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

Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

  This site is possible because of the following site sponsors. Please support them with your business.

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Estate of Patroky Polushkin v. Maw (10/26/2007) sp-6176

Estate of Patroky Polushkin v. Maw (10/26/2007) sp-6176, 170 P3d 162

     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,


by DAVID POLUSHKIN, Personal) Supreme Court No. S- 11775
Representative of the Estate,)
) Superior Court No.
Appellant, ) 3HO-03-60 CI
v. )
) O P I N I O N
Appellee. ) No. 6176 October 26, 2007
          Appeal  from the Superior Court of the  State
          of  Alaska,  Third Judicial District,  Homer,
          Harold M. Brown, Judge.

          Appearances:   Michael  Hough,   Homer,   for
          Appellant.   Peter  R. Ehrhardt,  Kenai,  for

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

          MATTHEWS, Justice.

          In  October 1989 Patroky Polushkin purchased  an  Upper
Cook  Inlet  salmon  drift fishery permit from  Roland  Maw.   An
addendum to the purchase agreement provided that Maw would retain
all  rights  to claims or benefits resulting from the March  1989
Exxon Valdez oil spill that were associated with the permit.  The
question  presented in this case is whether Maw  is  entitled  to
damages  resulting  from  the oil spill that  Polushkin  suffered
after  the  transfer of the permit.  We answer  in  the  negative
because  the  language  of the addendum is  ambiguous,  extrinsic
circumstances suggest that the clause was intended to ensure that
Maws  right  to damages was not transferred with the permit,  and
reading  the  addendum to be an assignment of  Polushkins  future
claims to Maw would lead to unreasonable results.  Because  there
is  no relevant conflicting extrinsic evidence, we conclude  that
summary judgment should be entered in favor of Polushkins estate.
     A.   Facts
          In  the  fall of 1989 commercial fisherman  Roland  Maw
listed his Upper Cook Inlet salmon drift fishery permit for sale.
Patroky  Polushkin  offered to buy it.  With the  help  of  their
brokers  (Bruce Martinson1 of the Seattle brokerage firm GSI  for
Maw  and  Roseleen  Moore of the Homer firm Northern  Enterprises
Boat  and Permit Brokerage for Polushkin), the parties agreed  on
Maws  asking  price  of $186,000 and executed  an  earnest  money
agreement in October 1989.  Maw testified that there had been  no
haggling over the sales price.  According to Moore, the price was
a bit high but was within about $10,000 of the going market price
for Upper Cook Inlet salmon drift net permits at that time.
          At  the  same  time that they signed the earnest  money
agreement, Maw and Polushkin, as well as their brokers, signed an
addendum to the agreement.  The text of the addendum follows:
               By their signatures below, the buyer and
          seller   agree  to  modify  their   agreement
          regarding  the  sale  of  Alaska  Cook  Inlet
          Salmon  Drift  Gillnet  Entry  Permit  number
          S03H61467Z as follows:
               Seller   shall  retain  all  rights   of
          ownership  and  effect  associated  with  the
          above  referenced  Alaska  Entry  Permit,  to
          claims,    settlements,    and/or    benefits
          resulting  from  the  March  1989  Exxon  oil
          spill,  against the vessel Exxon Valdez,  and
          the 1987 Glacier Bay oil spill.
          Maw  testified that he directed his broker,  Martinson,
to draft the addendum.2  According to Maw, one of the GSI brokers
characterized the addendum as boiler plate.  Maw also stated that
Polushkin himself suggested that the parties and the brokers  all
sign  the addendum in order to avoid issues and misunderstandings
about it in the future.
          Polushkin  fished the permit in 1990, 1991,  and  1992.
He  died  in  October 1992.  The permit was then  transferred  to
another person, who is not a party to this case. David Polushkin,
Patrokys  son, serves as the personal representative of  Patrokys
          The  1987  Glacier  Bay oil spill referred  to  in  the
addendum  involved the spill of oil from the vessel  Glacier  Bay
into  Cook Inlet.3  The record does not indicate that claims were
made  that this oil spill caused damage after October 1989.   The
Exxon  Valdez oil spill occurred in March 1989 in Prince  William
Sound.  Some of the oil drifted into Cook Inlet and caused  state
fisheries  regulators to cancel the drift gillnet salmon  fishery
          in the inlet for 1989.  Both the Glacier Bay spill and the Exxon
Valdez spill resulted in class-action litigation in which holders
of  Cook  Inlet drift permits were class members.4  In  1991  and
1992  Maw  received three separate payments, totaling $54,945.57,
for  damages for the Glacier Bay oil spill.  These funds were  to
compensate  Maw  for  the reduction to his  1987  fishing  income
caused by the spill, and Maw was obliged to pay from these  funds
the  percentage  he  owed  to crew members  who  were  percentage
shareholders in his 1987 fishing income.  Polushkin did not claim
any interest in these funds.
          The Exxon Valdez spill was much larger than the Glacier
Bay spill and the  litigation it engendered was more complex.5  A
multi-billion dollar punitive damages award to class members only
now  may  be  nearing a final resolution.6  In  1997  a  plan  of
distribution of present and future recoveries in the Exxon Valdez
litigation  in  favor  of  Upper  Cook  Inlet  salmon  drift  net
claimants  was approved by the United States District  Court  for
the  District of Alaska.7  This plan explains the types of claims
held by Upper Cook Inlet fishermen.
          The  largest claims are for seasonal lost income.   The
season  with  the  greatest  loss is the  1989  season,  and  the
greatest allocation of the anticipated proceeds is made for  that
year.   Smaller allocations are made for seasonal funds for 1990,
1991,  1994,  and  1995.  Concerning the 1990 and  1991  seasonal
funds,  the plan of distribution notes that the price  of  salmon
was  negatively impacted as a result of the spill . . . resulting
in  lost income to UCI salmon drift claimants.  According to  the
plan,  the 1994 and 1995 seasonal funds were created not  because
the price of salmon in those seasons had been reduced but because
of poor predicted returns for those seasons said to be the result
of  overescapement into the Kenai River system resulting in long-
term damage to the salmon stocks from that system.
          The  plan also provides a method of compensating permit
holders  for the devaluation of permits sold between  the  second
quarter of 1989 and the fourth quarter of 1992.  According to the
plan,  disbursements will be proportioned to the amount by  which
actual  market  values of permits fall short of what  they  would
have  been without the spill.  The shortfall is based on economic
studies and is set forth in tabular form in the plan.8  According
to  the  plan, the predicted value in the fourth quarter of  1989
for  an Upper Cook Inlet permit was $192,381 and the actual value
was $180,500.  Without the oil spill, according to the table, the
value  in  the fourth quarter of 1992 should have been  $234,373,
but  the  actual value was $83,250.  Thus, a hypothetical  seller
who  sold in the fourth quarter of 1989 suffered a projected loss
of  $11,881,  whereas the buyer of the same permit at  that  time
would  have  suffered an actual loss as of the fourth quarter  of
1992  of $97,250 ($180,500 less $83,250) and a projected loss  of
          A  third  fund is created to compensate for the  spill-
caused  decline in market value of fishing vessels  used  in  the
fishery.   Distributions from this fund are said to be  based  on
market  values  rather  than  individual  vessel  values  because
[a]ccounting for variations in individual vessel values would  be
          unreasonably, if not prohibitively, expensive and time-consuming.
Every  owner  of a vessel used in the fishery between  March  24,
1989,  and December 31, 1992, is eligible.  Fund proceeds are  to
be  distributed to vessel owners in a manner proportional to  the
amount  by which vessels are estimated to have declined in  value
from  March  24, 1989 through December 31, 1992,  using  loss  in
permit values as a measure.
          In  December 1992 an attorney from Faegre &  Benson,  a
law  firm in Minneapolis representing both the class in the Exxon
Valdez  litigation  and  Maw, wrote to  David  Polushkin  seeking
confirmation  that  he had no objection to  Maws  obtaining  your
fathers  1990  and  1991  fishing  records  from  the  Commercial
[Fisheries  Entry] Commission for Mr. Maws use  in  pursuing  his
claim  against Exxon.  The attorney stated:  As you are  probably
aware,  Mr.  Maw retained rights to recover all damages  accruing
under  the  permit  at  the  time he  sold  it  to  your  father.
According to Maws affidavit filed in connection with the  summary
judgment motion in this case, the requested records were provided
by  the  estate  without  comment.   But  Maw  contradicted  this
affidavit in his deposition, stating he had no knowledge of  what
David  Polushkin did in response to the letter; all he  knew  was
that his claims were submitted.
          In December 1994 David Polushkin was given a payment of
$2,337.56  by  a Kenai law firm disbursing funds from  a  partial
settlement  with  the  Alyeska Pipeline Service  Company,  a  co-
defendant  in the Exxon case.  This payment was for  his  fathers
lost fishing income in the 1990 and 1991 fishing seasons and  was
based  on  his  fathers catch history on the permit in  question.
Maw received two payments from Faegre & Benson funded by the same
partial  settlement:   the first was in  January  1994,  and  the
second  was in July 1995, totaling $7,558.64.  According  to  the
letter  transmitting the January 1994 payment the  breakdown  for
the initial payment to Maw was as follows:
          Net        Allocation        for        1989:
          Net        Allocation        for        1990:
          Net        Allocation        for        1991:
          Net   Allocation   for  permit   devaluation:
          In late 2002 a Seattle law firm, Davis Wright Tremaine,
administering  the  Exxon  Qualified Settlement  Fund,  sent  two
letters  to the estates attorney.  In the first letter the  Davis
Wright  firm  asserted that the plain language  of  the  addendum
granted  all claims to Maw, whether such claims arose  before  or
after  the sale of the permit.  The second letter, dated December
4, 2002, acknowledged that the estates counsel disputed the Davis
Wright   interpretation.   It  warned  that  unless  the   estate
presented a release of claims signed by Maw by February 15, 2003,
Davis Wright would honor Mr. Maws lien against the estates claims
on behalf of Mr. Polushkin.9
     B.   Proceedings
          On  March  13,  2003,  David Polushkin, as the personal
representative  of  the  Estate of  Patroky  Polushkin,  filed  a
complaint  against  Maw.   The  complaint  sought  a  declaratory
judgment  that Polushkin and derivative claimants (such  as  crew
members)  are entitled to the Exxon litigation claims that  arose
after Polushkin acquired the permit in October 1989.
          After  answering the complaint, Maw moved  for  summary
judgment.  Polushkin opposed the motion and cross-moved.
          While  the  motions for summary judgment were  pending,
Maw  removed the case to the United States District Court for the
District  of  Alaska.   Both the estate  and  Maw  renewed  their
motions for summary judgment in the district court, but the court
remanded  the  case to state court without deciding the  motions.
Once back in state court the parties again renewed their motions.
          Superior  Court  Judge Harold M. Brown granted  summary
judgment in Maws favor, without comment, ordering that Maw
          shall  retain all rights of ownership to  all
          claims,  payments  and settlements  from  the
          1989  Exxon  Oil  Spill  relating  to  Permit
          #S03H61467Z, whether such claims arose before
          or  after  the sale of the permit to  Patroky
          Polushkin.   Mr.  Maw  is  entitled  to   all
          claims,  payments and settlement  funds  from
          that case relating to this permit.
The  superior  court  also  denied  Polushkins  cross-motion  for
summary judgment.  Polushkin appeals.
          We  review  the grant or denial of summary judgment  de
novo  to  determine  whether  there are  any  genuine  issues  of
material  fact  and  whether  the moving  party  is  entitled  to
judgment as a matter of law on the established facts.10  We  draw
all reasonable inferences of fact against the moving party and in
favor   of   the  non-moving  party.11   Questions  of   contract
interpretation  are  generally questions of  law  which  will  be
reviewed de novo.12  However, fact questions are created when the
meaning  of  contract  language depends on conflicting  extrinsic
evidence.13   The question of the meaning of a written  contract,
including a review of the extrinsic evidence to determine whether
any of the extrinsic evidence is conflicting, is a legal question
which we review de novo.14
     A.   The Addendum Is Ambiguous.
          When  interpreting a contract, our duty is to ascertain
and  give  effect to the reasonable intentions of the contracting
parties.15   We  determine the parties reasonable  intentions  by
resort[ing] to the language of the disputed provision  and  other
provisions,   relevant   extrinsic   evidence,   and   case   law
interpreting similar provisions.16  It is not necessary  to  find
that  an  agreement  is  ambiguous before  looking  to  extrinsic
evidence as an aid in determining what it means.17
          Both  parties presented extrinsic evidence  to  aid  in
interpreting the addendum.  We have held that
          [i]nterpreting   a   written   contract    is
          generally   a  task  for  the  trial   court;
          however,  interpretation becomes a  task  for
          the  trier  of fact when the parties  present
          extrinsic  evidence  to clarify  a  contracts
          meaning,  when  this evidence  points  toward
          conflicting interpretations of the  contract,
          and  when  the contract itself is  reasonably
          susceptible  of  either  meaning.   In   such
          cases,  the  trial court initially determines
          whether  the  extrinsic  evidence  meets  the
          criteria to create a jury question; when  the
          court finds that the extrinsic evidence  does
          not  conflict  or  is incompatible  with  the
          terms of the written contract, interpretation
          remains  a  question of law  for  the  courts
          The  1989  addendum  states that Maw  will  retain  all
rights  of ownership and effect associated with the . . . Permit,
to  claims, settlements, and/or benefits resulting from the March
1989  Exxon oil spill, against the vessel Exxon Valdez,  and  the
1987 Glacier Bay oil spill.  The estate argues that this language
was  designed to ensure that the transfer of the permit  did  not
carry  with it the claims for losses that Maw had suffered  as  a
result of the oil spills.  Maw, on the other hand, contends  that
the  language  was  meant to assign to him  future  damages  that
Polushkin might suffer as a result of the spills.
          The  language of the addendum conceivably could support
the  interpretation of either party.  On the one hand,  the  verb
retain  suggests that only claims that Maw had  at  the  time  of
transfer  were the subject of the transaction.  He  could  hardly
retain  claims  for damages that Polushkin might  suffer  in  the
future though Polushkin might assign those claims to him.  On the
other hand, the all rights language with no explicit time cut-off
could  suggest that an assignment of future claims was  intended.
The  language of the addendum is therefore ambiguous.   Rules  in
aid  of contract interpretation must be employed in an effort  to
determine its meaning.
     B.   Relevant  Extrinsic  Circumstances  Indicate  That   No
          Assignment of Future Claims Was Intended.
          The rules in aid of contract interpretation are set out
               in  section  202  of the Restatement  (Second)  of
               Contracts.  The first and generally most important
               rule  is  that  [w]ords  and  other  conduct   are
               interpreted in the light of all the circumstances,
               and  if  the  principal purpose of the parties  is
               ascertainable   it   is  given   great   weight.19
               1.    Maws account of his subjective intent is not
          In support of his motion for summary judgment Maw filed
an  affidavit explaining his view of the purpose of the addendum.
The affidavit states in relevant part:
               At the time of entering into and signing
               the agreement and addendum it was the intent
          of  Mr. Polushkin and I and we understood and
          agreed that Polushkin had no interest  in  my
          Exxon or Glacier Bay claims and that I was to
          receive  all  proceeds or  money  from  those
(Emphasis added.)
          Polushkins counsel argues that the emphasized  language
indicates  that  the  addendum was  only  intended  to  apply  to
existing claims.  He argues:
               Mr.  Polushkin, if he were alive,  would
          hardly state it better:  Mr. Polushkin had no
          interest  in my (Mr. Maws) Exxon  or  Glacier
          Bay  claims  and  that I  (Mr.  Maw)  was  to
          receive  all  proceeds or  money  from  those
          claims.   The operative words are my  claims,
          and those claims, referencing my claims.
Although this argument has some plausibility, we do not view Maws
affidavit as an admission that the addendum was only intended  to
cover claims suffered by Maw.  Given Maws theory that he reserved
all  claims  for past and future losses, his use of the  term  my
claims  could simply be a reference to the full scope of what  he
contends he contracted for.
          In  a  later affidavit, made after Polushkin  made  the
argument  noted  above, Maw offered a modified account  regarding
the intent of the parties:
               At the time of entering into and signing
          the  agreement and addendum it was the intent
          of  Mr. Polushkin and I that Polushkin had no
          interest in any claim, settlement or  benefit
          resulting from the March 1989 Exxon oil spill
          against the vessel Exxon Valdez and the  1987
          Glacier Bay oil spill and that I retained all
          rights  to  those claims.  It was  understood
          and  agreed between Mr. Polushkin and  myself
          that  those were my claims not his and I  was
          to  receive all future proceeds or money from
          those claims.
Further,  in subsequent deposition testimony Maw interpreted  the
agreement  using these words:  I kept those rights,  that  was  a
part of the agreement from day one.  Nobody knew where this thing
was going to go, but wherever it went, those were mine.20
          None  of these post-litigation statements are probative
extrinsic  evidence.  Statements as to the subjective  intent  of
parties to a contract made during litigation do not create issues
of  fact regarding the meaning of the contract.  As we stated  in
Still  v.  Cunningham:  [W]e are . . . justified in  disregarding
parties  statements made during litigation as to their subjective
impressions  or  intent at the time of a transaction  unless  the
party  in  some way expressed or manifested his understanding  at
the  time  of  contract  formation. 21  In  a  footnote  to  this
statement  we set forth the following language from  the  seminal
          case of Peterson v. Wirum:
          Differences of opinion among the  parties  as
          to  their subjective intent, expressed during
          the litigation, do not establish an issue  of
          fact   regarding   the   parties   reasonable
          expectations  at the time they  entered  into
          the   contract,   since   such   self-serving
          statements   are   not   considered   to   be
          probative.   Rather, the court must  look  to
          the  express  manifestations of  each  partys
          understanding  of the contract in  attempting
          to  give  effect  to  the intent  behind  the
Maws  testimony as to what was understood or intended at the time
of  the  transaction does not relate what was stated or written23
between  the  parties at the time of contract formation.   It  is
thus  not probative extrinsic evidence as to the meaning  of  the
          2.   Extrinsic   evidence  indicates  that   a   normal
               allocation of claims was intended.
          Maws   testimony  as  to  what  was  said  during   the
transaction is entitled to weight.  Maw stated that he  was  told
by his broker that the addendum language was merely boiler plate.
This  means  that the addendum was thought to  be  a  part  of  a
normal, as distinct from an unusual, allocation of claims between
a buyer and seller of a permit.
          Polushkins  broker in the transaction, Roseleen  Moore,
testified  by  affidavit  that while  she  did  not  recall  this
specific  transaction, she would have read the addendum  to  mean
that  Maw would keep the damages that he suffered as a result  of
the  spills  and that Polushkin would have any damages  he  might
suffer  in  the  future.   Moore  also  testified  that  such  an
allocation would be normal for the industry.  She testified  that
she  participated  in  perhaps 100 or more  similar  transactions
involving Cook Inlet drift permits and has never been involved in
any  permit  sale  in which the seller kept the right  to  future
damages  caused by the Exxon Valdez or Glacier Bay spill.   Moore
made it clear that the reason for claims retention clauses was so
that  sellers  would  not  be thought to have  transferred  their
rights to damages they suffered to permit buyers:
               When  the Exxon spill happened, as  well
          as  to  a lesser degree when the Glacier  Bay
          oil  spill  occurred  in  1987,  sellers   of
          permits were concerned about making sure they
          kept  whatever rights they had regarding  the
          damages  they  suffered as a  result  of  the
          spills.  The sellers wanted to be sure  their
          rights  to  damages  did not  pass  with  the
          Moore  also  detailed  some reasons  why  it  would  be
atypical  for a seller to retain damages accruing after a  permit
is sold.  She stated:
          I  believe  it would be very unusual  that  a
          seller would retain future damages after  the
          permit  was transferred because those damages
          would be based on the participation and catch
          history of the purchaser.  The future  losses
          and damages, primarily lost income, would  be
          based  on  catch and price and  consider  the
          size  of the crew the purchaser used, his  or
          her  expenses,  use of a spotter  pilot,  the
          markets  available to the purchaser,  whether
          the  permit  holder  was experienced  in  the
          fishery,  whether the vessel used  was  ideal
          for  the specific fishery and other variables
          all    focused    on   the   abilities    and
          participation of the purchaser.
          Moores  testimony as to the normal allocation of claims
in  permit  transfer transactions is not refuted.   Maw,  at  his
deposition,  could  not  think  of  any  other  permit   transfer
transaction  in  which a seller claimed to  be  retaining  future
damage  suffered  by a buyer.24  Maw did not  attempt  to  refute
Moores  account  as  to the normal allocation of  claims  between
sellers and buyers of Cook Inlet permits.
          There is therefore uncontested evidence suggesting that
both Maws broker and Polushkins broker regarded the allocation of
claims that the addendum addressed to be normal for transfers  of
Cook  Inlet permits.  The evidence is also uncontested  that  the
normal allocation for such permits is that claims accrued  as  of
the  time  of transfer are retained by the seller whereas  losses
that might be suffered in the future belong to the buyer.
          3.   Extrinsic  evidence indicates that the  price  for
               the permit was not discounted.
          Another  undisputed item of extrinsic evidence  relates
to the price of the permit.  The price of the permit was slightly
above the average.  Moore testified that the price Polushkin paid
to  Maw,  $186,000, was, in her view, a slight premium price  and
that it was not discounted.  Maw testified at his deposition that
he  did not know of any sales at the time of this particular sale
where  a  permit  had  been sold for  a  higher  price.   If  the
transaction  were intended to entail an assignment of  Polushkins
future claims to Maw, one would expect that the sales price would
be  discounted.  Permits are fungible, there is an active  market
in them, and there is no reason why Polushkin would have assigned
his claims to Maw without receiving compensation in the form of a
reduced  sale  price.  Yet it is clear that  there  was  no  such
compensation  as  Polushkin paid a market price  for  the  permit
rather than a discounted price.  This, in turn, suggests that  no
assignment was intended.25
          4.   There   is  no  probative  course  of  performance
          Maw  claims that there is extrinsic evidence concerning
the parties course of performing the contract that indicates that
post-transfer claims for losses suffered by Polushkin were  meant
to  be  assigned  to  Maw.  Extrinsic evidence  of  a  course  of
performance  can  be  an aid in interpreting  the  meaning  of  a
contract.   Subsection  202(4)  of the  Restatement  (Second)  of
Contracts  states  concerning course of  performance:   Where  an
agreement  involves repeated occasions for performance by  either
party  with  knowledge  of  the nature  of  the  performance  and
opportunity  for  objection to it by the  other,  any  course  of
performance accepted or acquiesced in without objection is  given
great  weight in the interpretation of the agreement.  Comment  g
explains  that the rationale for the use of course of performance
evidence  is  that [t]he parties to an agreement know  best  what
they  meant,  and  their action under it is often  the  strongest
evidence of their meaning.  But the comment goes on to state that
action  on a single occasion or the action of one party  only  is
not entitled to weight:
          The rule of Subsection (4) does not apply  to
          action  on a single occasion or to action  of
          one party only; in such cases the conduct  of
          a  party may be evidence against him that  he
          had  knowledge or reason to know of the other
          partys  meaning, but self-serving conduct  is
          not entitled to weight.
          The  Uniform Commercial Code  Sales adopted  in  Alaska
also  requires  repeated  occasions  for  course  of  performance
evidence.26   The  reporters comment with respect  to  course  of
performance states that [a] single occasion of conduct  does  not
amount to a course of performance.27  The Uniform Commercial Code
Sales  governs  the sale of goods, a broad term that  nonetheless
does  not  encompass limited entry permits.28  But this does  not
mean  that  the  UCC  is irrelevant.  This court  has  previously
relied  on  the  UCC  to resolve contract disputes  not  strictly
governed  by the act.29  Other courts have done the same.   [T]he
UCC  is  regarded as a modern restatement of the law of contracts
that  has the seal of legislative approval.  Consequently,  there
is  a  very strong tendency to apply the UCC to non-UCC contracts
either directly or by way of analogy.30
          In  light of these considerations we believe that it is
appropriate  to  be guided by the provisions of  the  UCC   Sales
statute and the consistent principles of the Restatement (Second)
of Contracts  202 in considering whether there is relevant course
of performance or practical construction evidence in this case.
          As course of performance evidence Maw claims that David
Polushkin,  on behalf of the estate, provided Maws  counsel  with
Patroky Polushkins fishing records for 1990 and 1991.31  This  is
not course of performance evidence for two reasons.  First, David
Polushkin was not a party to the contract and thus did  not  know
what  the  parties  meant  when they  made  the  agreement.   His
performance,  therefore,  would  not  be  evidence   of   Patroky
Polushkins understanding of the meaning of the addendum.32 Second,
David  Polushkins  action  occurred on only  a  single  occasion.
          Course of performance evidence to be relevant requires repeated
          Maw also claims that his receipt of the Glacier Bay oil
spill proceeds is relevant course of performance evidence.   This
argument  lacks merit because all the Glacier Bay  proceeds  were
for losses incurred prior to the transfer.
          Finally,  Maw  claims  that  his  receipt  of   Alyeska
settlement  proceeds  for the years 1990  and  1991  is  relevant
course  of performance evidence.  This argument also lacks merit.
This is self-serving conduct of one party only.  As such, as  the
commentary to the Restatement makes clear, it is not entitled  to
     C.   Interpreting  the  Addendum  To  Be  an  Assignment  of
          Polushkins Future Losses Would Be Unreasonable.
          One  important  guide to the meaning of a  contract  is
that interpretations that give a reasonable meaning to a contract
are  preferred to those that impart an unreasonable meaning.   As
section 203(a) of the Restatement (Second) of Contracts provides:
[A]n  interpretation  which  gives  a  reasonable,  lawful,   and
effective   meaning  to  all  the  terms  is  preferred   to   an
interpretation which leaves a part unreasonable, unlawful, or  of
no  effect.  The commentary to this section further explains this
rule:  In the absence of contrary indication, it is assumed  that
each  term  of  an  agreement  has a reasonable  rather  than  an
unreasonable  meaning, and that the agreement is intended  to  be
lawful   rather  than  unconscionable,  fraudulent  or  otherwise
          Interpreting  the  addendum  to  be  an  assignment  of
Polushkins future claims to Maw would have unreasonable, arguably
unconscionable, consequences.  Focusing only on  the  decline  in
value  of  the  permit, Maws projected loss was  $11,881.35   His
actual  loss was only about half that because he sold the  permit
to  Polushkin  for  a  slight premium.  By  contrast,  Polushkins
actual loss between the time of his purchase and the time of  his
death  was  $102,750, and his projected loss was $151,123.36   To
construe the addendum to assign losses of this magnitude  to  Maw
would  be  unreasonable,  given that  Maw  paid  nothing  for  an
assignment and will be fully compensated for the losses  that  he
suffered.   The same is also true with respect to Maws claim  for
the  loss in value to Polushkins fishing boat.  Polushkin did not
buy  his boat from Maw, yet Maw claims that he acquired the right
to  claim damages for its spill-related depreciation.  Again, and
for  the  same reasons as those previously expressed with respect
to  the  decline  in  value  of  the  permit,  such  a  claim  is
unreasonable.  Maws claim to loss of income suffered by Polushkin
on  account  of  Polushkins fishing endeavors  in  1991  is  also
unreasonable for the same reasons.37
          Although the words used in the addendum to the purchase
agreement  arguably could support the interpretation  offered  by
either  party, the relevant extrinsic evidence and the rule  that
contracts  should be interpreted to have a reasonable meaning  in
the  absence  of  a  contrary  indication  demonstrate  that  the
addendum was not meant to assign losses suffered by Polushkin  to
Maw.   Since  there are no genuine issues of material  fact,  the
Estate  of  Patroky Polushkin is entitled to summary judgment  on
this  issue.  Accordingly, the judgment of the superior court  is
REVERSED,  and  this case is REMANDED for further proceedings  in
accordance with this opinion.
     1    Neither party has been able to locate Martinson.

     2     A  handwritten client activity log apparently kept  by
Maws  broker, GSI, includes the following entry by DF for October
11,  1989:  Drafted Addendum Re: Exxon Bennys.  Faxed  to  Roland

     3    See In re The Glacier Bay, 71 F.3d 1447, 1449 (9th Cir.

     4    Id.

     5     See  In  re The Exxon Valdez, 472 F.3d 600  (9th  Cir.

     6     See  In re Exxon Valdez, 490 F.3d 1066 (9th Cir. 2007)
(denial  of  rehearing en banc).  Exxon has filed a  petition  of
writ of certiorari to the United States Supreme Court.

     7     In re Exxon Valdez, No. A89-095-CV (D. Alaska Apr. 22,

     8    The table provides in relevant part as follows:

Year Qtr
Predicted Value
Actual Value
Predicted-Actual Gap
Sellers Share
Buyers Share





. . .




     9     Copies  of these letters were sent to Maw in  care  of
Faegre & Benson.

     10    Zok v. Collins, 18 P.3d 39, 41 (Alaska 2001).

     11    Id.

     12    Burns v. Burns, 157 P.3d 1037, 1039 (Alaska 2007).

     13    Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1000
n.1 (Alaska 2004).

     14    Still v. Cunningham, 94 P.3d 1104, 1109 (Alaska 2004);
Little Susitna Constr. Co. v. Soil Processing, Inc., 944 P.2d 20,
23 (Alaska 1997).

     15    W. Pioneer, Inc. v. Harbor Enters., Inc., 818 P.2d 654,
656 (Alaska 1991).

     16    Id.

     17     Alyeska Pipeline Serv. Co. v. OKelley, 645 P.2d  767,
771  n.1  (Alaska  1982)  ([A] court  in  this  jurisdiction  may
initially  turn to extrinsic evidence in construing a contract.);
Peterson v. Wirum, 625 P.2d 866, 871 (Alaska 1981).

     18      Little  Susitna,  944  P.2d  at  23  (citing  Alaska
Diversified Contractors, Inc. v. Lower Kuskokwim Sch. Dist.,  778
P.2d  581,  584  (Alaska 1989); Alaska N. Dev., Inc.  v.  Alyeska
Pipeline  Serv.  Co., 666 P.2d 33, 39 (Alaska 1983);  Restatement
(Second) of Contracts  212(2) (1981)).

     19    Restatement (Second) of Contracts  202(1) (1981).

     20    Maw gave this answer in connection with the meaning of
the  terms of the plan of distribution for Upper Cook Inlet drift
gillnet  permit holders.  Maw, who was at one time the  executive
director  of  the Upper Cook Inlet Drift Fishermens  Association,
participated in the development of the standards of the plan.

     21     94 P.3d 1104, 1110 (Alaska 2004) (quoting Norville v.
Carr-Gottstein Foods Co., 84 P.3d 996, 1003 (Alaska 2004)).

     22     Id. at 1110 n.14 (quoting Peterson v. Wirum, 625 P.2d
866, 870 (Alaska 1981)).

     23     The  negotiations were conducted without face-to-face

     24     The  record does reveal one other case where  such  a
claim  was  made.  This case, which was brought to Maws attention
during  his  deposition, and with which Moore was also  familiar,
resulted in litigation and a consent judgment in which the claims
were  allocated  between  buyer and seller  as  of  the  time  of
transfer  (except  for  the vessel devaluation  claim  where  the
dividing line was the calendar year of transfer).

     25     The  plan  of  distribution  recognizes  the  logical
relationship  between  an  assignment  of  future  claims  and  a
discounted sale price.  Thus the plan states as follows:

               In some cases, permit buyers and sellers
          agreed  to assign litigation rights and  this
          was  taken into consideration in arriving  at
          the  permit  sale price.  Plaintiffs  counsel
          would  abide  by  such agreements  which  are
          reflected   in   written  contracts,   (e.g.,
          contracts which contain language such  as  It
          is  hereby  agreed that all right, title  and
          interest  in  all claims for damages  arising
          out  of  the Exxon oil spill incurred by  the
          seller  prior  to and including  the  closing
          date  of the sale of the permit, shall remain
          with  the  seller or Both parties agree  that
          the sale and transfer shall not convey to the
          buyer  any  right, title or interest  of  the
          seller  in  any claim arising as a result  of
          the  Exxon Valdez oil spill on or about March
          24, 1989 which claims arose prior to the sale
          and  transfer) to the extent not disputed  by
          the  parties.   To the extent the  intent  of
          such  contracts are disputed by the  parties,
          plaintiffs  counsel  would  hold   back   any
          affected  distributions  until  the   parties
          disagreement is resolved.
(Emphasis added.)

     26    AS 45.02.208 provides:

          Course    of    performance   or    practical
               (a)  If  the contract for sale  involves
          repeated occasions for performance by  either
          party  with  knowledge of the nature  of  the
          performance and opportunity for objection  to
          it  by  the  other, a course  of  performance
          accepted  or acquiesced in without  objection
          is  relevant to determine the meaning of  the
               (b)  The  express terms of the agreement
          and the course of performance, as well as the
          course  of dealing and usage of trade,  shall
          be  construed  when reasonable as  consistent
          with each other;  but if the construction  is
          unreasonable,  express  terms   control   the
          course  of  performance  and  the  course  of
          performance  controls  both  the  course   of
          dealing and usage of trade (AS 45.01.205).
               (c)  Subject  to  the provisions  of  AS
          45.02.209  on  modification and  waiver,  the
          course  of performance is relevant to show  a
          waiver  or modification of terms inconsistent
          with the course of performance.
     27    Uniform Commercial Code (UCC)  2-208 cmt. 4.

     28     AS 45.02.102; AS 45.02.105(a) (defining goods as  all
things  .  .  .  movable  at the time of  identification  to  the
contract  for  sale other than . . . investment  securities,  and
things  in  action).   As  one commentator  states,  the  [Sales]
Article does not apply to licenses, whether that term is used  in
the  property sense or as representing a governmental  grant.   2
Larry Lawrence, Lawrences Anderson on the Uniform Commercial Code
2-105:74 (3d ed. rev. 2004).

     29     See Cousineau v. Walker, 613 P.2d 608, 615-16 (Alaska
1980)  (analogizing to the UCCs treatment of caveat emptor  in  a
real  property contract dispute); Firemans Fund Ins. Co. v.  Sand
Lake   Lounge,   Inc.,  514  P.2d  223,  226-27   (Alaska   1973)
(analogizing  to  UCC  statute of limitations  provisions  in  an
insurance   contract  dispute  over  the  interpretation   of   a
limitations  clause); Rego v. Decker, 482 P.2d 834,  838  (Alaska
1971)  (drawing from the UCCs provision that a contract will  not
fail  for  indefiniteness if there is a reasonably certain  basis
for  providing a remedy in a contract dispute involving an option
contract  for  the sale of land); see also Veach v. Meyeres  Real
Estate, Inc., 599 P.2d 746, 749 n.5 (Alaska 1979) (citing the UCC
by analogy).

     30     1  Larry Lawrence, Lawrences Anderson on the  Uniform
Commercial Code  1-101:42 (3d ed. rev. 2003).

     31     On this record, whether this actually occurred is  in
doubt,  given Maws subsequently declared lack of knowledge.   But
for  the  purpose  of the present opinion we  assume  that  David
Polushkin provided the records.  See supra Part II.A.  In support
of his argument, Maw cites Exxon Corp. v. State, 40 P.3d 786, 795-
96  (Alaska  2001).   In  Exxon this court considered  course  of
performance evidence in interpreting whether an agreement between
Exxon  and the state granted to the state the discretion to  deny
an  enlargement of an oil-producing unit area.  In affirming  the
states discretionary authority we relied on course of performance
evidence   by  Exxon  acknowledging  such  authority   on   three
occasions.  Id.

     32     [C]ourse of performance when employed to interpret  a
contract is an indicator of what the parties intended at the time
they  formed their agreement.  It is an expression by the parties
of  the meaning that they gave to the terms of the contract  that
they made.  Arthur Linton Corbin, Corbin on Contracts  24.16,  at
136 (rev. ed. 1998) (emphasis added).

     33    Although evidence of conduct on a single occasion does
not  amount  to  a  course of performance,  action  on  a  single
occasion  by  a  party,  as  comment g  to  section  202  of  the
Restatement  notes,  may  be evidence against  him  that  he  had
knowledge or reason to know of the other partys meaning . .  .  .
Such  evidence  can  be  important  because  where  parties  have
attached different meanings to an agreement it is interpreted  in
accordance  with the meaning attached by one of them  if  at  the
time  the agreement was made the other party either knew  or  had
reason  to  know  of  the meaning attached by  the  first  party.
Restatement  (Second) of Contracts  201(2)(a) & (b) (1979).   But
this  use  of  conduct  evidence could not be  applied  to  David
Polushkin  because  he was not  party to the  contract  and  thus
lacked  both knowledge and reason to know of the meaning attached
by Maw to the contract at the time it was made.

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

     35    See supra Part II.A.

     36    See supra Part II.A.

     37    Further, one would expect that if the contract actually
contemplated that Maw would receive damages for Polushkins future
loss  of  fishing  income,  provisions  requiring  diligence  and
reporting would have been built into the contract.

This site is possible because of the following site sponsors. Please support them with your business.
Case Law
Statutes, Regs & Rules

IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights