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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Carr-Gottstein Foods Co. v. Wasilla, LLC (05/16/2008) sp-6265

Carr-Gottstein Foods Co. v. Wasilla, LLC (05/16/2008) sp-6265, 182 P3d 1131

     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

CARR-GOTTSTEIN FOODS CO. )
and SAFEWAY, INC., ) Supreme Court No. S- 12010
)
Appellants, ) Superior Court No. 3AN-02- 7336 CI
)
v. ) O P I N I O N
)
WASILLA, LLC, d/b/a WASILLA) No. 6265 May 16, 2008
SHOPPING CENTER, LLC,)
)
Appellee.)
)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Morgan Christen, Judge.

          Appearances:  James N. Reeves and Michael  A.
          Grisham, Dorsey & Whitney LLP, Anchorage, for
          Appellants.   Jeffrey M.  Feldman  and  Susan
          Orlansky,   Feldman   Orlansky   &   Sanders,
          Anchorage, for Appellee.

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

          MATTHEWS, Justice.


I.   INTRODUCTION
          Approximately six years after a supermarket relocated a
stand-alone  liquor  store  to  the  supermarkets  premises,  the
supermarkets landlord claimed that the move constituted a  breach
of  the  supermarkets  lease.  The  superior  court  agreed.   We
reverse  because  the landlords lengthy silence  and  other  acts
constituted a waiver of its right to insist on strict performance
of the lease with respect to the relocation.
II.  FACTS
          In  the 1950s Larry Carr opened his first Carrs grocery
store and Oaken Keg liquor store.  He expanded the businesses and
in  the  1970s  merged  them  with  Barney  Gottsteins  wholesale
company.    Thereafter  several  Carr-Gottstein  companies   were
created,  including Carr-Gottstein Properties (CG Properties),  a
real  estate  development company, and LABAR Co., a  partnership.
At  all  times  relevant to this case CG Properties  managed  the
commercial   real   estate  owned  by  Carr-Gottstein   entities,
including LABAR.
          One  of  the  properties LABAR owned  was  the  Wasilla
Shopping  Center.   A Carrs supermarket and an Oaken  Keg  liquor
store were two of the tenants in the Wasilla Shopping Center, and
a Carr-Gottstein company owned them, too.  The supermarket was in
the  main building of the shopping center while the liquor  store
was  in  a  smaller, satellite building.  In 1990  an  investment
group  headed by Leonard Green bought the Carrs supermarkets  and
Oaken  Keg  liquor stores, but not the real estate on which  they
were  located.   LABAR  remained  the  landlord  of  the  Wasilla
Shopping  Center.   The Green-controlled corporation  that  owned
Carrs supermarkets after 1990 was eventually named Carr-Gottstein
Foods  Co. (CG Foods).  The Oaken Keg stores were owned by  Oaken
Keg Spirit Shops, Inc., a wholly owned subsidiary of CG Foods.
          As  part  of  the sale, the supermarket lease  for  the
Wasilla  Shopping Center was renegotiated.  Its term  was  twenty
years  subject to four successive renewal options of  five  years
each at the option of the tenant.  The liquor store lease of  the
satellite building was to expire in 1995.  The use clause of  the
supermarket lease provided that the tenant would use the premises
for  the  principal purpose of conducting thereon a general  food
supermarket.   It  permitted the sale  of  items  sold  in  other
general  food  supermarkets.  Another clause of  the  supermarket
lease  prohibited the tenant from subleasing the premises without
landlord consent.
          Because  Alaska law had disallowed grocery stores  from
selling  liquor,  Oaken  Keg stores, including  the  one  in  the
Wasilla  Shopping  Center, were physically  separate  from  Carrs
stores.  In 1993 the Alcohol Beverage Control Board modified  its
interpretation  of  state liquor laws to permit  closer  physical
proximity  between retail establishments and liquor  stores.   In
1996,  after the liquor store lease expired, CG Foods  moved  the
liquor  store  in the Wasilla Shopping Center into  part  of  the
premises previously occupied by the supermarket.  This relocation
required   physical  alterations  to  the  supermarket  premises,
including glass partitions and doors separating the liquor  store
from  the supermarket.  Electrical modifications were also  made.
CG  Foods  did  not seek or obtain permission for the  relocation
from  CG  Properties.   But  CG  Properties  was  aware  of   the
relocation  and  made  no  objection that  the  relocation  would
violate  either  the use clause or the sublease  clause.   Denali
Commercial   Management,  Inc.,  described   as   CG   Properties
management  arm with respect to the shopping center,  facilitated
the  relocation  by  bidding  on and  billing  for  some  of  the
electrical work required by the move  Denali billed CG Foods some
$20,000 for electrical work.1  After the relocation CG Properties
required Oaken Kegs sales figures to be reported separately,  but
combined them with the supermarkets sales figures for the purpose
of calculating whether percentage rent should be charged.2
          In  1998  LABAR  transferred ownership of  the  Wasilla
Shopping  Center to another Carr-Gottstein entity,  Wasilla  LLC.
Wasilla LLC was also managed by CG Properties and in this opinion
our  reference to CG Properties should be understood  to  include
both LABAR and Wasilla LLC.
          In  1998  Wasilla LLC borrowed a large amount of  money
from  a  third  party,  using  the  Wasilla  Shopping  Center  as
security.  In connection with this transaction, Robert Mintz,  CG
Properties  general  manager, signed a sworn statement  that  the
leases in the shopping center were not in default.
          In  1999  Greens  investment group  sold  CG  Foods  to
Safeway.   As  part  of  this transaction,  Safeway  asked  about
possible liabilities that CG Foods might have and sought estoppel
certificates  from  CG Properties that would declare  that  there
were  no  defaults under CG Foods leases except as  stated.3   CG
Properties did not state that CG Foods was in default  under  the
lease,  but refused to sign the certificates.  In February  2002,
approximately six years after the relocation of the liquor store,
CG  Properties wrote Safeway that it considered the move to be  a
breach of the supermarket lease.
III. PROCEEDINGS
          A  few  months  later  CG  Properties,  acting  through
Wasilla  LLC, brought this action against Safeway, CG Foods,  and
Oaken  Keg  Spirit  Shops,  Inc.  (collectively  Safeway).    The
complaint  alleged that several years ago the  liquor  store  had
been  relocated to a partitioned area of the supermarket  without
CG  Properties consent and that this violated the leases use  and
sublease clauses.  CG Properties sought declaratory relief and  a
permanent injunction preventing Safeway from operating  an  Oaken
Keg liquor store on the supermarket premises.
          Safeway   answered   and   pled  affirmative   defenses
including waiver, estoppel, and laches.  CG Properties then filed
an  amended  complaint,  adding a claim for  damages.   Extensive
motion practice and discovery followed.
          CG   Properties  moved  for  partial  summary  judgment
seeking  a ruling that CG Foods had violated the use and sublease
clauses.   According  to  CG  Properties,  the  use  clause   was
understood  by  the  parties  to  exclude  the  sale  of  liquor.
Further,  CG  Properties argued that the sublease clause  of  the
lease, which prohibited CG Foods from allowing others to use  any
part  of  the leased space without the landlords written consent,
included wholly owned subsidiaries of CG Foods.
          Safeway  opposed  the motion for summary  judgment  and
cross-moved  for summary relief.  It argued that the  use  clause
permitted   the  sale  of  liquor  from  within  the  supermarket
premises.  Safeway also argued that the sublease to Oaken Keg was
not  a  breach of the lease because Oaken Keg was a wholly  owned
subsidiary  of  CG  Foods  and  the  parties  treated   the   two
corporations as a single entity.  Both as to the use  clause  and
          the sublease clause, Safeway argued further that the parties
course  of performance supported Safeways interpretation  of  the
lease.  In addition, Safeway argued that CG Properties had waived
its  right to contend that Safeway was in breach of the  use  and
sublease  clauses because of CG Properties long  acquiescence  in
the  move and its conduct and statements relating to the  absence
of  defaults.  On similar grounds, Safeway presented an  argument
relating to estoppel and laches.
          Anchorage Superior Court Judge Morgan Christen  granted
CG Properties motion for summary judgment concerning the sublease
clause,  holding  that  CG  Foods  breached  its  duty  to   seek
permission  before sub-leasing a portion of the leased  premises.
The   superior  court  implicitly  denied  Safeways  cross-motion
concerning the sublease clause and expressly denied both  parties
motions concerning whether the use clause was breached.
          CG Properties then sought a ruling to establish the law
of  the  case regarding damages for defendants violation  of  the
sublease clause.  CG Properties sought damages resulting from its
inability  to lease the satellite building on terms as  favorable
as  those paid by Oaken Keg after Oaken Keg vacated the satellite
building in 1996.  CG Properties argued that Oaken Keg would  not
have  moved from the satellite building to a location other  than
the  supermarket premises, even though Oaken Keg had no  duty  to
remain  in the satellite building because its lease had  expired.
Over   Safeways  opposition,  the  trial  court  ruled  that   CG
Properties  was  entitled  to recover lost  rent  and  remodeling
expenses pertaining to the satellite building, less an offset for
rents actually received.
          The  court  then  ordered a trial in two  phases.   The
first  phase would be tried to the court and would concern issues
relating  to the use clause.  The second phase would  be  a  jury
trial and would involve all other issues.
          The  court entered findings of fact and conclusions  of
law following the presentation of evidence for the first phase of
the  trial.   The  court concluded that the use  clause  did  not
permit  the  sale of liquor from the supermarket  premises.   The
court also rejected Safeways argument that CG Properties delay in
objecting to the move signified that CG Properties did  not  view
the  move to be a violation of the lease, notwithstanding finding
that  CG Properties leasing director, Gale Bogle-Munson, knew  of
the  move  a few weeks before it happened.  The court also  found
that  when  Mintz of CG Properties learned of the move  after  it
occurred, he decided to keep his options open rather than  notify
CG Foods that it was in breach of the lease.4
          The court next scheduled a jury trial on damages and on
Safeways  affirmative  defenses.   But  before  the  jury   trial
concluded  the  court  ruled (1) that  the  lease  precluded  the
affirmative  defense  of  waiver, and (2)  that  the  affirmative
defense of estoppel would be submitted to the jury acting  as  an
advisory jury.
          The  jury  returned a special verdict finding  that  CG
Properties suffered past damages as a result of the breach of the
sublease  clause of $172,490 and past damages for breach  of  the
use clause of $50,028.78.  The jury also found that CG Properties
          would suffer future damages flowing from the breach of the use
clause  of  $47,847.  But the jury also found that CG  Properties
was estopped from enforcing the use clause.5
          Subsequently,  the  trial  court  rejected  the   jurys
finding  regarding  estoppel,  concluding  that  there  was   not
evidence of an unambiguous statement or action by Plaintiff  that
was  inconsistent  with Plaintiffs position  at  trial  that  the
parties  lease  did  not  permit  the  sale  of  alcohol  on  the
supermarket premises.  The court also concluded that the evidence
did  not  support a finding that Defendants relied upon any  such
statement or action by Plaintiff.
          The court entered judgment in favor of CG Properties in
the  principal  sum of $270,365.78 (the sum of the  three  awards
made  by  the  jury) plus prejudgment interest.  The  court  also
awarded CG Properties full attorneys fees and costs approximating
$660,000.6
IV.  DISCUSSION
     A.   Contentions on Appeal
          On appeal Safeway raises issues pertaining to liability
and damages and also challenges the award of full attorneys fees.
In  particular,  Safeway argues that neither the sublease  clause
nor   the  use  clause  was  breached  and,  alternatively,  that
CG  Properties is barred by the doctrines of waiver and  estoppel
from  claiming that they were.  With respect to damages,  Safeway
contends  that the claimed breaches were not the legal  cause  of
any  damage  CG  Properties may have suffered  and  further  that
duplicate   damages   were   awarded.    CG   Properties   offers
counterarguments  on  all points.  Because we  conclude  that  CG
Properties claims for breach were waived as a matter of  law,  it
is  unnecessary  to  discuss the other points  that  Safeway  has
raised.
     B.   Waiver
          Safeways   argument  concerning  waiver  is   that   CG
Properties clearly manifested its acquiescence in the move of the
liquor  store onto the supermarket premises.  Safeway also argues
that  no  provision  of the lease bars assertion  of  its  waiver
defense  and  if  there  were  such  a  provision,  it  would  be
unenforceable.  Safeway argues that the court erred with  respect
to  its waiver defense by granting partial summary judgment to CG
Properties  concerning the sublease clause, and later  by  ruling
that  the  lease  precluded assertion of  the  defense.   Safeway
argues that the undisputed facts establish waiver as a matter  of
law; alternatively, it contends that there were genuine issues of
material fact requiring a trial on the issue.
          In  reply CG Properties argues that the courts  rulings
were  correct.  It contends that a no waiver clause of the  lease
precluded  the  application  of  waiver.   CG  Properties  argues
further  that if the clause is invalid, it is only  so  when  the
landlord  seeks termination of the lease.  Further, CG Properties
argues  that  even  if  the  no waiver clause  is  unenforceable,
Safeways  waiver  defense fails on the  facts  and  that  summary
judgment in CG Properties favor was properly granted.
          When  a party to a contract is aware of conduct on  the
part  of  the other party that constitutes a breach and fails  to
          protest the breach while continuing to perform the contract, that
party  may be held to have waived its right to rely on the breach
in subsequent litigation.  The seminal case in Alaska on contract
waiver is Milne v. Anderson.7  In Milne we stated:
               Waiver  is  generally  defined  as   the
          intentional relinquishment of a known  right.
          However, waiver is:
          
               a  flexible word, with no
               definite,    and    rigid
               meaning in the law . .  .
               .   While  the  term  has
               various          meanings
               dependent    upon     the
               context,      it      is,
               nevertheless, capable  of
               taking on a very definite
               meaning  from the context
               in  which it appears, and
               each case must be decided
               on  the facts peculiar to
               it.
               
               A  waiver  can  be  accomplished  either
          expressly  or implicitly.  An implied  waiver
          arises  where  the course of conduct  pursued
          evidences  an intention to waive a right,  or
          is inconsistent with any other intention than
          a waiver, or where neglect to insist upon the
          right  results in prejudice to another party.
          To  prove an implied waiver of a legal right,
          there  must  be  direct, unequivocal  conduct
          indicating a purpose to abandon or waive  the
          legal right, or acts amounting to an estoppel
          by the party whose conduct is to be construed
          as a waiver.[8]
          
          In  later  cases we added an objective  gloss  to  this
formulation.  [N]eglect to insist upon a right, we have said, may
result in an implied waiver, or an estoppel, when the neglect  is
such  that it would convey a message to a reasonable person  that
the  neglectful  party would not in the future pursue  the  legal
right in question.9
          The  Milne case offers a valuable illustration  of  how
the  general  principles  of implied waiver  should  be  applied.
Milne  involved  a  contract to sell real estate.10   The  buyer,
Milne,  purchased  land and buildings from the Andersons.11   His
offer  contained language to the effect that all furnishings  and
fixtures on the premises would be included in the purchase.   The
Andersons,  who resided outside Alaska, wrote in some  exceptions
to  the  offer  specifying furnishings that  they  would  retain.
These  terms  were  communicated  to  Milnes  attorney  but  not,
evidently, to Milne, and the warranty deed did not contain  them.
Later  Mr. Anderson returned to Alaska and removed some  personal
property  from  the premises.12  Milne observed him  doing  this,
          asked what he was doing, but made no protest.  Sometime later a
bank official asked Milne to initial his approval to the language
that  the  Andersons  had added.13  Milne refused,  but  made  no
complaint  to  the Andersons.  Later Milne borrowed  $4,000  from
Mrs.  Anderson in exchange for an unsecured promissory note.   He
made  payments for awhile and then defaulted.  When the Andersons
attorney  sent him a demand letter, Milne did not claim  that  he
was  offsetting the balance of the note because of  the  property
that  had  been  removed from the premises.   But  he  took  that
position  at  the trial of the suit to collect on the  note.   He
also claimed that he had made certain utility payments before  he
took  possession of the premises and these payments, too,  should
be  offset.  The trial court held that Milne had waived his right
to claim these offsets.14  On appeal we affirmed, noting that
          [t]here is substantial evidence in the record
          to  support  an inference of waiver:   Milnes
          failure   to   complain  about  the   utility
          payments and Mr. Andersons activities on  the
          premises; his failure to protest when he  saw
          that  the  contract  had  been  altered;  his
          continued  performance  under  the  contract,
          despite his knowledge that the contract terms
          had  been  changed; and his failure to  raise
          the  claim of offset when Andersons  attorney
          demanded  payment  on  the  promissory  note.
          Since, from our review of the record, we  are
          not  left with a definite and firm conviction
          that  a  mistake has been made, the  district
          courts finding that Milne waived any right to
          raise  his claim for damages under  the  land
          sale  contract  in this litigation  over  the
          promissory note must be affirmed.[15]
          
          In  Altman v. Alaska Truss & Manufacturing Co., we  had
occasion  to  apply  the implied waiver principles  announced  in
Milne in the context of a lease.16 The property involved was owned
by  the  State  of Alaska and leased under a long-term  lease  to
Altman.17   Altman in turn had subleased part of the property  to
Alaska  Truss  & Manufacturing (ATM), which in turn assigned  the
sublease  to  Woods & Rohde, d/b/a Alaska Truss &  Millwork  Inc.
(W&R).18   A  clause in the sublease provided that if  the  state
increased its rate on the primary lease, the sublease rent  would
be increased by the same percentage.19  On December 15, 1974, the
state  increased  its rent by approximately 500 percent.20   This
increase occurred in a period during which Altman, ATM,  and  W&R
were in a dispute as to what the appropriate rent should be for a
five-year  renewal of the sublease that began  on  September  30,
1973.21  Although Altman was seeking a rent increase, he did  not
advise ATM or W&R of the 500-percent increase in the states  rent
until  September  1976, and even then he did not  state  that  he
intended to enforce the escalation provision.22  Rather, he relied
on the increased rent as a reason why ATM and W&R should agree to
an  increase.  It was only in 1978 when Altman filed suit that he
notified  ATM  and  W&R  that he intended  to  enforce  the  rent
          escalation clause.23  The superior court held that Altman had
impliedly waived his right to enforce the escalation provision.24
On appeal we affirmed this conclusion:
          As  we  stated  in  Milne v.  Anderson,  [a]n
          implied  waiver arises where  the  course  of
          conduct  pursued  evidences an  intention  to
          waive  a  right, or is inconsistent with  any
          other  intention  than  a  waiver,  or  where
          neglect  to insist upon the right results  in
          prejudice to another party.  Altmans  conduct
          in  never insisting upon his right to enforce
          the  escalation  provision  was  inconsistent
          with any other intention than a waiver of his
          right;  furthermore, his  neglect  to  insist
          upon  his right resulted in prejudice to  ATM
          and W & R.  To have preserved his right under
          the  escalation provision, Altman needed only
          to  have  notified ATM and  W  &  R  that  he
          intended  to  enforce the provision.   Altman
          did  not  do this until he filed his suit  in
          1978.   We  thus conclude that  the  superior
          court  properly held that Altman is  estopped
          from  enforcing, and has waived his right  to
          enforce,  the  escalation  provision  of  the
          sublease.[25]
          
          In  at  least  two  other cases we  have  held  that  a
landlord has waived its right to rely on potential lease breaches
by  conduct  amounting  to acquiescence.  Thus  in  Fun  Products
Distributors,  Inc.  v. Marters a tenant  gave  notice  of  lease
renewal  that  was  untimely under the terms  of  the  lease  and
defective in other respects.26  Thereafter the tenant continued to
make  monthly rental payments that were labeled lease payments.27
For  some  three  years  the landlord  gave  no  notice  that  it
considered the option to renew ineffective.  The trial court held
that  the option to renew the lease was not effectively exercised
and  that  the tenancy had become a month-to-month  tenancy.   On
appeal  this court reversed, holding as a matter of law that  the
landlord had waived its right to claim that the purported renewal
was defective:
          We  hold  that  as a matter of  law  where  a
          lessor   accepts   lease   payments   for   a
          substantial  period  of  time  (approximately
          three  years) after receipt of a tardy notice
          of renewal, without advising the lessees that
          the  late  tender  of notice  was  considered
          ineffective and without advising the  lessees
          that  the  notice was ineffective because  it
          was  executed by only one of the lessees, the
          lessor  has waived the lease requirement  for
          notice by the lessees of renewal of or within
          a certain time.[28]
          
          In  Dillingham  Commercial Co. v.  Spears,  the  lessee
          sought to exercise a purchase option in the lease.29  The lessor
resisted  on  a number of grounds, one of which was  that  nearly
every payment of rent over the nine-year history of the lease had
been  made  late.30  The landlord had accepted the late  payments
without  objection but argued that a non-waiver clause  preserved
her  right  to object to the late payments.  The clause provided:
Only  waivers in writing executed by Landlord shall be effective.
No delay or omission on the part of Landlord in exercising any of
its  rights shall operate as a waiver of such right or any  other
right.31  We observed that if literally applied, this clause would
permit  the  landlord  to accept late payment  and  still  assert
default  of  the lease.  But we found that the non-waiver  clause
did  not  preclude  the defense of waiver and that  the  superior
court   had   correctly  concluded  that   the   landlords   long
acquiescence constituted a waiver of her right to claim a default
for [the tenants] late payments of rent.32
          Based  on  the  above  principles  and  our  case   law
application of the doctrine of waiver, we agree with Safeway that
the  course  of conduct of CG Properties in this case constituted
implied  waiver  as a matter of law.  CG Properties  had  advance
knowledge of CG Foods intent to move the Oaken Keg store onto the
supermarket  premises.   CG  Properties  management  arm,  Denali
Commercial Management, assisted CG Foods in relocating the  Oaken
Keg.   After  the  relocation, while  requiring  that  the  sales
figures  for  the Oaken Keg be kept separate from  those  of  the
supermarket,  CG  Properties combined them  for  the  purpose  of
calculating  whether  percentage rent should  be  charged  to  CG
Foods.  Thus, CG Properties had full knowledge of the relocation,
and  facilitated it, and also had full knowledge of the continued
sales  of  liquor  by  the  Oaken  Keg  store  from  within   the
supermarket premises.  CG Properties general manager, Mintz, upon
learning  of  the  relocation made a conscious  decision  not  to
protest  it,  preferring a wait-and-see approach in order  to  be
able  to select the most economically favorable choice as  events
unfolded.  He maintained this posture for the better part of  the
next  six years.  Meanwhile, Mintz signed a sworn statement  that
there  are  no  defaults in connection with  the  leases  in  the
shopping  center  in  order  to  obtain  a  large  loan  for   CG
Properties.  In addition, at the time of Safeways acquisition  of
CG  Foods,  Safeway  sought information and a certificate  as  to
whether CG Foods was in default on the lease.  CG Properties  had
a  duty to declare itself on that subject, but did not claim that
a  default  existed.   Instead  it maintained  its  non-committal
stance.
          These acts  except for the statement made to obtain the
loan   prejudiced CG Foods and Safeway.  Timely notice  that  the
relocation  violated the lease would have afforded CG  Foods  the
opportunity  to reconsider its position.  It could have  declined
to  make  the  move   thus  saving the expense  of  altering  the
supermarket premises  or sought to amend the lease.33  Further, if
Safeway had been told that CG Foods was in breach of its lease in
the  Wasilla Center  and had a potential six-figure liability  to
CG  Properties   it  could have declined to  purchase  CG  Foods,
offered  a  lower price, or sought a bond to protect  it  against
          potential damages.  Because of CG Properties failure to claim
that the relocation breached the lease, CG Foods and Safeway  had
no occasion to pursue these options.34
          This combination of acquiescence and assistance in  the
relocation, consciously declining to declare a breach, even  upon
request, and prejudice is inconsistent with any conclusion  other
than  that CG Properties waived its right to claim that the lease
was breached.35
     C.   The Non-Waiver Clause Applies Only to Future Breaches.
          The  non-waiver  clause on which CG  Properties  relies
states:
          The  failure of either party to insist in any
          one   or   more  instances  upon  the  strict
          performance of any one or more of the  . .  .
          terms . . . of this Lease . . . shall not  be
          construed  as a waiver or relinquishment  for
          the  future  . . . of the right  to  exercise
          such right [or] remedy . . . .
          
Under  this  clause, CG Properties failure to  insist  on  strict
performance of the lease on one occasion does not waive its right
to  insist on strict performance on a future occasion.  But  this
clause  does  not  state  that  a failure  to  insist  on  strict
performance  on  one occasion will waive the  right  to  claim  a
default  for  the  conduct  on that  occasion.   The  clause,  if
anything, implies that failure to insist on the performance of  a
right on one occasion will be a waiver of the right to declare  a
breach for that occasion.  Thus, the non-waiver clause means that
Safeway could not, in reliance on CG Properties failure to insist
on  strict performance of the lease in connection with the  Oaken
Keg  relocation, in the future move some other business onto  the
supermarket  premises  in  violation  of  the  use  and  sublease
clauses.   But nothing in the clause suggests that the waiver  of
these clauses as to the Oaken Keg move would be ineffective.
V.   CONCLUSION
          Having concluded that CG Properties waived any right to
claim  that  CG  Foods breached the sublease or  use  clauses  by
moving  the Oaken Keg liquor store onto the supermarket  premises
and  that  no provision of the lease prevents such a waiver  from
taking effect, we REVERSE the judgment of the superior court  and
REMAND  this  case for further proceedings consistent  with  this
opinion.
_______________________________
     1      Two-thirds   of   the  stock  of  Denali   Commercial
Management, Inc., was owned by Carr-Gottstein entities  and  one-
third  was  owned  by  CG Acquisition Co., an investment  company
created  by Green that later became CG Foods.  Denalis  president
was Robert Mintz, the general manager of CG Properties.

     2     The  breakpoint for percentage rent was not met  until
the  second  quarter of 2001; until then no percentage  rent  was
charged.

     3    The lease provided that if a party refused for ten days
to  execute an estoppel certificate after a formal request, which
could be made at any time, the requesting party had the authority
to sign certificates on behalf of the refusing party.  Under this
authority Safeway signed the certificates (stating there were  no
defaults) on CG Properties behalf after the litigation began, but
the  superior court found this to be ineffective for the purposes
of estoppel.

     4     The  court found that Mintz decided to wait  until  he
could  assess  the  economic ramifications  of  the  move  before
deciding how to proceed.

     5     The jury was instructed that the essential elements of
equitable  estoppel  were  whether  (1)  plaintiff  asserted   an
unambiguous  position,  by conduct or by making  a  statement  or
statements, that is contrary to its contention in this trial that
[CG  Foods]  violated  the use clause; and (2)  that  [CG  Foods]
reasonably relied on plaintiffs asserted position.

     6     The court based the award of full fees on the language
of a guaranty clause signed by Safeway that the court interpreted
to call for such an award.

     7    576 P.2d 109 (Alaska 1978).

     8    Milne, 576 P.2d at 112 (citations omitted).

     9    Anchorage Chrysler Ctr., Inc. v. DaimlerChrysler Corp.,
129 P.3d 905, 917 n.35 (Alaska 2006) (citing Wausau Ins. Cos.  v.
Van Biene, 847 P.2d 584, 589 (Alaska 1993)).

     10    Milne, 576 P.2d at 110.

     11    Id. at 111.

     12    Id. at 110-11.

     13    Id. at 111.

     14    Id. at 111-12.

     15    Id. at 112-13 (footnote omitted).

     16    Altman v. Alaska Truss & Mfg. Co., 677 P.2d 1215, 1223
(Alaska 1983).

     17    Id. at 1217-18.

     18    Id. at 1215, 1217-18.

     19    Id. at 1217.

     20    Id. at 1218-19.

     21    Id. at 1217-18.

     22    Id. at 1218-19.

     23    Id. at 1219-20.

     24    Id. at 1220, 1223.

     25    Id. at 1223 (citation omitted).

     26    559 P.2d 1054, 1056-57 (Alaska 1977).

     27    Id. at 1057.

     28    Id. at 1058.

     29    641 P.2d 1, 2 (Alaska 1982).

     30    Id. at 7-8.

     31    Id. at 7.

     32    Id. at 7-8.

     33    When CG Properties first gave notice of the breach, on
February  22, 2002, it offered a number of options that are  like
those that could have been explored six years earlier:

               We  believe that either the lease should
          be  renegotiated or the unapproved use should
          cease.   Several options come to  mind.   You
          can  move the liquor operation into a  vacant
          space  in  the shopping center  under  a  new
          Oaken  Keg  lease.   Alternatively,  you  can
          amend  the  Carrs lease to add  the  sale  of
          liquor as an approved use in exchange for  an
          increase in Carrs minimum rent equivalent  to
          the  rent that would be paid were you to move
          the   liquor   store  into  its  own   space.
          Finally,  you  can amend the Carrs  lease  to
          allow  the sale of liquor as an approved  use
          in exchange for relinquishing the prohibition
          against  the  landlord leasing space  in  the
          shopping center to other liquor sellers.   We
          are, of course, open to other suggestions you
          may have.
          
     34      Preserving  the  opportunity  to  cure  defects   in
performance  and  opening the way to settlement negotiations  are
two of the interests that underlie the statutory waiver provision
of AS 45.02.607.  Subsection (c)(1), which is section 2-607(3)(a)
of  the  Uniform Commercial Code, requires a buyer of  goods  who
discovers a breach to notify the seller within a reasonable  time
or  be  barred  from  a remedy.  Such notice, we  have  observed,
provides  the seller a chance to correct any defect,  Shooshanian
v.  Wagner,  672 P.2d 455, 462 (Alaska 1983) (quoting  Prutch  v.
Ford Motor Co., 618 P.2d 657, 661 (Colo. 1980)), and open[s]  the
way  for  normal  settlement through negotiation.    Armco  Steel
Corp. v. Isaacson Structural Steel Co., 611 P.2d 507, 512 (Alaska
1980)  (quoting  U.C.C.  2-607, Official Comment  4).   The  rule
requiring notice also is designed to defeat commercial bad  faith
by  protecting  against stale claims arising out of  transactions
which a buyer has led [a seller] to believe are closed.  Id.

     35     This  conclusion is supported by case law from  other
jurisdictions involving use clause violations acquiesced in by  a
landlord.   See Sol Apfel, Inc. v. Kocher, 61 N.Y.S.2d  508,  512
(Sup.  1946) (holding that lessor waived complaint for breach  of
lease  by  permitting lessee to carry on manufacturing operations
from  the outset without objection and aiding in the installation
of  necessary equipment for manufacturing); Malley v. Thalheimer,
44  Conn. 41, 1876 WL 1754, at *1-2 (Conn. 1876) (holding lessors
complaint that lessee breached lease by adding a restaurant to  a
saloon waived because the lessor knew of lessees alterations  and
expenditures  fitting up the restaurant and did not object);  see
also Milton R. Friedman, Friedman on Leases  7:3.6, at 7-78 to 7-
79  &  nn.  315-16 (Patrick A. Randolph, Jr., ed., 5th ed.  2007)
(Waiver may also occur by other behavior, as where with knowledge
and  without  objection a landlord permits  his  tenant  to  make
improvements  or  other  expenditures  in  reliance  and  to  his
prejudice.).

          These  authorities  and our own cases  such  as  Milne,
Altman, Fun Products, and Dillingham Commercial suggest that  the
traditional  verbal  formulation for implied  waiver  is  not  as
demanding  as  it  sounds.   What the cases  have  in  common  is
knowledge on the part of the party charged with waiver  of  facts
giving  rise to a right to assert a breach (or claim  a  contract
benefit  as in Altman), unreasonable delay in asserting a  breach
(or claiming a benefit), and acceptance of continued performance.
Frequently  there  is also prejudice  often  because  failure  to
protest deprives the other party of an opportunity to cure   even
if prejudice is not discussed.  Little or no attention is paid to
whether  the  party  charged  with waiver  actually  intended  to
relinquish a known right.  At least one respected text,  Calamari
and  Perillo  on  Contracts, recognizes  the  problems  with  the
traditional  formulation.  The text says  of  the  voluntary  and
intentional relinquishment of a known right definition that

          there   are   few,  if  any,  more  erroneous
          definitions known to the law.  For one thing,
          waiver  is  far more multifaceted  than  this
          definition  would allow for.  Moreover,  even
          as  far as it goes, it is totally misleading.
          It  strongly  implies that the waiving  party
          intends  to  give  up a right.   In  reality,
          many,  if  not most waivers are unintentional
          and  frequently do not involve a  right  that
          the party is aware of.
          
Joseph  M. Perillo, Calamari and Perillo on Contracts  11.29,  at
458 (5th ed. 2003).

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