim.

FABE,   Chief  Justice,  with  whom  MATTHEWS,  Justice,   joins,

dissenting.

          Todays decision departs significantly from our analysis

in  Reeves  v. Alyeska Pipeline Service Co. (Reeves  I)1  of  the

remedy  for  breach of an implied-in-fact contract.   I  disagree

with  todays plurality opinion because I believe that  the  trial

court  erred  by  failing  to limit the  jurys  consideration  of

damages  to  the  value  of  the  services  Reeves  provided   in

developing and disclosing his unoriginal idea to Alyeska.  In  my

view, the trial court should have instructed the jury that in the

absence of an express agreement regarding compensation, the  jury

could only consider the value of the services provided by Reeves,

not  the  potential commercial value of the non-novel idea.   For

this reason, I respectfully dissent.

          In our decision in Reeves I, we touched on the question

of  the  proper measure of damages for development and disclosure

of  an  unoriginal  or non-novel idea.  At the trial  on  remand,

Alyeska proposed a jury instruction that was consistent with  the

guidance that we provided in Reeves I and that would have limited

damages  for  breach  of  the  disclosure  agreement  of  Reevess

unoriginal idea to the value of Reevess services:

          [Y]ou  may not compensate Mr. Reeves for  the
          value,  if  any, of the idea itself.  .  .  .
          [I]f  you  decide that Alyeska  breached  the
          disclosure    agreement  by  developing   the
          pipeline  viewing  area by using  Mr.  Reeves
          idea,  then  you  should  consider  how  much
          money, if any, Mr. Reeves should be paid  for
          his services in disclosing his idea.
          
(Emphasis added.)

          The  trial court rejected Alyeskas proposed instruction

and  instead gave the jury five separate jury instructions on the

measure  of damages that corresponded to Reevess various theories

of recovery for breach of the disclosure contract.  For breach of

the  express  contract, the trial court instructed  the  jury  to

determine  the  amount  necessary to place  Reeves  in  the  same

position that he would have been in had Alyeska kept its  promise

          to allow him to participate in implementing the visitor center.

For  breach  of  an  implied-in-fact contract,  the  trial  court

instructed  the jury to determine damages in the  amount  of  the

value  of  the  idea to Alyeska.  The trial court instructed  the

jury to determine damages based on the promissory estoppel theory

in the amount of the value of any benefit [Reeves] conferred upon

Alyeska.   The  unjust enrichment jury instruction  directed  the

jury  to  determine damages in the amount of  the  value  of  the

benefit which Alyeska unjustly retained.  On the final theory  of

recovery for misrepresentation, the trial court directed the jury

to  determine  the  amount of damages that  will,  as  nearly  as

possible,  place [Reeves] in the position he would have  occupied

had it not been for [Alyeskas] misrepresentation.

          We  recognized in Reeves I that contract and  contract-

like  theories may protect individuals who spend their  time  and

energy  developing unoriginal or non-novel ideas that may benefit

others  because  [i]t  would  be  inequitable  to  prevent  these

individuals from obtaining legally enforceable compensation  from

those who voluntarily choose to benefit from the services of  the

idea-person. 2  We noted in our discussion of the implied-in-fact

contract  claim  that  when parties bargain  for  an  individuals

services  in  disclosing  a non-novel  or  unoriginal  idea,  the

services  provided are like those of a writer,  a  doctor,  or  a

lawyer:  each  may  provide  a  product  that  is  not  novel  or

original.3  Thus, although Reeves is not a writer, his ideas  are

entitled to no less protection than those of writers, doctors, or

lawyers.4

          So,  in  the  context  of  our  discussion  of  Reevess

contract  theories, we intimated that, as with those of a  doctor

or  lawyer,  the  value  of Reevess services  in  developing  and

disclosing  an  unoriginal idea would be the correct  measure  of

damages,  absent an express contract with a price  term  defined.

