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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kazan v. Dough Boys, Inc. (02/20/2009) sp-6338

Kazan v. Dough Boys, Inc. (02/20/2009) sp-6338, 201 P3d 508

     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

NICHOLAS KAZAN, )
) Supreme Court No. S- 12830
Petitioner, )
) Superior Court No. 3AN-06-12160 CI
v. )
) O P I N I O N
DOUGH BOYS, INC., )
) No. 6338 February 20, 2009
Respondent. )
)


          Petition for Hearing from the Superior  Court
          of   the  State  of  Alaska,  Third  Judicial
          District, Anchorage, Michael R. Spaan, Judge,
          on appeal from the District Court, Anchorage,
          John R. Lohff, Judge.

          Appearances:  Brewster H. Jamieson and Joshua
          M.  Kindred, Lane Powell LLC, Anchorage,  for
          Petitioner.    Roy  Longacre,  Longacre   Law
          Offices, Ltd., Anchorage, for Respondent.

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

          FABE, Chief Justice.

I.   INTRODUCTION
          This appeal arises from a claim based on the filing  of
a  financing  statement with an overly broad description  of  the
property subject to a lien under Revised Article 9 of the Uniform
Commercial Code.  A single overarching question is presented:  Is
it  error  as  a matter of law to rescind a settlement  agreement
with  respect to one party and not the other?  In the proceedings
below,  the  trial  court awarded Dough  Boys,  Inc.  $60,000  in
damages  after  holding that Nicholas Kazan  used  his  overbroad
financing  statement to leverage a $60,000 settlement payment  as
part of the sale of a business owned by Dough Boys.  The superior
court  affirmed  and  we  granted Kazans  petition  for  hearing.
Because  we conclude that it was error to not enforce the parties
settlement agreement in its entirety and that Dough Boys was  not
harmed  by  Kazans overbroad financing statement, we reverse  the
$60,000 award to Dough Boys.
II.  FACTS AND PROCEEDINGS
     A.   Facts
          In 2002 Nicholas Kazan sold two business, Europa Bakery
and Caf Europa, to Dough Boys, Inc. in two separate transactions.
When  Dough  Boys purchased Caf Europa in the second transaction,
it  gave Kazan a promissory note for part of the purchase  price.
The  parties also entered into a security agreement that  secured
the promissory note and all amounts Dough Boys might owe Kazan in
the future under the parties sale agreement for Caf Europa.  Both
the   Caf  Europa  sale  agreement  and  the  security  agreement
authorized  Kazan  to  file a financing  statement  covering  the
assets  of  Caf Europa.  Dough Boys paid the $125,000 balance  on
the note in full and on time at the end of 2002.
          It  is undisputed, and the trial court found, that  the
financing  statements description of Dough Boys property  subject
to  Kazans lien was overly broad because it covered all of  Dough
Boys  property.1   The  parties sale  agreement  for  Caf  Europa
authorized Kazan to execute and record . . . an initial financing
statement  covering  equipment,  inventory,  fixtures,   accounts
receivable, general intangibles and proceeds thereof arising from
any  business operation owned by [Dough Boys] and operated  under
the   name  of  Caf  Europa.   Similarly,  the  parties  security
agreement,  which authorized Kazan to file a financing statement,
limited  the  collateral  to  the  assets  of  Caf  Europa.   The
financing  statement filed by Kazan, however, did not  limit  the
property  to  that of Caf Europa but instead covered  Dough  Boys
equipment[,]  inventory, fixtures, accounts  receivable,  general
intangibles,   trademarks,   customer   lists,   booked   orders,
attachments  and  accessions, leasehold  interest,  products  and
proceeds.
          In  2005  Dough  Boys sold both Europa Bakery  and  Caf
Europa to Sagaya Corporation, again in two separate transactions.
Sagaya  and  Dough  Boys signed a purchase agreement  for  Europa
Bakery in January 2005, and a month later, they signed a purchase
agreement for Caf Europa.
          Before  the  purchase  agreement  for  Caf  Europa  was
signed,  an  attorney  representing  Dough  Boys  sent  a  letter
requesting that Kazan amend the financing statement to cover only
assets  of Caf Europa.2  Kazan responded in a letter that [u]ntil
my  extended claims against the Dough Boys are resolved, I am not
inclined  to release my security interest in the assets of  Dough
Boys, Inc.
          Sagayas owner, Paul Reid, testified that the lien . . .
was  inhibiting  [Dough  Boys and Sagaya]  from  closing  on  the
purchase of [Europa Bakery and Caf Europa].  Reid also noted that
he  acted  as a closer on the deal  by go[ing] back and forth  to
          both [Dough Boys and Kazan].  These negotiations led to related
agreements.
          Dough Boys signed a sale agreement for Caf Europa  with
Sagaya.  That sale agreement provided that Sagaya would pay Kazan
$60,000 in return for certain releases of claims by Kazan:
          At the Closing, [Sagaya] shall pay in cash or
          in  cash  over a scheduled term  to  Nicholas
          Kazan,  who has a claim against [Dough  Boys]
          and  who holds a security interest in certain
          assets  of  the  Caf,  the  sum  of  $60,000.
          [Sagaya]  will obtain a release  or  releases
          from  Kazan . . . for the benefit  of  [Dough
          Boys] and [Sagaya] and the assets of the Caf.
          
Kazan  executed and delivered to Sagaya a settlement and  release
agreement under which Kazan discharged all of his claims  against
Dough  Boys.   Kazan also entered into a mutual  release  of  all
claims with Sagaya under which both discharged their present  and
future claims against each other.  Although Kazans settlement and
release  agreement  in favor of Dough Boys did  not  mention  the
$60,000  payment  and  was  not  executed  by  Dough  Boys,  Reid
testified  that the sale agreement between Sagaya and Dough  Boys
expressed  the understanding that Kazan would receive $60,000  in
consideration for the settlement and release agreement  in  favor
of Dough Boys.
     B.   Proceedings
          In  March  2005  Gheorghe Cozac filed  a  small  claims
action  against Dough Boys for payment for work he performed  for
Europa  Bakery and Caf Europa when Kazan was the owner.   In  its
answer  to  Cozacs  complaint, Dough  Boys  filed  a  third-party
complaint against Kazan, seeking damages arising from Dough  Boys
purchase  of  Caf  Europa from Kazan and from  its  agreement  to
manage Kazans coffee shop.  Dough Boys further alleged that Kazan
breached  the covenant of good faith and fair dealing by treating
Dough  Boys  unfairly and breached their settlement  and  release
agreement  by failing to indemnify Dough Boys for Cozacs  claims.
In  response,  Kazan  brought counterclaims  against  Dough  Boys
concerning  money  owed by Kazan to the IRS and other  creditors,
the  management  of Kazans coffee shop by Dough Boys,  and  Dough
Boys alleged breach of its indemnity agreement with Kazan.
          In  the  district courts summary judgment order,  Judge
John  R. Lohff dismissed Kazans counterclaims and release[d]  any
lien against Europa Bakery Wholesale assets,3 leaving appropriate
damages to be determined [at trial].  The trial court found  that
good cause existed for granting Dough Boys motion, but it did not
discuss  the grounds for its decision.  In Dough Boys motion  for
summary  judgment, it argued that Kazans counterclaims should  be
dismissed  because  Kazan released all his claims  against  Dough
Boys  in  his  settlement and release agreement with Dough  Boys.
Dough  Boys  also  argued  that  Kazan  refused  to  correct  his
overbroad  financing statement and that Kazan held the  financing
statement hostage to extract $60,000 from its sale of Caf Europa.
          At a two-day bench trial in May 2006, Dough Boys sought
damages  for  the  $60,000 paid to Kazan when Sagaya  bought  Caf
          Europa.  Dough Boys did not pursue any of the other claims
alleged  in  its  third-party  complaint  against  Kazan.   Kazan
represented himself at trial.
          In  its  decision, the trial judge denied Cozacs  claim
against  Dough  Boys,  finding  that  it  was  not  supported  by
sufficient  evidence.  It also awarded Dough Boys  $60,000,  plus
interest, costs, and fees, against Kazan on the basis that  Dough
Boys  was  damaged by Kazans demand for the payment  required  to
obtain the release of the lien.  The trial court reasoned:
          If  Kazan  had  not  filed  an  overly  broad
          description  of the property subject  to  the
          UCC  lien,  he would not have been  paid  the
          $60,000.   This court is left with  the  firm
          conviction  that Kazan had no basis  for  the
          $60,000  payment.  The claims  Kazan  had  or
          thought  he  had over the nonpayment  of  the
          employee  withholding tax to [the]  IRS,  and
          the  dispute over the management of the  Made
          in  the  Shade  Coffee shop did  not  entitle
          Kazan  to  the lien he had filed against  the
          Dough Boys property.  He should have released
          the UCC lien when requested to do so by Dough
          Boys.[4]
          
In its written findings of fact and conclusions of law, the trial
court also concluded that Kazan had used his lien to leverage the
$60,000 payment at Dough Boys expense.  The district court  found
that Kazans claims arose from his difficulty with the IRS over an
unpaid  employee withholding from the last quarter that he  owned
Caf  Europa and from another agreement between the parties, where
Kazan  hired Dough Boys to manage a coffee shop owned  by  Kazan.
The   trial  court  attributed  the  breakdown  of  the   parties
management  agreement  to  Kazans failure  to  disclose  numerous
unpaid  bills  to  Dough Boys when it began managing  the  coffee
shop.  According to the district court, [t]hese disputes remained
unresolved until Dough Boys sold Europa Bakery and Caf Europa  in
2005.
          Kazan  appealed  the district courts damages  award  to
Superior  Court  Judge Michael R. Spaan, who affirmed,  reasoning
that  the trial court did not err in concluding that the  parties
settlement  and release agreement prevented Kazan  from  bringing
his  claims  against Dough Boys, that Kazans lien was  overbroad,
and  that Kazan extracted the $60,000 payment from Sagaya because
of his overbroad lien.  We granted Kazans petition for hearing.
III. STANDARD OF REVIEW
          We  review  questions  of  law  and  the  trial  courts
application  of the law to facts de novo,5 adopting the  rule  of
law  that  is most persuasive in light of precedent, reason,  and
policy.6   We review factual findings under the clearly erroneous
standard7  and  in the light most favorable to  Dough  Boys,  the
prevailing party below.8  A finding of fact is clearly  erroneous
if it leaves the court with a definite and firm conviction on the
entire record that a mistake has been made.9
IV.  DISCUSSION
     A.   The   Trial  Courts  Failure  To  Enforce  the  Parties
          Settlement Agreement in Its Entirety Was Error.
          Kazan   argues  that  the  district  court  erroneously
enforced only one-half of the parties settlement agreement  under
which  Kazan  released his lien and his disputed  claims  against
Dough Boys10 in exchange for $60,000 to be paid by Sagaya when it
purchased  Caf Europa from Dough Boys.  According to  Kazan,  the
trial court enforced the agreement against him by dismissing  his
claims against Dough Boys based on the release he had executed as
part  of  the  settlement.  But the trial  court  set  aside  the
settlement  agreement as it bound Dough Boys by awarding  it  the
$60,000  that  Kazan  received under the  settlement.   In  other
words,  Kazan  argues that the trial court effectively  rescinded
the  part of the parties agreement benefiting Kazan but  not  the
portion benefiting Dough Boys.  We agree.
          The  settlement agreement between Kazan and Dough  Boys
is  a  binding contract because Kazan released claims  that  were
disputed  in good faith in exchange for the $60,000 payment.   In
Wyatt v. Wyatt, we recognized that a settlement agreement forms a
binding  contract when the agreement satisfies the four  elements
of contract formation: an offer encompassing all essential terms,
unequivocal  acceptance  by the offeree,  consideration,  and  an
intent to be bound.11  Even though we generally do not examine the
adequacy  of  the  consideration agreed upon by  the  contracting
parties and instead leave the bargaining to them,12 we have noted
that one form of adequate consideration is the release of a claim
that is disputed in good faith.13  And the record supports Kazans
contention  that his claims were disputed in good faith,  despite
the trial courts holding that Kazans claims had no basis.
          In  his response to Dough Boys request that Kazan amend
and   narrow  the  description  of  property  in  his   financing
statement, Kazan noted that he had a number of unresolved  claims
against  the  Dough Boys, Inc., and that until these claims  were
resolved, he was not inclined to release [his] security  interest
in the assets of Dough Boys, Inc.  Under the terms of the parties
security  agreement,  Kazans  lien secured  Dough  Boys  $125,000
promissory note to Kazan for a portion of the sale price  of  Caf
Europa  as  well as [a]ll amounts [Dough Boys] may in the  future
owe  to  [Kazan] pursuant to the [Caf Europa] Purchase  and  Sale
Agreement,  any  promissory note, and any  extension  or  renewal
thereof, whether agreed to now or in the future, or which [Kazan]
may otherwise pay, advance, or loan to [Dough Boys] . . . .
          Todd  Harris, a principal of Dough Boys, testified that
Dough  Boys paid the $125,000 balance on the note on time and  in
full  on December 30, 2002.  Dough Boys contends that Kazans lien
was  no longer valid after this payment was made.  But Dough Boys
fails to acknowledge that the lien also secured any amounts  that
Dough Boys owed to Kazan under its contractual obligations in the
parties  Caf Europa sales agreement.  These obligations  included
Dough Boys assumption of all of Kazans liabilities for Caf Europa
as  of  July  1,  2002,  as  well as  Dough  Boys  completion  of
accounting  work  to close the books of Kazan doing  business  as
Europa  Bakery  and  Caf Europa in 2001  and  2002.   Kazan  also
alleged that Dough Boys failed to protect and indemnify him  from
          claims of the IRS and other creditors of Caf Europa as agreed
upon  under the parties sale agreement for Caf Europa.   But  the
parties  never  had  an opportunity to flesh out  the  merits  of
Kazans  claims  because the trial court dismissed all  of  Kazans
claims   against  Dough  Boys  in  its  summary  judgment  order.
Although the district court did not discuss the grounds  for  its
decision,  Dough Boys argument in favor of summary  judgment  was
based  on  Kazans  release,  which was  signed  as  part  of  his
settlement with Dough Boys.
          Given   that  the  parties  had  a  binding  settlement
agreement,  the  trial courts conclusions  of  law  were  legally
erroneous.   In  light  of the district courts  summary  judgment
order dismissing all of Kazans claims against Dough Boys based on
the  settlement and Kazans release agreement, it was legal  error
to  award Dough Boys $60,000 in damages.  During the trial, Kazan
repeatedly referred to the claims against Dough Boys that he  had
released  in exchange for $60,000.  But Kazan was precluded  from
presenting  any  evidence about those claims  because  the  trial
court  had  ruled that the release Kazan gave in connection  with
the  settlement  barred him from doing so.  Yet the  trial  court
awarded   Dough   Boys  the  $60,000  that  Kazan   received   in
consideration  for  releasing his disputed claims  against  Dough
Boys.
          A  number  of  policy  reasons support  enforcement  of
settlement  agreements.  Citing the basic  tenet  that  competent
parties are free to make contracts and that they should be  bound
by  their  agreement,  we have observed that  [a]s  a  matter  of
judicial  policy the court should maintain and enforce contracts,
rather  than  enable parties to escape from the obligations  they
have chosen to incur.14  Accordingly, we leave the negotiating to
the  parties and do not ordinarily question the adequacy  of  the
consideration  that they exchanged for their promises.15   Policy
also   favors  enforcing  settlements  and  stipulations  between
parties.16   We  encourage and favor settlements between  parties
because they reduce demand for judicial resources.17
          Nonetheless,  we  have  recognize[d]  that  freedom  of
contract is a qualified and not an absolute right, and cannot  be
applied  on a strict, doctrinal basis.  An established  principle
is  that  a  court  will  not permit itself  to  be  used  as  an
instrument of inequity and injustice.18  In particular,  we  have
quoted   Justice  Frankfurters  discussion  of  the   fundamental
principle of law that the courts will not enforce a bargain where
one  party  has unconscionably taken advantage of the necessities
and distress of the other.19
          The trial court found that Kazan used his lien . . . to
leverage  a payment of $60,000 from Dough Boys as a part  of  the
sale  of Caf Europa and Europa Bakery [to Sagaya].  According  to
Sagayas  owner,  the lien . . . was inhibiting  [Dough  Boys  and
Sagaya]  from closing on the purchase of [Europa Bakery  and  Caf
Europa].   But we have recognized that  economic necessity   very
often  the  primary motivation for compromise  is not enough,  by
itself,  to  void an otherwise valid release. 20  And Dough  Boys
never raised, argued, or presented evidence of any unconscionable
activity,  nor  did it allege fraud or economic duress.   In  the
          absence of evidence that the settlement agreement between Kazan
and  Dough  Boys  was unconscionable or of any  other  basis  for
invalidating  the  settlement, the parties  settlement  agreement
should have been enforced in its entirety by the trial court.21
     B.   The  Overbroad Financing Statement Did Not Cause  Dough
          Boys To Suffer Any Damages.
          
          Aside  from seeking a refund of its payments under  the
settlement agreement, Dough Boys does not allege that it suffered
any  additional damages as a result of Kazans overbroad financing
statement.  Dough Boys notes that [t]he financing statement filed
by  Kazan  improperly covered all assets of Dough Boys, not  just
the  Europa  Caf  assets.  But Kazan does not  dispute  that  the
financing  statement was overbroad.  Instead, Kazan  argues  that
Dough  Boys  was not harmed by the overbroad financing statement.
And  Dough Boys failed to present any evidence that the overbroad
financing statement caused it harm, perhaps because the financing
statements  overly  broad  description  of  Dough  Boys  property
subject  to  Kazans  lien did not affect  the  extent  of  Kazans
security interest in Dough Boys property.
          Kazans  lien on Dough Boys property was limited to  its
Caf  Europa  assets because a financing statement cannot  enlarge
the  property covered by the security agreement.  As other courts
have explained, the purpose of filing a financing statement is to
give  notice to third parties that the filing party  may  have  a
security interest in the named debtors property.22  The extent of
a  partys security interest in anothers property is determined by
the  description  of  the  collateral in the  security  agreement
between them.23  If there is a conflict between the language used
in the security agreement and the financing statement to describe
the  property  covered  by the security  interest,  the  security
agreement generally prevails because the security agreement,  not
the financing statement, defines the extent of the secured partys
interest.24   A financing statement cannot enlarge  the  property
covered  by  the  security agreement, but  it  may  restrict  the
property covered by the security agreement.25
          The  security  agreement between Kazan and  Dough  Boys
granted Kazan a security interest in all of Dough Boys Caf Europa
assets  and  authorized Kazan to file a financing statement  that
covered those assets.  As a result, Kazan had a security interest
in  Dough  Boys Caf Europa assets.  When Kazan filed a  financing
statement  that  covered all of Dough Boys assets,  his  security
interest  in  Dough Boys property did not expand.   Kazan  merely
filed  an overbroad financing statement, and Dough Boys  had  the
statutory  right to request that it be corrected.26  After  Dough
Boys  asked  Kazan to amend the financing statement, the  parties
negotiated a settlement agreement under which Kazan released  all
of  his  claims against Dough Boys, including his lien  on  Dough
Boys Caf Europa assets, which rendered the issue of the overbroad
financing statement moot.27  Because Dough Boys failed  to  prove
any  damages  arising  out of the overbroad  financing  statement
aside from its role in motivating Dough Boys to settle its claims
with Kazan, it was error to award damages to Dough Boys.
V.   CONCLUSION
          Because  the parties settlement agreement is a  binding
contract  and  there is no justification for rescinding  it,  and
because  Dough  Boys  did  not suffer  any  damages  from  Kazans
overbroad  financing  statement, we REVERSE  the  $60,000  damage
award to Dough Boys.
_______________________________
     1     The  parties and courts below at times refer to Kazans
overbroad  lien, but this phrase is misleading.   Kazan  filed  a
financing statement containing an overly broad description of the
collateral  covered  by  his  security  interest  in  Dough  Boys
property.  This did not create an overbroad lien.  A lien is  [a]
legal right or interest that a creditor has in anothers property,
lasting  usu[ally]  until  a debt or  duty  that  it  secures  is
satisfied, and generally the creditor does not take possession of
the  property  on which the lien has been obtained.   Blacks  Law
Dictionary  941  (8th  ed. 2004).  As other  courts  have  noted,
including  an  overbroad description of collateral covered  by  a
security  interest in a financing statement does not enlarge  the
scope  of a creditors security interest, or lien, in the  debtors
property.   E.g., In re Amex-Protein Dev. Corp., 504  F.2d  1056,
1061  (9th  Cir.  1974).  Thus, the more accurate description  is
overbroad  financing  statement, which  we  use  throughout  this
decision  unless  specifically  referring  to  the  arguments  or
reasoning of the parties or the courts below.

     2     Although  the  letter requested that Kazan  amend  the
collateral description in the security agreement, it appears that
the  letter intended to refer to the financing statement  because
the  letter said that the description in the financing statement,
and not the security agreement, was too broad.

     3     Kazan, however, never had a lien on any of Dough  Boys
Europa  Bakery  assets.   The parties security  agreement,  which
authorized  Kazan to file a financing statement,  limited  Kazans
security  interest  in Dough Boys assets to  all  assets  of  Caf
Europa.  As other courts have explained, even though Kazan  filed
a  financing statement that described the property covered by his
security  interest  as  all of Dough Boys assets,  the  financing
statement  did  not expand the property covered by  his  security
agreement  to all of Dough Boys assets.  See, e.g., Amex-Protein,
504  F.2d  at 1061 (explaining that a financing statement  cannot
enlarge the property covered by the security agreement).   Kazans
security interest was in Dough Boys Caf Europa assets only.   See
79  C.J.S.  Secured  Transactions  99  (2008)  (noting  that  the
security agreement defines the extent of the security interest).

     4     Contrary  to  the  trial courts assertion  that  Kazan
should have released the lien when asked to do so, Dough Boys did
not  ask  Kazan to release his lien.  Dough Boys asked  Kazan  to
amend  his  financing statements description  of  the  collateral
covered by his lien.

     5    Maddox v. Hardy, 187 P.3d 486, 491 (Alaska 2008).

     6     Odom v. Odom, 141 P.3d 324, 330 (Alaska 2006) (quoting
Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).

     7    Id.

     8     See  N.  Pac. Processors, Inc. v. City  &  Borough  of
Yakutat,  113  P.3d 575, 579 (Alaska 2005) (In reviewing  factual
findings, we view the evidence in the light most favorable to the
prevailing party below. (internal quotation marks omitted)).

     9    Id. (internal quotation marks omitted).

     10     Dough  Boys  appears  to  describe  this  release  as
unilateral  to argue that the release did not reciprocally  state
that  Dough  Boys  released all its claims against  Kazan,  which
would  support  the trial courts finding that the release  barred
Kazan  from  bringing  his claims against Dough  Boys  while  the
release  did not bar Dough Boys from bringing its claims  against
Kazan.   Kazan,  however, does not argue that  the  release  bars
Dough Boys from bringing its claim against Kazan concerning Dough
Boys  alleged harm from Kazans overbroad lien; Kazan argues  that
if  the trial court enforces the parties settlement agreement, it
cannot both bar Kazan from bringing his disputed claims and award
Dough Boys the consideration it gave for the release.

     11     65  P.3d  825,  828 (Alaska 2003) (quoting  Davis  v.
Dykman, 938 P.2d 1002, 1006 (Alaska 1997)).

     12     Reeves v. Alyeska Pipeline Serv. Co., 926 P.2d  1130,
1142 (Alaska 1996).

     13     See Air Van Lines, Inc. v. Buster, 673 P.2d 774,  777
(Alaska 1983) (citing  Restatement (Second) of Contracts  74,  at
281   (1981))   (In   our  view  the  requirement   of   adequate
consideration  is satisfied if Keystone disputed AVLs  claim  for
overtime in good faith.).

     14     Inman  v. Clyde Hall Drilling Co., 369 P.2d 498,  500
(Alaska 1962).

     15    Reeves, 926 P.2d at 1142.

     16     See DeSalvo v. Bryant, 42 P.3d 525, 528 (Alaska 2002)
(Generally,   sound  judicial  policy  indicates   that   private
settlements  and  stipulations between  the  parties  are  to  be
favored  and should not be lightly set aside. (internal quotation
marks and alteration omitted)).

     17     See Interior Credit Bureau, Inc. v. Bussing, 559 P.2d
104,  106 (Alaska 1977) (Stipulations and settlements are favored
in  law  because  they  simplify, shorten and  settle  litigation
without taking up valuable court resources.); see also Worland v.
Worland, 193 P.3d 735, 740 (Alaska 2008).

     18    Inman, 369 P.2d at 500 (footnotes omitted).

     19     Id. (quoting United States v. Bethlethem Steel Corp.,
315 U.S. 289, 327-28 (1942) (Frankfurter, J., dissenting)).

     20    Hawken Nw., Inc. v. State, Dept of Admin., 76 P.3d 371,
380  (Alaska  2003) (quoting Zeilinger v. SOHIO Alaska  Petroleum
Co., 823 P.2d 653, 658 (Alaska 1992)).

     21    The failure to enforce the settlement agreement in its
entirety had the effect of rescinding half of the agreement.   We
have  explained  that rescission is an equitable remedy  used  by
courts to unmake a contract induced by mistake, fraud, or duress.
Watega v. Watega, 143 P.3d 658, 666 (Alaska 2006).  When a  court
rescinds  a  contract,  it restores to the  extent  possible  the
parties  to  the positions they were in before they entered  into
the contract.  Id.  The remedy of rescission is not applicable to
this  case.   Dough  Boys  neither argued or  presented  evidence
supporting a claim of economic duress.  Nor did Dough Boys  claim
that  it  was  induced to enter into the settlement agreement  by
mistake or fraud.  Moreover, the parties cannot be put back  into
the position they were in before they entered into the settlement
agreement.   Kazan could pay Dough Boys $60,000  and  his  claims
against Dough Boys could be reinstated, but his security interest
in  Dough Boys Caf Europa cannot be reinstated because Dough Boys
no longer owns Caf Europa.

     22     See,  e.g., In re Northview Corp.,130 B.R.  543,  547
(B.A.P.  9th Cir. 1991) (quoting In re Softalk Publg  Co.,  Inc.,
856 F.2d 1328, 1330 (9th Cir. 1988)).

     23     In  re  Bakersfield Westar Ambulance, Inc., 123  F.3d
1243, 1248 (9th Cir. 1997).

     24    79 C.J.S. Secured Transactions  99 (2008).

     25     E.g.,  In re Amex-Protein Dev. Corp., 504 F.2d  1056,
1061 (9th Cir. 1974).

     26     See  generally AS 45.29.210, .625(g)  (providing  the
types  of  requests that debtors may make of secured parties  and
the  remedy  if  the  secured parties fail  to  comply  with  the
requests).

     27     Because  the financing statements overbreadth  is  no
longer  an issue, we decline to discuss Kazans argument that  the
statutory  procedures  provide  the  exclusive  remedy   for   an
overbroad financing statement.

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