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.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc. (6/10/2011) sp-6564

Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc. (6/10/2011) sp-6564, 252 P3d 1011

        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 

CHILKOOT LUMBER CO., INC.,                      ) 
                                                )       Supreme Court No. S-12921 
                        Appellant,              ) 
                                                )       Superior Court No. 1PE-03-00014 CI 
        v.                                      ) 
                                                )      O P I N I O N 
RAINBOW GLACIER SEAFOODS,                       ) 
INC.,                                           )      No. 6564 - June 10, 2011 
                                                ) 
                        Appellee.               ) 
                                                ) 

                Appeal from the Superior Court of the State of Alaska, First
 
                Judicial District, Petersburg, Michael A. Thompson, Judge.
 

                Appearances:       Fred   W.   Triem,   Petersburg,   for   Appellant.
 
                John M. Rice, Law Offices of John M. Rice, P.C., Juneau, for
 
                Appellee.
 

                Before:   Fabe, Chief Justice, Eastaugh, Carpeneti, Winfree,
 
                and Christen, Justices.
 

                CARPENETI, Justice.
 
                FABE, Chief Justice, with whom WINFREE, Justice, joins,
 
                dissenting in part.
 

I.      INTRODUCTION 

                A commercial landlord and its tenant resolved their dispute and entered the 

terms of the settlement on the record, but the tenant did not perform the settlement 

agreement. After the time for performance by the tenant had expired, the landlord moved 

to enforce the settlement agreement.         The superior court denied the motion to enforce. 

----------------------- Page 2-----------------------

The landlord moved for reconsideration and the court ordered oral argument on the 

motion.    At   oral   argument,   the   parties   tentatively   agreed   to   reinstate   the   settlement 

agreement, with new deadlines for performance.  But when they could not agree on new 

deadlines, the superior court entered an order that enforced the settlement agreement as 

modified by the tenant's proposed deadlines.           The landlord violated the order, and the 

superior court ordered it to pay $1,000 per day of violation to the tenant.  The landlord 

appeals. 

                Because it was error to deny the original motion to enforce, we reverse the 

superior court's subsequent order enforcing the modified settlement agreement. Because 

we reverse the court's order, we also reverse the civil contempt sanctions stemming from 

violation of the order. 

II.     FACTS AND PROCEEDINGS 

        A.      Facts 

                In 1996 a group of commercial fishers began a fish-processing business 

called   Rainbow   Glacier   Seafood   (Rainbow).        Rainbow   entered   into   a   contract   with 

Chilkoot Lumber Company (Chilkoot) to lease land and a dock from Chilkoot on which 

to put Rainbow's fish-processing equipment.            In 1998 Rainbow failed to pay the full 

lease amount to Chilkoot. The parties dispute what happened next. Chilkoot alleges that 

Rainbow abandoned the equipment. Rainbow alleges that Chilkoot locked Rainbow out 

of the premises and converted Rainbow's equipment to Chilkoot's own use. 

        B.      Proceedings 

                In April 2003 Chilkoot sued Rainbow for unpaid rent, liquidated damages, 

and the cost of storage of Rainbow's fish-processing equipment. Chilkoot also asked for 

a lien on the equipment to satisfy the rent debt, liquidated damages, and storage fees. 

                                                 -2-                                            6564
 

----------------------- Page 3-----------------------

               In   April   2004   Chilkoot   moved   for   summary   judgment.  By   affidavit, 

Chilkoot alleged that Rainbow had abandoned its equipment.  Rainbow responded that 

Chilkoot prevented Rainbow from using or removing the equipment.              The parties also 

disagreed about whether the equipment could be removed without damaging Chilkoot's 

buildings.   In July 2004, at oral argument, Superior Court Judge Michael A. Thompson 

indicated that he would deny Chilkoot's motion.  The transcript of that hearing is not in 

the record, but the log notes read: "Summary judgment motion still floating around. [I]t 

will be denied."   (Emphasis in original.)  The court then denied a request for injunction 

and appears to have asked if there was anything further: 

               Rice [attorney for Rainbow] - nothing further. 

               Triem [attorney for Chilkoot] - a written order on S.J. 

               Ct. - No. 

The superior court did not issue a written ruling. 
               In April 2005 the parties1 held a settlement conference before District Court 

Judge Keith B. Levy in Juneau.   They reached an agreement and entered its terms on the 

record. They agreed Chilkoot would pay Rainbow $12,500 by June 1, 2005, if Rainbow 

substantially removed its equipment from the premises by May 15, 2005.             If Rainbow 

failed to remove the equipment by May 15, it would forfeit any remaining equipment to 

Chilkoot, and Chilkoot would not have to pay Rainbow anything. Judge Levy then orally 

confirmed with the parties that they understood the terms of the agreement, and that they 

intended the agreement to be a full and final binding settlement. 

