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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Casey v. Semco Energy, Inc. (06/11/2004) sp-5813

Casey v. Semco Energy, Inc. (06/11/2004) sp-5813

     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


TIMOTHY J. CASEY and               )
DAVID L. SINCLAIR,                      )
                              )    Supreme Court No. S-10830
             Appellants,           )
                              )    Superior Court No.
     v.                       )    3AN-00-12077 CI
                              )
SEMCO ENERGY, INC.,                )    O P I N I O N
                              )
             Appellee.                  )    [No. 5813 - June 11,
                              2004]
_______________________________    )

          Appeal from the Superior Court of the State
          of Alaska, Third Judicial District,
          Anchorage, John Reese, Judge.

          Appearances:  Bruce E. Gagnon and Jerome H.
          Juday, Atkinson, Conway & Gagnon, Anchorage,
          for Appellants.  John C. McCarron and Dani
          Crosby, Ashburn & Mason, P.C., Anchorage, for
          Appellee.

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

          CARPENETI, Justice.

I.   INTRODUCTION

          Timothy  Casey and David Sinclair appeal  the  superior

courts  decision  that  Semco Energy, Inc.  did  not  breach  the

covenant of good faith and fair dealing when its counsel  decided

that  their  inclusion  in  an  early  retirement  program  would

jeopardize  the  programs tax-exempt status  under  federal  law.

They  argue  that the superior court should have construed  their

severance  contracts to provide them other benefits of the  early

retirement  program  that  were  not  affected  by  federal  law.

Because the superior court properly interpreted the contract, and

because the covenant of good faith and fair dealing does not  add

duties to a contract, we affirm.

II.  FACTS AND PROCEEDINGS

     A.   Facts

          In  November  1999 Appellee Semco Energy, Inc.  (Semco)

purchased   ENSTAR  Natural Gas Company.  The  next  month  Semco

terminated  ENSTAR  managers   Timothy  J.  Casey  and  David  L.

Sinclair   effective  at  the  end  of  the  year,  despite   its

assurances, given during the negotiations for the sale,  that  it

intended  to retain ENSTARs management.  A condition of the  sale

was that the top management sign severance agreements, which they

did  in  October 1999, providing for lump-sum severance  payments

and  several months of health insurance coverage in the event  of

involuntary  termination  or voluntary  termination  following  a

significant change in duties.  Two other managers, Richard Barnes

and  Thomas  Waldock, left ENSTAR voluntarily in  early  December

1999 after their salaries were reduced.

          The  four  departing managers later  decided  that  the

severance  agreements  were inadequate, and  Barnes  and  Waldock

began  negotiating  for additional benefits on  their  collective

behalf.   On December 15, 1999 the parties raised the possibility

that Semco would offer an early retirement program or plan (ERP),

perhaps  adding  three or five years of age  and  service  to  an

employees  existing  benefit level,  to  encourage  other  ENSTAR

employees to leave.  Semco President Carl Porter said that if the

ERP  was  offered he would make it happen for the four  departing

managers.   A  draft agreement to this effect dated December  16,

1999  provided  that  [i]f SEMCO implements an  Early  Retirement

Program  on  or  before [date], Employee will  be  considered  as

having retired for purposes of that Early Retirement Plan.  SEMCO

makes  no  commitment to Employee that it will implement  such  a

Plan.  Waldock, an attorney, consulted an advisor who specialized

in   benefit  plans  who  warned  that  applying  any   new   ERP

retroactively only to certain highly-compensated employees  would

probably  disqualify the plan from tax-exempt  eligibility  under

section  1051  of  the  Employee Retirement Income  Security  Act

(ERISA).1   Waldock passed this concern along to Bud Madigan,  an

attorney and one of Semcos primary negotiators on the issue.

          Negotiations followed, and on January 14, 2000 the four

managers  signed settlement agreements under which  they  dropped

all  outstanding claims against Semco in exchange for large lump-

sum  severance payments, inclusion in the ENSTAR retiree  medical

program,  and inclusion in the possible future ERP if  the  ERISA

risk  could  be avoided.  Specifically, paragraph  II(D)  of  the

settlement agreements provided:

          If  Semco implements an Early Retirement Plan
          for  the employees of the ENSTAR Natural  Gas
          Division on or before June 30, 2001, Employee
          will, subject to the following provisions  of
          this   paragraph,  be  considered  as  having
          retired for purposes of that Early Retirement
          Plan.  Employee will not be so considered if,
          in  SEMCOs  sole judgment exercised  in  good
          faith,   based  upon  an  opinion  of  SEMCOs
          counsel,  the  inclusion of the  Employee  in
          such an Early Retirement Plan would result in
          a risk that the ENSTAR Natural Gas Retirement
          Plan  For Salaried Employees would no  longer
          be  a Qualified Plan under Section 401 of the
          Internal   Revenue  Code.   SEMCO  makes   no
          commitment to Employee that it will implement
          such an Early Retirement Plan.
          
(Emphasis  added.)  At the time that this paragraph was  drafted,

Waldock  warned  all the managers in an e-mail that  we  will  be

included  UNLESS  in  SEMCOs sole judgment  our  inclusion  would

jeopardize the ERISA qualification of the Plan.  SEMCO  will  not

offer  any cash payment in lieu thereof.  You can bet that  SEMCO

will  be  VERY  conservative when it assesses the  risk  of  Plan

disqualification.

          In  July  2000  Semco adopted an ERP  consisting  of  a

severance  payment  equal to nine months pay,  a  twenty  percent

discount  on  co-payments for medical visits, and a pension  plan

enhanced  by  five years of age and five years of  service.   But

          Semco did not include the four managers in the plan.  Semco

submitted the question of ERISA disqualification to its  actuary,

Ray  Shapiro, and its counsel, Larry Gagnon, both of whom  issued

opinions stating that allowing the managers to participate  would

jeopardize  the  tax  status of the plan  under  ERISA.   Waldock

called  Madigan in late August 2000 to ask whether  the  managers

would be eligible for just the severance pay and health insurance

aspects of the ERP, since these benefits would not disqualify the

pension  program.   Waldock asked whether the  opinion  had  been

issued  on the assumption that the ERP would be offered  only  to

the  four  managers  in question, or whether it  would  still  be

discriminatory if offered to all otherwise eligible employees who

had  retired  in  the  period prior to the ERP  being  officially

offered.   Madigan  responded that he  had  only  instructed  his

advisors to investigate the possibility of discrimination if  the

four  managers  were  included.  Madigan  then  asked  Gagnon  to

research  how  many otherwise eligible employees had  retired  or

left  ENSTAR during the relevant period.  Gagnon discovered  that

no  such employees had left during the relevant period, and wrote

another opinion in late September 2000 stating that even  if  the

discrimination  testing  had taken all  relevant  employees  into

account, there would still have been the risk of disqualification

of the ERPs ERISA status.

     B.   Proceedings

          Casey   and  Sinclair  filed  suit  in  November  2000,

alleging  breach of contract, violation of the covenant  of  good

faith and fair dealing, and misrepresentation.  Trial was held on

January  7-9,  2002 before Superior Court Judge John  Reese.   At

trial,  Casey and Sinclair presented the testimony of an  expert,

Norman Milks.  Milks testified that Casey and Sinclairs inclusion

in  the  ERP could indeed have created a risk of disqualification

of  the  ERPs  ERISA status, but that Semco could  have  provided

Casey  and Sinclair with the ERP benefits or their equivalent  by

creating a benefit plan that applied to any employee who  retired

at about the same time as the managers, by simply making lump-sum

payments  to  Casey  and  Sinclair that were  equivalent  to  the

pension  benefits, or by creating a top hat plan in  which  Casey

and   Sinclair   would  have  received  periodic  cash   payments

equivalent to those under the ERP pension.  Milks also  testified

that  Semco could have provided Casey and Sinclair with just  the

severance  pay and medical co-payment aspects of the ERP  without

any  risk  to its ERISA status.  Milks also testifed  that  Semco

could  have  eliminated  the  risk of ERISA  disqualification  by

obtaining an opinion letter to that effect from the IRS.

          The  superior  court denied all of Casey and  Sinclairs

claims.   The  court   held  that the settlement  agreement  only

required  Semco to obtain a good faith opinion from  its  counsel

about  whether inclusion of Casey and Sinclair in the  ERP  might

jeopardize  its  ERISA status, that Semco had met this  condition

when  Gagnon  issued his opinion in good faith, and that  any  of

Porters  statements that well take care of it  were  unclear  and

unenforceable  in light of the settlement agreements  integration

clauses.  Casey and Sinclair appeal.

III. STANDARD OF REVIEW

          We apply our independent judgment to questions of law,2

including contract interpretation,3 adopting the rule of law most

persuasive in light of precedent, reason, and policy.4  We review

a  trial courts factual findings for clear error, which is  found

when we are left with a definite and firm conviction based on the

entire  record that a mistake has been made.5  Whether there  has

been a breach of the covenant of good faith and fair dealing is a

question of fact, and is therefore reviewed only for clear error.6

It is the function of the superior court, rather than this court,

to  weigh  conflicting  evidence and assess  the  credibility  of

witnesses.7

IV.  DISCUSSION

          Casey   and  Sinclair  challenge  the  superior  courts

factual  findings, its application of the covenant of good  faith

          and fair dealing to the agreement, and its  refusal to fill the

gap  by  granting  them two of the three benefits  of  the  early

retirement program.  We reject each of these challenges.

     A.   The Parties Did Not Intend the Settlement Agreements To
          Require  Semco To Exhaust All Means of Including  Casey
          and Sinclair in the Early Retirement Plan.
          
          The  goal  of  contractual interpretation  is  to  give

effect  to  the  reasonable  expectation  of  the  parties.8   We

consider  disputed language in its context in the contract  as  a

whole and look to the purposes of the contract, the circumstances

surrounding   its  formation,  and  the  case  law   on   similar

contractual  provisions.9  The parol evidence rule provides  that

an  integrated  contract (one that is intended  to  describe  the

entire  agreement) cannot be varied through the  introduction  of

evidence  about  prior  negotiations or  agreements.10   However,

extrinsic  evidence is always admissible on the question  of  the

meaning  of  the words of the contract itself.11  If the  parties

disagree about the interpretation of a provision, we inquire into

what  the  parties  knew or had reason to  know  of  each  others

position;12 a party prevails when he or she did not know or  have

reason  to  know  that the other side interpreted  the  provision

differently, but the other party did know or have reason to  know

of the disagreement.13  When a phrase in a contract is understood

differently  by  the  parties and is  sufficiently  ambiguous  to

support both meanings, no contract exists.14

          Casey  and  Sinclair contend that the true  meaning  of

paragraph  II(D)  was that Semco [could] avoid giving  Casey  and

Sinclair the early retirement benefits only if there was  a  risk

of   ERISA  disqualification  that  Semco  could  not  avoid   by

reasonable  means.   They  argue  that  their  interpretation  is

consistent  with the purpose of the settlement agreements,  which

was  to  give  them more benefits than they had obtained  in  the

severance  agreements.  They also argue that their interpretation

is  consistent  with Porters statements that  he  would  make  it

happen  for  them and Madigans statements that he  expected  that

          Semco would find a way to put them in the plan if [it] could.  In

effect,  they  argue that the superior court should have  weighed

the  testimonial evidence more heavily in their favor.  We reject

that argument.

          It  is  the  role of the trial court, not the appellate

court, to evaluate the credibility of the witnesses and to  weigh

the   evidence.15    Although   Sinclair   testified   that   his

understanding  of good faith was that Semco would  have  to  make

serious  efforts to include him in the early retirement plan,  he

also suggested that his expectation that he would be included was

based  more on Carl Porters statements, which he received second-

hand,  than  on  the  words  of  the  settlement  agreement.   In

contrast, Madigan testified that the disputed language  had  been

drafted at the last moment and that his intent was to put them in

the  plan if we could do it without a risk to qualification,  not

to  research alternative ways to approximate benefits similar  to

those  in the plan if the risk of disqualification was determined

to  exist.  The court found Madigans testimony to be credible and

convincing.   There  was ample evidence to support  the  superior

courts  decision to accept Semcos rather than Casey and Sinclairs

version of the facts.

          Casey  and  Sinclair  argue that  the  superior  courts

interpretation of the contract constitutes legal error because it

violates the rule that contracts should be interpreted so  as  to

give  effect  to all their provisions and to find all  provisions

meaningful to the extent that this is possible.16  They point out

that  a  certain amount of ERISA risk had already been identified

by the time that the final version of paragraph II(D) was drafted

indeed,  this  risk  was the very reason why  the  paragraph  was

redrafted  and that conditioning their inclusion in the plan on a

risk  assessment by Semcos counsel would be a redundant exercise,

the outcome of which was almost certain.  Thus, they claim, it is

more  reasonable to interpret paragraph II(D) as requiring  Semco

to  find a way to include them. Semco argues that requiring it to

          find a way to include Casey and Sinclair by any reasonable means

renders  part of the text of paragraph II(D) meaningless.17   The

central  mystery of Casey and Sinclairs case is  why  they  would

agree to such a narrowly drawn provision, especially in light  of

their representatives warnings that SEMCO will not offer any cash

payment in lieu of the plan and [y]ou can bet that SEMCO will  be

VERY   conservative   when  it  assesses   the   risk   of   Plan

disqualification.

          Nonetheless, parties are free to make arrangements that

seem unreasonable to others.18  The intent of the parties is  the

primary  issue,  and  their intent can be  drawn  from  extrinsic

evidence,  especially their express attempts to comply  with  the

contract  as they understood it.19  Based on the superior  courts

factual  findings regarding the parties intent  in  drafting  the

contractual  language, and upon our reading of that language,  we

hold  that  paragraph II(D) required only that Semco  obtain  its

counsels good faith opinion regarding ERISA disqualification.

     B.   The  Covenant  of Good Faith and Fair Dealing  Did  Not
          Require  Semco  To  Find a Way  To  Include  Casey  and
          Sinclair in the Early Retirement Plan.
          
          Casey  and Sinclair argue that because the covenant  of

good  faith  and fair dealing requires a party to take reasonable

steps  to  ensure the occurrence of a condition  precedent  to  a

contract, Semco had to take reasonable steps to include  them  in

the  ERP.   Because the covenant of good faith and  fair  dealing

cannot  add  terms  to  a contract or prohibit  what  a  contract

explicitly  permits,  we reject Casey and  Sinclairs  claim  that

Semco breached the covenant of good faith and fair dealing.

          The  covenant of good faith and fair dealing is implied

in  all  contracts in Alaska.20  [W]here a party has promised  to

attempt to satisfy a condition, the attempt must be made in  good

faith.21  A party must act in subjective good faith, meaning that

it cannot act to deprive the other party of the explicit benefits

of  the contract, and in objective good faith, which consists  of

acting in a manner that a reasonable person would regard as fair.22

          Where a duty of one party is subject to the occurrence of a

condition,  the  additional duty of good faith and  fair  dealing

. . . may require . . . refraining from conduct that will prevent

or  hinder  the  occurrence of that condition or  .  .  .  taking

affirmative steps to cause its occurrence.23  But the purpose  of

the  covenant is to effectuate the reasonable expectations of the

parties, not add to them,24 and cannot be interpreted to prohibit

what is expressly permitted.25

          Casey  and Sinclair rely on the doctrine that  a  party

cannot   be   excused   from  contractual  performance   by   the

nonoccurrence of a condition over which that party  has  control.

The  Restatement (Second) of Contracts section 245 provides  that

[w]here a partys breach by non-performance contributes materially

to  the  non-occurrence of a condition of one of his duties,  the

non-occurrence is excused.26  The classic case of a breach of the

covenant  of  good  faith and fair dealing regarding  contractual

conditions  occurs when an obligation is conditioned on a  partys

ability to obtain financing or insurance, but the party fails  to

make  reasonable efforts to obtain such financing or insurance.27

Where  a condition is within the sole control of a single  party,

most  authorities require that party to take reasonable steps  to

obtain  the  occurrence of the condition.28  The  superior  court

found  that  Semco  and  its agents acted  in  good  faith,  both

subjectively  and  objectively, in fulfilling Semcos  contractual

obligations  to  Casey  and Sinclair.  It also  found  Casey  and

Sinclairs  argument  that Semco could have  included  them  in  a

separate  retirement  plan to be irrelevant because  neither  the

express  language of the Settlement Agreements  nor  the  implied

good  faith and fair dealing covenant require[s] Semco to provide

more than the parties bargained for.

          Casey  and Sinclair argue that taking reasonable  steps

to  obtain  the  occurrence of the condition  required  Semco  to

consider[] ways to extend the benefits of the plan to them.  They

argue  that  the superior court misunderstood the application  of

          the covenant of good faith and fair dealing to their case,

because  the  superior  court read the settlement  agreements  as

requiring Semco only to submit the question of whether Casey  and

Sinclairs inclusion would create a risk of ERISA disqualification

to  counsel,  and  as requiring Semcos counsel  to  consider  the

question in accordance with the law and without being arbitrary.

          The superior court was correct in its interpretation of

paragraph II(D) of the settlement agreements.    The covenant  of

good faith and fair dealing is implied in every contract in order

to  effectuate the reasonable expectations of the parties to  the

agreement,  not to alter those expectations.29  The  covenant  of

good faith and fair dealing will not create a duty where one does

not  exist.30   The doctrine does not provide courts  with  carte

blanche to rewrite contracts31 and cannot be interpreted to permit

what is expressly prohibited by the contract.32  While the text of

paragraph  II(D) promises Casey and Sinclair that they  could  be

included in the ERP, it specifically disclaims any responsibility

for Semco to adopt an ERP, and further conditions their inclusion

on  Semcos  counsel not finding any potential risk  to  the  ERPs

ERISA  qualification.  The language is so carefully  hedged  that

Semco has very little responsibility at all; it must merely adopt

a  plan  and submit it to counsel for an opinion.  Moreover,  the

paragraph  defines  implement[ing] an Early  Retirement  Plan  as

amend[ing]  the ENSTAR Natural Gas Retirement Plan  for  Salaried

Employees  . . . to provide enhanced benefits (such as  increased

years  of  service) which function as incentives to employees  to

accelerate termination of employment to a date preceding July  1,

2001.  It would considerably increase Semcos duties to require it

to put forth all reasonable efforts to structure the plan so that

these  four  employees  may be included,  or  to  put  forth  all

reasonable  efforts to provide benefits to these  employees  that

are  similar to but outside of the structure of the plan.   Since

Casey  and  Sinclair  do not allege that Semco  and  its  counsel

reached  their  conclusion about ERISA  disqualification  in  bad

          faith  indeed, their own expert agreed that such a risk existed

we uphold the superior courts conclusion that there was no breach

of the covenant of good faith and fair dealing.

          Casey  and Sinclair also argue that Semco breached  the

covenant of good faith and fair dealing by refusing to grant them

the  severance  pay  and medical benefit components  of  the  ERP

solely because they were ineligible for the pension aspect of the

ERP.   They  argue that this violated the covenant as defined  in

Restatement  section  205, which states  that  a  breach  of  the

covenant includes abuse of power to specify terms.33  While Semco

could have provided those benefits, it was not required to do  so

under  the settlement agreement.  Therefore we affirm the holding

of  the  superior  court that Semco did not  breach  the  implied

covenant of good faith and fair dealing.

     C.   The Superior Court Did Not Err in Declining To Fill the
          Gap  in the Agreements by Requiring Semco To Give Casey
          and  Sinclair Two of the Three Components of the  Early
          Retirement Plan.
          
          Finally,  Casey  and Sinclair argue  that  because  the

ERISA  risk foreseen in paragraph II(D) affected only one of  the

three  components of the ERP  the enhanced pension benefit adding

five  years  of  age  and  five years of  service,  but  not  the

additional twenty percent of medical visit co-payments to be paid

by  the company or the nine months transitional pay in a lump sum

the  parties had left a gap in the contract.  Casey and  Sinclair

argue  that  the superior court should have filled  this  gap  by

implying  a new term granting them the two remaining benefits  of

the  ERP.   Semco  responds that filling the gap in  this  manner

would  be inappropriate because Semco never would have agreed  to

the terms proposed by Casey and Sinclair.

          A  court  may  supply an essential term that  has  been

omitted   from  an  otherwise  sufficiently  defined  contract.34

Because the parties cannot plan for all contingencies that  might

arise,  a  court  may fill in gaps to ensure fairness  where  the

reasonable expectations of the parties are clear.35  But based on

          the integration clauses in the settlement agreements and the

superior  courts  findings  regarding  the  parties  intent,   we

conclude that there were no contractual gaps to fill.

          The  threshold inquiry in determining whether this case

is  an appropriate one for gap-filling is whether, in fact, there

is an essential term or circumstance for which the parties failed

to   plan.   Casey  and  Sinclair  argue  that  their  settlement

agreements  were skeletal ones in which the possibility  of  only

one  aspect of the plan causing a risk to ERISA qualification was

never  discussed or planned for, primarily since the  content  of

the  future Semco ERP amendment was unknown at the time.  But our

reading  of  the  contractual language and  the  superior  courts

factual  finding regarding the intent of the parties lead  us  to

conclude  that  Semco  was required under the  contract  only  to

obtain  a good faith legal opinion from its counsel as to whether

inclusion   of  Casey  and  Sinclair  in  the  ERP   would   risk

disqualification  under  ERISA.  The settlement  agreements  were

fully  integrated:  Both contain integration clauses that  state,

[t]his is the entire Agreement between Employee and SEMCO.  SEMCO

has  made  no  promises  to Employee other  than  those  in  this

agreement.   We  therefore  reject Casey and  Sinclairs  argument

that  the  superior  court should have read new  terms  into  the

agreement in order to fill contractual gaps because we find  that

there were no gaps to fill.

V.   CONCLUSION

          Because  the  superior  court  did  not  err   in   its

interpretation of the severance agreements, we AFFIRM.


_______________________________
     1     29  U.S.C.A.  1051(2) (West 2003) (providing that  tax
exemption  of  employee  pension plan under  Employee  Retirement
Security Act shall not apply to a plan which is unfunded  and  is
maintained by an employer primarily for the purpose of  providing
deferred compensation for a select group of management or  highly
compensated employees).

     2     McCormick  v.  Reliance Ins. Co., 46 P.3d  1009,  1012
(Alaska 2002).

     3     Old  Harbor Native Corp. v. Afognak Joint Venture,  30
P.3d 101, 104 (Alaska 2001).

     4     Vezey  v. Green, 35 P.3d 14, 20 (Alaska 2001) (quoting
Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).

     5    Id. (internal citations omitted).

     6    Luedtke v. Nabors Alaska Drilling, Inc., 834 P.2d 1220,
1223  (Alaska 1992).  If the case presents only undisputed facts,
then  the covenant of good faith and fair dealing can be reviewed
de novo.  Id.

     7     Krossa v. All Alaskan Seafoods, Inc., 37 P.3d 411, 415
(Alaska 2001).

     8    Exxon Corp. v. State, 40 P.3d 786, 793 (Alaska 2001).

     9     Zuelsdorf v. Univ. of Alaska, Fairbanks, 794 P.2d 932,
934 (Alaska 1990).

     10    Alaska Diversified Contractors, Inc. v. Lower Kuskokwim
Sch. Dist., 778 P.2d 581, 583 (Alaska 1989).

     11     Id.  at 584 (citing Restatement (Second) of Contracts
214 cmt. b (1981)).

     12     Id.  at  584  n.3  (quoting Restatement  (Second)  of
Contracts  214 cmt. b).

     13    Restatement (Second) of Contracts  201(2).

     14    Krossa v. All Alaskan Seafoods, Inc., 37 P.3d 411, 416
(Alaska 2001).

     15    Id.

     16    See, e.g., Grant v. Anchorage Police Dept, 20 P.3d 553,
556  (Alaska  2001); Peterson v. Wirum, 625 P.2d  866,  872  n.11
(Alaska 1981).

     17    See Grant, 20 P.3d at 556.

     18    Restatement (Second) of Contracts  203 cmt. c.

     19     Sprucewood Inv. Corp. v. Alaska Hous. Fin. Corp.,  33
P.3d 1156, 1162 (Alaska 2001).

     20     Ellingstad v. State, Dept of Natural Res.,  979  P.2d
1000, 1009 (Alaska 1999).

     21     Gordon  v. Foster, Garner & Williams, 785 P.2d  1196,
1199 (Alaska 1990).

     22    Ramsey v. City of Sand Point, 936 P.2d 126, 133 (Alaska
1997).

     23     Gordon,  785  P.2d  at 1199 n.6 (quoting  Restatement
(Second) of Contracts  245 cmt. a).

     24     Era  Aviation, Inc. v. Seekins, 973 P.2d  1137,  1141
(Alaska 1999).

     25    Ramsey, 936 P.2d at 133.

     26     Quoted in Gordon, 785 P.2d at 1199 n.6, and  Klondike
Ind. Corp. v. Gibson, 741 P.2d 1161, 1167 (Alaska 1987).

     27    E.g., Cauff, Lippman & Co. v. Apogee Fin. Group, Inc.,
807  F.  Supp. 1007, 1022-24 (S.D.N.Y. 1992) (finding  breach  of
covenant  of good faith and fair dealing where party  refused  to
proceed  with certain meetings and finance agreements  so  as  to
obtain financing for contract); Gordon, 785 P.2d  at 1199-1200  &
n.8  (remanding to find whether intent of parties required  party
to  attempt  to obtain insurance, or actually required  insurance
itself).

     28     Dayan  v. McDonalds Corp., 466 N.E.2d 958, 972  (Ill.
App. 1984); John Edward Murray, Jr., Murray on Contracts  111(B),
at 622-23 (3d ed. 1990).

     29    Ramsey, 936 P.2d at 133 (internal citation omitted).

     30     Lorenz  v. CSX Corp. 736 F. Supp 650, 656  (W.D.  Pa.
1990).

     31    Id.

     32    Ramsey, 936 P.2d at 133.

     33    Restatement (Second) of Contracts  205 cmt. d (1981).

     34    Id. at  204.

     35    Magill v. Nelbro Packing Co., 43 P.3d 140, 142 (Alaska
2001).