We  also noted in the context of our discussion of Reevess quasi-

contract  claim  that  [i]f  Reeves  services  unjustly  enriched

          Alyeska, he should be compensated for the value of those

services.5

          As  we  explained in Reeves I, [i]f parties voluntarily

choose  to  bargain for an individuals services in disclosing  or

developing a non-novel or unoriginal idea, they have the power to

do  so.6   If the parties reach an express agreement for monetary

compensation  in  return for disclosure,  then  that  agreed-upon

amount would comprise the damages to be awarded upon a finding of

breach  of  the express contract.  Here, however,  there  was  no

evidence of an agreed-upon price for disclosure of Reevess idea.

          I  agree  with the court that the jurys finding  of  an

implied-in-fact  contract should be upheld.  Reeves  argued  that

Alyeska  solicited  his idea and that its manager  asked  him  to

reveal  the substance of the idea.  In addition, Reeves contended

that  Alyeskas later use of the idea created an implied  contract

for  payment.   This theory was consistent with our  decision  in

Reeves I that a reasonable fact-finder could determine that  [the

managers] actions implied a promise to pay for the disclosure  of

Reeves idea.7

          But  although the lack of a specific term  for  payment

for  disclosure  of an unoriginal idea does not  render  such  an

agreement  invalid, it does limit the damages  to  the  value  of

Reevess  service in developing and disclosing the idea.   And  in

this  case, the measure of damages is the same, whether the  jury

used  theories of implied-in-fact contract, promissory  estoppel,

or  quasi-contract  to reach its conclusion that  the  disclosure

agreement  had  been  breached.  In  proposing  its  instruction,

Alyeska  correctly  recognized that where there  is  no  contract

establishing the price term for the development and disclosure of

an  idea, a court must base its equitable remedy on the value  of

the  performance of one party, here Reeves, unjustly retained  by

the other, here Alyeska.8

          As  we suggested in Reeves I, if Reevess experience  or

the  written plan benefitted Alyeska, either in its timing or how

          it was presented, Reeves should be compensated for the value of

his  services in developing and disclosing his idea.9  An injured

party usually seeks, through protection of either his expectation

or  his  reliance  interest, to enforce the other  partys  broken

promise.   However,  he  may,  as an alternative,  seek,  through

protection  of  his restitution interest, to prevent  the  unjust

enrichment  of  the  other party.10  Moreover,  [o]ccasionally  a

party  chooses the restitution interest even though the  contract

is  enforceable because it will give a larger recovery than  will

enforcement   based  on  either  the  expectation   or   reliance

interest.11

          As  we  noted  in Reeves I, by disclosing his  idea  to

Alyeska,  Reeves  substantially  changed  his  position   he  had

significantly reduced his ability to bargain for the terms of the

disclosure.12  Under a theory of promissory estoppel,  the  court

can  remedy  the  breach of promise by enforcing that  promise.13

The  amount of damages for the remedy, however, would  equal  the

restitutionary  remedy,  the same remedy  for  unjust  enrichment

under a quasi-contract theory.

          In  summary, the appropriate measure of damages in this

case,  in  light of the absence of express agreement establishing

the  amount of compensation for Reeves for the disclosure, is the

fair  market  value of Reevess services in disclosing  the  idea.

Yet,  the  trial  court directed the jury that, if  it  found  in

Reevess favor on the implied contract claim, it should award  the

amount  of  the value of the idea to Alyeska.  The  jury  awarded

Reeves $1,820,000 using this measure.  Because the jury based its

award  on the revenues produced by the visitor center as well  as

the  value  of improving public relations and fostering  goodwill

for  Alyeska,  rather  than evidence  of  the  value  of  Reevess

services  in  developing and disclosing the idea, I believe  that

the jurys award should be vacated and the case remanded for a new

trial on damages.  I therefore dissent.

_______________________________
     1     The  court unanimously agrees that the jury  correctly
established  Alyeskas  liability  for  breaching  the  disclosure
agreement.   The court also unanimously agrees that the  superior
court  properly declined to allow punitive damages.  But  we  are
evenly  divided  on  the  measure of  compensatory  damages:  two
justices  conclude  that one of the special verdicts  alternative
awards  correctly  determined  compensatory  damages  and   would
therefore remand for entry of a modified judgment reflecting that
award;  two  justices conclude that none of the special  verdicts
alternative theories decided the damages issue correctly.

          Our case law establishes that [a] decision by an evenly
divided court results in an affirmance.  Ward v. Lutheran  Hosps.
& Homes Socy of Am., Inc., 963 P.2d 1031, 1037 n.11 (Alaska 1998)
(quoting  Thoma  v.  Hickel, 947 P.2d 816,  824  (Alaska  1997)).
Additionally, we have recognized that an affirmance by an  evenly
divided court is not precedent.  Kenai v. Burnett, 860 P.2d 1233,
1246  (Alaska  1993) (Compton, J., concurring).  In  the  present
case, no member of the court favors outright affirmance.  But two
justices would affirm the jurys special verdict on both liability
and  an  alternative theory of compensatory damages, whereas  two
would require a retrial on damages.  In these circumstances,  our
case law indicates that the votes favoring the greatest degree of
affirmance will determine the outcome of this case but  that  the
decision  on  compensatory  damages  will  have  no  precedential
effect.

2      926   P.2d   1130,   1133-34  (Alaska   1996)   (footnotes
omitted).  Because we addressed the case on summary judgment, our
decision in Reeves I stated the facts in the light most favorable
to  Reeves.  Id. at 1133 n.1.  As used in  Reeves I pig describes
a device which passes through the pipeline to clean interior pipe
walls,  survey interior pipe shape and detect corrosion.  Id.  at
1134 n.2.

3    Id. at 1134.

     4    Id.

     5    Id. at 1136.

     6    Id. at 1134.

     7    Id. at 1138-40.

     8    Id. at 1145.

     9    Id.

10   Id. at 1135.

11   Id. at 1142.

     12   802 F.2d 1193, 1196 (9th Cir. 1986).

     13   Id.

     14   Id.

     15   Id. at 1196-97.

     16   Id. at 1196.

17   Reeves I, 926 P.2d at 1137.

18    802  F.2d  at  1198;  see also Donahue  v.  United  Artists
Corp.,  83  Cal. Rptr. 131, 135-36 (Cal. App. 1970) (in situation
of  non-novel idea, recovery need not be limited to the value  of
the  services  provided; various measures of  damages,  including
lost profits, may properly be considered).

     19   Reeves I, 926 P.2d at 1133-34.

     20   Id. at 1137-39.

21     Id.    As  already  mentioned,  the  compensatory  damages
instruction  on Reevess claim for misrepresentation relied  on  a
similar  measure,  asking  the jury  to  restore  Reeves  to  the
position   that   he   would  have  enjoyed   had   Alyeska   not
misrepresented  its intent to exploit Reevess proposal.   Because
the  jury  found  that Reeves had failed to prove an  intentional
misrepresentation,  however, it awarded no compensatory  damages,
thereby rendering this claim moot.

     22    Reeves also argues that the unjust enrichment claim is
separate  from the express contract theory and that  recovery  is
therefore  possible under both; Reeves argues  that  this  is  so
because  the  unjust  enrichment  theory  applies  to  the  lease
agreement  and  not  the  disclosure  agreement.   But  we   have
concluded  that evidence of the lease agreement was inadmissible;
the  unjust  enrichment claim therefore cannot  survive  on  this
argument.

23    The  jury  also awarded the same amount on  the  promissory
estoppel  claim.   Because  the implied contract  and  promissory
estoppel  awards  were  based on similar factual  theories,  were
covered  by  identical  damages  instructions,  and  resulted  in
identical verdicts, we need not separately consider the  estoppel
verdict.

     24   Reeves I, 926 P.2d at 1141.

     25    Alyeska separately argues for remittitur on the ground
that  the  verdict bears no relationship to the value of  Reevess
services in developing and disclosing his idea.  Because we  have
concluded that the value of those services is not the appropriate
measure of damages, we need not consider this argument.

     26    Exxon  Corp.  v. Alvey, 690 P.2d 733,  741-42  (Alaska
1984).

     27   Id. at 742.

     28   Richey v. Oen, 824 P.2d 1371, 1374 (Alaska 1992).

29     Buoy   v.  ERA  Helicopters,  Inc.,  771  P.2d  439,   442
(Alaska 1989).

     30   State v. Will, 807 P.2d 467, 469 (Alaska 1991).

     31    Alaska  Tae Woong Venture, Inc. v. Westward  Seafoods,
Inc., 963 P.2d 1055, 1061 (Alaska 1998).

     32   By Gallelas estimate, the center earned Alyeska between
$2.8  million  and  $4.2  million in  public  relations  benefits
(depending  on whether Dr. Toeppers or Alyeskas data were  used);
these  figures fall within Dr. Toeppers estimation of the centers
actual value.

     33    See,  e.g.,  Air Tech. Corp. v. Gen.  Elec.  Co.,  199
N.E.2d 538, 548 (Mass. 1964).

     34   Alaska R. Evid. 402.

     35   Alaska R. Evid. 401.

36    The  trial  court  asked the jury foreperson  if  the  jury
was  aware that the award of punitive damages after answering  no
to  one of the questions about misrepresentation was, at least on
its  face, inconsistent.  The jury foreperson answered:  We  felt
that  the only reason we answered no to that question is  because
it said at that time. . . . The assumption we had was the initial
meeting  with [Burke and Reeves].  And we didnt feel that [Burke]
walked  into this with misrepresentation in his heart.  It  might
have happened a second and a half later, after [Reeves] left  the
room,  when  he talked to somebody else, or thought about  it  or
whatever, but we felt . . . that Alyeska was at serious fault for
the rest of it, . . . all the rest of it happened after the fact,
it was the misrepresentation after that.

     37    Bubbel  v. Wien Air Alaska, 682 P.2d 374, 380  (Alaska
1984) (quoting Restatement (Second) of Torts  552(1) (1977)).

38    Id.  at  381.  On remand, Reeves was permitted  to  present
only  claims related to the disclosure agreement, not the alleged
lease agreement or memorialization agreement.  See Reeves I,  926
P.2d  at  1145.  Yet even accepting at face value the forepersons
explanation    for    the    punitive    damages    award,    the
misrepresentations the jury relied upon for the punitive  damages
claim  relate to the later alleged agreements, which  this  court
had eliminated in Reeves I.  As the foreperson stated, [i]t might
have happened a second and a half later, after [Reeves] left  the
room,  when  he talked to somebody else, or thought about  it  or
whatever  . . . .  But we still felt that Alyeska was at  serious
fault  for  the rest of it . . . . And I still feel that  Alyeska
was  misrepresented along the line . . . .  I . . . think it  was
just  compounded after the fact [of the initial moment when  they
sat down at that initial meeting].  (Emphasis added.)

     39   Reeves argues that the jurys punitive damages award was
not  the  result of passion, prejudice, or sympathy.  Presumably,
he  raises  this  argument to bolster his claim that  this  court
should  reinstate the verdict entered by the jury.  We  need  not
consider  this  argument because, as a matter  of  law,  punitive
damages are not available.

     40   Restatement (Second) of Contracts  355 (1979); see also
Wien Air Alaska v. Bubbel, 723 P.2d 627, 631 (Alaska 1986).

1    926 P.2d 1130 (Alaska 1996).

2      Id.   at   1135   (citing  3  David  Nimmer,   Nimmer   on
Copywright  16.01, at 16-3 (1994)).

     3    Reeves I, 926 P.2d at 1142.

     4    Id.

5    Id. at 1144 (emphasis added).

     6    Id. at 1142.

     7    Id. at 1141.

     8    Id. at 1144.

     9    Id.

     10   Restatement (Second) of Contracts  373 cmt. a (1981).

     11   Restatement (Second) of Contracts  344 cmt. d (1981).

     12   Reeves I, 926 P.2d at 1142.

     13   Restatement (Second) of Contracts  90 (1981).