       1       The State of Alaska also participated in the settlement conference as it had 

an interest in an unpaid start-up loan it made to Rainbow in 1998.  Its participation is not 
relevant to this appeal. 

                                              -3-                                           6564 

----------------------- Page 4-----------------------

                The parties then agreed that the settlement agreement should be reduced to 

writing and made an order of the superior court.  About a week later, Chilkoot prepared 

a   written   agreement   and   order,   signed   the   agreement,   and   sent   it   to   Rainbow   for 

signature.     But Rainbow did not sign the agreement and, because Rainbow had not 

signed, Judge Thompson did not sign the order. Rainbow did not remove the equipment. 

                In   January   2006   Chilkoot   moved   to   enforce   the   settlement   agreement. 

Judge Thompson denied Chilkoot's motion on the grounds that Rainbow had not "signed 

or otherwise evidenced [its] agreement."            Chilkoot filed a motion for reconsideration. 

Judge Thompson then ordered oral argument. 

                Oral argument took place in June 2006, but the parties did not argue the 

enforceability   of   the   settlement   agreement.       At   the   outset   of   the   hearing,   Rainbow 

explained to the court that the parties had tentatively agreed that the original settlement 

agreement was still enforceable but decided to change the deadlines for removal of 

equipment and payment.  Rainbow said that Chilkoot had agreed to a removal deadline 

of May 2007.  The court asked why the time frame for removal was so much longer than 

in the original agreement. Chilkoot explained that removal in the next few months would 

interfere with the fish-processing season. The court suggested removal between October 

2006 and May 2007, and it appeared the attorneys for the parties would agree to that. 

                But   then   Rainbow's   representative   broke   into   the   discussion   and   said 

Rainbow would prefer to be able to lease out the equipment rather than let Chilkoot use 

it without charge for the upcoming season.  Rainbow suggested 30 days for removal, as 

provided for in the original agreement.            Chilkoot objected, and explained that it had 

negotiated   for   the   May   removal   date   in   the   original   agreement   in   order   to   prevent 

removal of the equipment during the fishing season.              Chilkoot explained at length that 

a   30-day   removal   deadline   would        be   inconvenient.      The    court   indicated    that  it 

                                                   -4-                                             6564
 

----------------------- Page 5-----------------------

understood the problem.         Throughout the hearing, Chilkoot maintained that it would 

accept only an October - May window for removing the equipment. It therefore objected 

to a deadline for removal that would fall during the approaching summer fishing season. 

                The court then ruled.   First, it noted that the parties agreed to the substance 

of the agreement, but not to the dates for removal.             The court then concluded that it 

needed to "reset" the dates. Finally, the court ordered enforcement of the agreement with 

a 45-day deadline for removal. 

                A few weeks later, Rainbow informed the court that Chilkoot was not 

complying with the agreement and was hindering Rainbow's attempts to remove its 

equipment.      Rainbow asked the court for an order enforcing the agreement, finding 

Chilkoot   in   contempt,   and   awarding   Rainbow a   sanction   of  $1,000   for   each   day   of 

Chilkoot's contempt.       The superior court granted the motion, with sanctions to begin 

accruing three days after entry of the order. 

                The court held a hearing on the question of sanctions in May 2007.                   In 

ordering sanctions, the court noted that it intended to "provide[] liquidated damages 

sufficient to either stop the interference or make it painless to Rainbow if Chilkoot elects 

to continue ignoring the order."   The court  made clear that the $1,000 per day was not 

based on any actual damages suffered by Rainbow.                 The court ultimately found that 

Chilkoot   was   liable   for   69   days   of   violation,   totaling   $69,000   in   sanctions. It   also 

awarded Chilkoot the equipment Rainbow failed to remove.  Chilkoot appeals. 

                                                  -5-                                            6564
 

----------------------- Page 6-----------------------

III.    STANDARD OF REVIEW 

                In   the  absence    of  factual   disputes,   we   review    questions    of  contract 
formation and interpretation de novo.2        We interpret settlement agreements as contracts.3 

If we agree, on de novo review, that a valid settlement agreement exists, the superior 

                           4                                           5 
court has no discretion  to decline to enforce that agreement.   We review such a decision 

        2       See Copper River Sch. Dist. v. Traw, 9 P.3d 280, 283 (Alaska 2000). When 

the question of contract formation hinges on  factual disputes, we review a superior 
court's factual findings under the clearly erroneous standard. See Munn v. Thornton, 956 
P.2d 1213, 1217-18 (Alaska 1998). 

        3       See Smith v. Cleary, 24 P.3d 1245, 1247 (Alaska 2001) ("The settlement 

agreement's scope and effect raise questions of contract law that we review de novo."). 

        4       In Rice v. Denley, we explained that "the superior court 'has discretion to 

deny the motion [to enter judgment on a settlement agreement reached on the record] if 
the court determines that material issues of fact exist as to the existence of the settlement 
agreement or to a material term of the settlement.' "   944 P.2d 497, 499 (Alaska 1997) 
(emphasis added). The word "discretion" has been used imprecisely in subsequent cases 
involving settlement enforcement: We have used "discretion" where we simply meant 
"authority."    See Brooks Range Exploratory Co. v. Gordon, 46 P.3d 942, 944 (Alaska 
2002); Dickerson v. Williams, 956 P.2d 458, 462 (Alaska 1998). This imprecision was 
propagated further in Worland v. Worland, 193 P.3d 735, 738 (Alaska 2008);Mullins v. 
Oates, 179 P.3d 930, 935 (Alaska 2008); and Ford v. Ford, 68 P.3d 1258, 1263 (Alaska 
2003). 
                Thus, a close review of our precedent makes clear that in the context of 
settlement enforcement, the word "discretion" refers to the superior court's authority to 
choose between methods of enforcement, such as whether "to compel [a party] to execute 
the settlement agreement, or alternatively direct the clerk of court to sign the agreement 
on [the party]'s behalf."  Pavek v. Curran, 754 P.2d 1125, 1127 (Alaska 1988). But the 
superior court does not have broad power to decide whether to enforce a conclusively 
valid agreement. 

        5       See, e.g.,Pavek, 754 P.2d at 1127 ("[W]e hold that the superior court erred 

in refusing to grant Pavek's motion for entry of judgment when no material issues of fact 
existed   as   to   the   settlement's   terms   or   validity."); see   also   Smith,   24   P.3d   at   1249 
                                                                                        (continued...) 

                                                  -6-                                               6564 

----------------------- Page 7-----------------------

de novo.6 

              We review civil contempt judgments for abuse of discretion.7 

IV.    DISCUSSION 

       A.     It Was Error To Deny Chilkoot's Motion To Enforce. 

              Chilkoot argues that the 2005 oral settlement agreement reached on the 

record was an enforceable contract with Rainbow, and that the superior court erred in 

failing to enforce it. Rainbow responds that Chilkoot agreed to reset the dates of the 

original settlement agreement, and that therefore Chilkoot abandoned its argument that 

the court should enforce the original settlement agreement.  We agree with Chilkoot that 

the 2005 settlement agreement was enforceable. 

              Civil Rule 81(f) states: "Stipulations between parties or their attorneys will 

be recognized only when made in open court, or when made in writing and filed with the 
clerk."8 We have held that oral settlement agreements made on the record are binding 

       5      (...continued) 

(analogizing enforcement of settlement agreement to contract law and giving effect to 
parties' reasonable expectations). 

       6      Colton v. Colton, 244 P.3d 1121, 1127(Alaska 2010) ("We review the 

decision to summarily enforce a contested agreement de novo and will affirm only if we 
conclude that there is no issue of material fact and the agreement is valid as a matter of 
law."). 

       7      See Matanuska Elec. Ass'n v. Rewire the Bd., 36 P.3d 685, 690 n.4 (Alaska 

2001) (quoting Czaja v. Czaja, 537 S.E.2d 908, 917 (W. Va. 2000));Doyle v. Doyle, 815 
P.2d 366, 371 (Alaska 1991) (holding use of civil contempt not abuse of discretion). We 
conclude that the contempt was civil, rather than criminal, in Part IV.B, infra. 

       8      Alaska R. Civ. P. 81(f). 

                                            -7-                                       6564
 

----------------------- Page 8-----------------------

on the parties.9  In this case, both parties clearly stated on the record that they understood 

and intended to be bound by the agreement.  Under Civil Rule 81(f) and our case law, 

therefore, this agreement was enforceable.          We are not convinced that reducing the 

agreement to writing was a bargained-for condition that prevented contract formation. 

The parties placed a complete and enforceable settlement agreement on the record; their 

agreement to subsequently memorialize its terms in a written document does not preclude 

enforcement of the oral contract. Thus, it was error for the superior court to hold that the 

agreement was unenforceable due to the absence of Rainbow's signature on the written 

settlement agreement. 

               Furthermore, we do not agree with Rainbow that Chilkoot abandoned the 

contract by negotiating for different removal dates at oral argument on reconsideration. 

It is true that a party can abrogate an existing contract by accepting a new contract in its 
place.10  But Chilkoot and Rainbow never agreed on new dates, and so never formed a 

        9      See Crane v. Crane, 986 P.2d 881, 885 (Alaska 1999) ("When a stipulation 

is admitted by both parties or their attorneys in open court and there is no dispute as to 
the material terms of the settlement, the stipulation is enforceable between the parties 
absent fraud, duress, or concealment . . . ."); Murphy v. Murphy, 812 P.2d 960, 965 
(Alaska 1991) (upholding superior court's refusal to set aside oral divorce property 
settlement made on the record after settlement conference).            And Alaska's Statute of 
Frauds, which provides that certain agreements are not enforceable against a party unless 
the party agreed in writing, makes an exception for agreements admitted to in court 
proceedings.      AS   09.25.010,   AS   09.25.020(4).    The   parties   do   not   argue   that   the 
agreement in this case falls under the Statute of Limitations. 

        10     RESTATEMENT (SECOND)OF CONTRACTS  279 (1981). We have noted that 

"relief from a stipulation which settles a case may be granted in situations similar to 
those in which relief from a contract is authorized."  The enforcement of the settlement 
agreement in this case is compelled by the "meaning the parties attached to the terms of 
the [settlement agreement] at the time [it] was made."  Sprucewood Inv. Corp. v. Alaska 
Hous. Fin. Corp., 33 P.3d 1156, 1162-63, 1164 n.23 (Alaska 2001) (refusing to "allow 
                                                                                    (continued...) 

                                                -8-                                            6564 

----------------------- Page 9-----------------------

new contract.11     Thus, the failed renegotiation did not abrogate the original contract.12 

Nor did Chilkoot ever abandon its position that the original settlement agreement was an 
enforceable contract.13      Rainbow's unilateral non-performance and the parties' failure to 

agree on substitute performance did not turn a valid agreement into an invalid one. 

                 Because   the   settlement   agreement   put   on   record   was   an   enforceable 

contract,   Chilkoot   was   entitled   to   the   benefit  of   its   bargain.  Per   the   terms   of   the 

agreement,   Chilkoot   became   owner   of   the  property   when   Rainbow's   performance 

        10       (...continued) 

[a party] to unilaterally rewrite the contract by non-performance"). 

        11       See Bradford v. First Nat'l Bank of Anchorage, 932 P.2d 256, 264-65 

(Alaska 1997) (noting that absent substitute contract to which all parties agreed, all 
parties still bound by original contract). 

        12       The dissent argues that '[t]he discussion at the hearing may have evidenced 

a mutual intent to rescind the original settlement agreement." But Rainbow has not made 
this argument to us.       (Rainbow argued only that the superior court had the authority to 
impose dates not agreeable to Chilkoot, a proposition that all members of the court firmly 
reject.) Because Rainbow has not made this argument to us, it is waived.  Adamson v. 
Univ. of Alaska, 819 P.2d 886, 889 n.3 (Alaska 1991) ("[W]here a point is given only a 
cursory statement in the argument portion of a brief, the point will not be considered on 
appeal." (citing State v. O'Neill Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980); 
Fairview Dev, Inc. v. City of Fairbanks, 475 P.2d 35, 36 (Alaska 1970)). 

        13       The dissent argues that the mention by counsel for Rainbow of "collateral 

estoppel,   etc."   at   the   June   2006   hearing   should   be   interpreted   instead   to   mean   that 
counsel was arguing that Chilkoot was equitably estopped from seeking enforcement of 
the settlement agreement. But collateral estoppel and equitable estoppel are quite distinct 
doctrines, and Rainbow has not made the argument to us that Chilkoot is equitably 
estopped, has not set out the elements of equitable estoppel, and has not even tried to 
show that the elements of equitable estoppel are met here.  Under these circumstances, 
Rainbow has failed to preserve an equitable estoppel issue for review and did not give 
Chilkoot a fair opportunity to respond to such an issue in its reply brief.  See authorities 
cited supra note 12. 

                                                    -9-                                              6564
 

----------------------- Page 10-----------------------

deadline passed.   We hold that it was error to conclude that the parties had not reached 

a settlement agreement and to deny Chilkoot's motion to enforce the agreement.                      We 
remand with directions to enforce the original agreement.14 

        B.	     The   Sanctions   Against   Chilkoot   Do   Not   Survive   Reversal   Of   The 
                Underlying Order. 

                Chilkoot argues that the superior court erred in awarding Rainbow $1,000 

per day when Chilkoot failed to comply with the court's order.                We decline to address 

this issue, as the sanctions for noncompliance with the court's order in this case do not 

survive our nullification of that order. 

                The general rule is that sanctions for criminal contempt stand when the 
underlying order is invalidated on appeal, but that sanctions for civil contempt do not.15 

Civil contempt and criminal contempt are distinguished by the primary purpose behind 

the contempt.  Contempt is civil when the primary purpose is to coerce compliance with 
the court's orders, and to remedy harm to the other party from the contempt.16  In cases 

of civil contempt, the party can end the sanctions at any time by changing its behavior 

        14      In light of our holding that it was error to refuse to enforce the original 

settlement agreement, the modified agreement in which the superior court "reset" the 
dates is a nullity.     Therefore, we need not address whether it was error to unilaterally 
substitute new dates over Chilkoot's objection. 

        15      See Weidner v. State, 764 P.2d 717, 721 (Alaska App. 1988) (holding that 

criminal contempt for violation of court's order stands even when underlying order is 
later found invalid); see also Blaylock v. Cheker Oil Co., 547 F.2d 962, 966 (6th Cir. 
1976)   (holding   that,   although   criminal   contempt   survives   the   reversal   of   the   order 
violated, "the same cannot be true of civil contempts, which are only remedial"). 

        16      Johansen v. State, 491 P.2d 759, 763 (Alaska 1971). 

                                                  -10-	                                           6564
 

----------------------- Page 11-----------------------

to comply with the court's order.17        The purpose of criminal contempt, on the other hand, 

is to punish past conduct;18 violation of the court's order is complete, and the party can 

no longer remedy its conduct.19         Another hallmark of criminal contempt is the intent to 

vindicate the authority of the court.20      The interested parties are the party in contempt and 

the court; criminal contempt sanctions are not primarily intended to benefit the opposing 

       21 
party. 

                 These categories often overlap, and it is sometimes difficult to distinguish 
between civil and criminal contempt.22           From the record, we conclude that the superior 

court's primary purpose in imposing the sanctions was coercive and remedial, rather than 

punitive. 

                 First,   the   sanctions   were   coercive  in   that   the   court   only   imposed   them 

prospectively. The court's order for sanctions, entered July 21, stated that the $1,000 per 

day would begin accruing on July 24.   The sanctions would cease to accrue at any time 

        17       Stadler v. State, 813 P.2d 270, 273 (Alaska 1991) (noting that in cases of 

civil contempt, "the contemnor could have purged the contempt at any time, thereby 
reducing the amount of restitution he or she would eventually have to pay"); Cont'l Ins. 
Cos. v. Bayless & Roberts, Inc., 548 P.2d 398, 405 (Alaska 1976) (determining that 
contempt was criminal and noting that the fine "was not conditioned on any further 
action by Continental, it was imposed solely for past actions and could not be avoided 
by any subsequent action on Continental's part"). 

        18      Johansen, 491 P.2d at 766 n.27. 

        19       Gwynn v. Gwynn, 530 P.2d 1311, 1312-13 (Alaska 1975). 

        20      Johansen, 491 P.2d at 764. 

        21       Cont'l   Ins.   Cos.,   548   P.2d   at   405   ("The   only   interested   parties   in   the 

imposition of [criminal] contempt are the court and Continental - [the opposing party] 
has no interest in the outcome of the dispute."). 

        22      Johansen, 491 P.2d at 764. 

                                                   -11-                                              6564
 

----------------------- Page 12-----------------------

Chilkoot came into compliance with the order.  Moreover, the superior court repeatedly 

stated that it intended to create an economic disincentive for violation of the order. 

               Second, although the superior court did not expressly say so, it must have 

had a remedial intent because it awarded the sanctions to Rainbow rather than making 

them a fine to the court. The court said: "I probably could have [made the $1,000 per day 

a fine to the court], but I have no interest in making [Chilkoot] pay a fine. . . .  You know, 

this is a civil dispute. The state has no interest." This showed a remedial intent to benefit 

the opposing party, rather than an intent to punish by imposing a fine payable to the 

court.   The court only twice mentioned anything that might be construed as showing a 
punitive intent.23  For these reasons, we conclude that the primary purpose in imposing 

the $1,000 per day fine was coercive and remedial, and thus the sanctions were civil in 

nature. 

               Because the contempt sanctions in this case were civil, they do not survive 
our reversal of the underlying order on which they were based.24 

       23      In a colloquy with counsel for Chilkoot, the court said, "I didn't say they 

were in contempt . . . .   I said they violated the order, and this is a sanction for doing 
that." (Although the court maintained that it had not held Chilkoot in contempt, the order 
it signed did precisely that: "[Chilkoot] is found in contempt of court and the court 
awards sanctions in the amount of $1,000.00 a day . . . ."). In a similar vein, the superior 
court hinted at a punitive purpose, stating: "[I]f the Court enters an order, it's really nice 
if people follow it.  And frankly, the whole system collapses if it's assumed that people, 
you know, ignore it and just - and pay nothing for it.  In other words, . . . that there be 
no ramifications whatsoever for ignoring court orders." 

       24      Chilkoot raises an additional issue, arguing that the superior court erred in 

denying its motion for summary judgment. The motion for summary judgment was made 
a year before the on-record settlement agreement and was part of the case that the parties 
settled. Because we hold that the settlement agreement was enforceable, and remand for 
proceedings     consistent  with   enforcement    of  that  agreement,   Chilkoot's   summary 
                                                                                (continued...) 

                                             -12-                                          6564 

----------------------- Page 13-----------------------

V.      CONCLUSION 

                Because it was error to deny Chilkoot's motion to enforce the original 

settlement agreement, we REVERSE the denial order and REMAND for enforcement of 

the agreement.  Because the modified settlement agreement is invalid in light of our first 

holding, we REVERSE the sanctions stemming from Chilkoot's noncompliance with that 

order. 

        24      (...continued) 

judgment argument is moot.        See Bridges v. Banner Health, 201 P.3d 484, 490 (Alaska 
2008)   (quoting  Wetherhorn   v.   Alaska   Psychiatrist   Inst.,   156   P.3d   371,   380   (Alaska 
2007)) ("An issue is moot 'if it is no longer a present, live controversy . . . .' "). 

                                                -13-                                            6564 

----------------------- Page 14-----------------------

FABE, Justice, with whom WINFREE, Justice, joins, dissenting in part. 

                Today the court directs the superior court to enforce the original settlement 

agreement between Chilkoot and Rainbow. I agree with the court that the parties entered 

into an enforceable settlement agreement during the April 2005 hearing and that the 

absence of Rainbow's signature on the settlement documents prepared later by Chilkoot's 
counsel did not render the oral settlement agreement unenforceable.1   But because the 

statements and conduct of counsel for the parties at the June 2006 enforcement hearing 

could be viewed as evidence of a mutual agreement to rescind the original settlement 

agreement, and because I would give Rainbow an opportunity to argue its claim that 

Chilkoot should be estopped from enforcing the original agreement, I disagree with the 

court's instructions to the superior court on remand. 

               First, while the original settlement agreement was enforceable, it is not clear 

that   either  party  sought    enforcement     of  the  original  settlement    agreement    at  the 

June 2006 hearing.   According to the agreement, Chilkoot was to pay Rainbow $12,500 

by   June   1,   2005   if   Rainbow   substantially   removed   its   equipment   from   Chilkoot's 

property by May 15, 2005; any equipment not removed by May 15 was to be forfeited 

to Chilkoot without further payment by Chilkoot to Rainbow.                But by the June 2006 

hearing, the time for Rainbow to remove the equipment under the original agreement's 

terms had passed. Thus the "default" provision, deeming Rainbow's equipment forfeited 

to Chilkoot, would have been the only part of the agreement subject to enforcement at 

        1      See Mullins v. Oates, 179 P.3d 930, 939 (Alaska 2008) (agreeing that a 

settlement "as originally articulated at the settlement conference [] remained in effect 
despite the flawed attempt to insert a new term into the final settlement documents") 
(citing 1 JOSEPH M. PERILLO, CORBIN ON CONTRACTS  2.9 (1993) (noting that when 
parties intend a writing to merely memorialize a prior contract, "the contract is valid even 
though they try and fail to agree upon the form and terms of the memorial")). 

                                                -14-                                           6564
 

----------------------- Page 15-----------------------

the June 2006 hearing.2      In other words, enforcing the original agreement would only 

have required the superior court to declare that the original oral settlement agreement was 
enforceable3 and to enter an order that Chilkoot owned Rainbow's forfeited equipment 

without any further payment obligations. 

               But Chilkoot never asked the superior court to declare it the owner of 
Rainbow's equipment.4       And the statements and conduct of counsel for the parties at the 

June 2006 hearing indicate that neither party wanted to enforce the "default" provision. 

Instead, both parties wanted to "re-key" the performance deadlines, presumably to allow 

Rainbow the opportunity to remove its equipment and be paid by Chilkoot.  Rainbow's 

counsel represented to the superior court that he was concerned about the "default" 

possibility and that Chilkoot's counsel had assured him that Chilkoot did not want to 

declare Rainbow in default for failure to meet the performance deadlines: 

                       Rice [attorney for Rainbow]: First of all, our objection 
               with the agreement is if it was strictly applied, because there 
                are performance deadlines in the agreement. 

                       Court: There were - 

                       Rice: My client has not made it.  And our concern is if 
               the Court turned around and said the agreement is going to be 
                enforceable, and since Rainbow did not meet the deadlines, 
               they're automatically in default.  Okay? 

                       Court: Uh-huh. 

        2      See Slip Op. at 9-10. 

        3       Indeed,   Chilkoot's   motion   was   actually   to   enforce   the  stipulation   of 

settlement, i.e., to request a declaration that Rainbow was bound by the terms of the oral 
settlement agreement even though it had not signed the written stipulation prepared later 
by counsel for Chilkoot. 

        4       Chilkoot did not ask for Rainbow's equipment in its motion to enforce the 

agreement. 

                                                -15-                                           6564
 

----------------------- Page 16-----------------------

                        Rice:   I   have   spoken   with   Mr.   Triem   [counsel   for 
                Chilkoot] about this, and he said, "That's not our intent.  Our 
                intent is to re-key the performance deadlines[,]" i.e., start the 
                performance deadlines over. 

Chilkoot's counsel, Triem, later stated:  "I agree with Mr. Rice that we should re-key the 

dates, but we cannot re-key them to allow them in there now."  Both parties announced 

that they had no intent to enforce the default provision - yet this is precisely what the 

court holds them to today. 

                Despite the superior court's attempt to guide them in negotiations on "re- 

keying" the dates, the parties were not able to agree on new performance dates and so did 
not arrive at a modified settlement agreement at the June 2006 hearing.5   Nonetheless, 

the discussion at the hearing may have evidenced a mutual intent to rescind the original 
settlement   agreement.6        Whether   Chilkoot   and   Rainbow   intended   to   rescind   their 

agreement is a question of fact, resolved by looking "not only to the language of the 
parties, but to all of the surrounding circumstances."7         Although an agreement to rescind 

a contract may be implied from the circumstances and conduct of the parties, implied 

        5       I   agree   with   the   court   that   the   parties'   failed  attempt   to   "re-key"   the 

performance dates did not "abrogate the  original contract" by replacing the original 
agreement with a modified contract - the parties did not successfully reach a modified 
agreement. 

        6       E.g.,Knight v. TCB Const. & Design, LLC, 248 P.3d 178, 181 (Wyo. 2011) 

("Generally, contracts - even fully executed ones - can be cancelled or rescinded by 
the mutual consent of the parties." (quoting 29 SAMUEL WILLISTON, A TREATISE ON THE 
LAW   OF  CONTRACTS  73:15, at 49 (Richard A. Lord ed., 4th ed. 2003))); see also 
RESTATEMENT (SECOND) OF CONTRACTS  283(1) (1981) ("An agreement of rescission 
is an agreement under which each party agrees to discharge all of the other party's 
remaining duties of performance under an existing contract."). 

        7       29 WILLISTON, supra note 6, at 49, 52. 

                                                  -16-                                            6564
 

----------------------- Page 17-----------------------

rescission must be based on positive and unequivocal actions.8              Thus, I would remand to 

the superior court for a determination whether Chilkoot and Rainbow's stated desires to 

"re-key"     the  dates,   along   with   their   conduct    and  the   surrounding     circumstances, 

evidenced mutual consent to rescind the settlement agreement. The court faults Rainbow 

for failing to make this argument on appeal.  But Rainbow does maintain that Chilkoot 

did not ask for "strict enforcement" of the original settlement agreement at the June 2006 

hearing and that both parties agreed to "enforcement of the original settlement agreement 
with re-keying the performance dates."9 

                Second, I disagree with the court's decision to remand for enforcement of 

the original settlement agreement without allowing Rainbow to argue an estoppel defense 

to enforcement.  Although Rainbow ordinarily would have been obligated to raise such 

a defense in response to any attempt by Chilkoot to enforce the original oral agreement 

during the June 2006 hearing, here, at the June 2006 hearing the parties indicated their 

interest in setting new dates and "re-keying" the agreement.  Because this was the focus 

of the enforcement hearing, which functioned in large part as a settlement conference on 

the record, if the superior court were to find no mutual agreement to rescind the original 

        8       Id. at 50, 52. 

        9       I note that agreeing to "enforcement of the original settlement agreement 

with re-keying the performance dates" would have been a contract modification, not a 
rescission. Because Chilkoot and Rainbow were unable to agree upon new performance 
dates, they did not arrive at a modified agreement that would have replaced the original 
agreement.  See supra note 5.   But it is not clear what the parties would have done if the 
superior   court   had   presented   them   with  the   option   of   either   enforcing   the   original 
deadlines and default provision or rescinding and walking away from their agreement. 
I conclude that both parties' express statements made at the outset of the hearing that it 
was "not [their] intent" to place Rainbow "automatically in default" but rather to "re-key 
the dates" at least creates a question of fact as to whether they intended to rescind the 
original agreement and re-negotiate a new one. 

                                                  -17-                                             6564
 

----------------------- Page 18-----------------------

settlement agreement, it should next consider whether Rainbow has a valid estoppel 

defense to enforcement of the original settlement agreement. 

                 Indeed,     the   court    recognizes     that   "the    parties   did   not   argue    the 
enforceability of the settlement agreement" at the June 2006 hearing.10  At the beginning 

of the hearing, Rainbow seemed to explain to the superior court that it had failed to 

perform because the parties had agreed to "start[] negotiating a different agreement." 

Counsel for Rainbow added that "the concept of collateral estoppel, et cetera, would stop 

the   agreement   from  being   strictly   enforced."       It   appears   that   Rainbow   was   actually 

arguing that the doctrine of equitable estoppel should have prevented Chilkoot from 

seeking   enforcement   of   the   settlement   agreement.          Under   Alaska   law,   if   Rainbow 

reasonably relied on Chilkoot's conduct to its detriment, Chilkoot could be estopped 
from proceeding with its enforcement action.11 

                 If   permitted   to   flesh   out   this   estoppel   argument,   Rainbow   could   have 

claimed that it missed the original performance deadline because it relied on Chilkoot's 

conduct in initiating negotiations for a new agreement during the time for performance 

of   the   first. It   is   hard   to   fault   Rainbow   for   its   failure   to   fully   develop   its   estoppel 

argument at the June 2006 hearing when that hearing was conducted as a negotiation 

        10       Slip Op. at 4. 

        11       E.g., Osterkamp v. Stiles, 235 P.3d 193, 196 (Alaska 2010) ("The general 

elements   required   for   the   application   of  the   doctrine   of   equitable   estoppel   are   the 
assertion of a position by conduct or word, reasonable reliance thereon by another party, 
and resulting prejudice." (quoting Jamison v. Consol. Utils., Inc., 576 P.2d 97, 102 
(Alaska 1978)));Sowinski v. Walker, 198 P.3d 1134, 1147 (Alaska 2008) (explaining that 
the doctrine of equitable estoppel "bars a speaker from taking a position inconsistent with 
a prior statement when another person has reasonably and detrimentally relied on the 
earlier   statement"   and   that   the   doctrine's purpose   is   to   "protect   parties'   reasonable 
expectations"). 

                                                    -18-                                              6564
 

----------------------- Page 19-----------------------

session to "re-key" the agreement by setting new dates for performance.  And, contrary 

to the court's implication that Rainbow was required to develop its estoppel defense in 

the superior court, Rainbow had no incentive to do so once it received the relief it sought 

from the superior court at the conclusion of the June 2006 hearing.  Similarly, there was 

no   reason   for   Rainbow   to   argue   its   estoppel   defense   on   appeal   because   Rainbow 

apparently had no objection to enforcement of the agreement with the new performance 

dates. Thus, Rainbow would have had no motive to argue on appeal against enforcement 

of the agreement with the new dates.         Nor is the court's concern that Chilkoot will not 

have a fair opportunity to respond to Rainbow's estoppel argument justified.  Chilkoot 

may certainly respond to Rainbow's fully developed estoppel defense on remand should 

Rainbow choose to present one. 

                In sum, although I agree with the court's decision to reverse the superior 

court's judgment, I would remand to the superior court to determine first whether there 

was a mutual agreement to rescind the original settlement agreement, and if not, whether 

Rainbow      has   a  valid  estoppel   defense    to  enforcement     of  the  original  settlement 

agreement. 

                Therefore, I respectfully dissent. 

                                                -19-                                            6564
 
Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


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

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC