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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kiernan v. Creech (1/20/2012) sp-6642

Kiernan v. Creech (1/20/2012) sp-6642

        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, 
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WILLIAM KIERNAN and                              ) 
CHRISTINE PFEIFFER, individually                 )       Supreme Court No. S-13230
and d/b/a AMERICAN TOWING                        )
& RECOVERY,                                      )       Superior Court No. 3AN-07-09828 CI
                        Appellants,              )       O P I N I O N
        v.                                       )       No. 6642 - January 20, 2012 
and VULCAN TOWING &                              ) 
RECOVERY, INC., an Alaska                        ) 
corporation,                                     ) 
                        Appellees.               )

                Appeal from the Superior Court of the State of Alaska, Third
                Judicial District, Anchorage, Peter A. Michalski, Judge.

                Appearances:   Joe   P.   Josephson,   Josephson   &         Associates
                P.C.,    Anchorage,       for   Appellants.      Peter     J.  Maassen,
                Ingaldson,      Maassen     &   Fitzgerald,    P.C.,   Anchorage,      for

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

                CARPENETI, Chief Justice.
                CHRISTEN, Justice, with whom FABE, Justice, joins, dissenting.

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


               Two parties agreed orally to purchase a commercial towing lot, even though 

title to the lot would be in one party's name only.           The parties agree that they split 

equally all costs associated with the property, including purchase and development costs, 

and   that   they   used   the   property   jointly. They   dispute   whether   their   oral   agreement 

provided that they would co-own the property, or that the non-titled party would lease 

from the title-holder.   The title-holder moved for summary judgment on the ground that 

the statute of frauds barred any oral co-ownership agreement between the parties.  The 

superior court granted the motion.       The non-titled party appeals. 

               We reverse because the substance of the oral agreement is a disputed fact 

material to resolving whether an exception to the statute of frauds applies.             If the non- 

titled party can prove by clear and convincing evidence that the parties had a contract for 

co-ownership      with   definite  terms,   he  may   be  able   to  succeed   on  his  claims   that 

promissory estoppel or the part performance doctrine make this contract enforceable 

despite the statute of frauds. 


        A.     Facts 

               In 2001, Bill Kiernan owned American Towing & Recovery (Kiernan) and 

Willie Creech owned Vulcan Towing & Recovery (Creech).1                  That year Kiernan and 

Creech decided to share a lot for their towing businesses.             Kiernan asserts that they 

agreed to buy the lot jointly, but, because Kiernan had a substantial outstanding IRS 

        1       Subsequently,   both   Kiernan   and   Creech   transferred   ownership   in   their 

towing companies to one of their children.          At the time of the superior court's order 
Christine Pfeiffer, Kiernan's daughter, owned American Towing & Recovery and Justin 
Creech owned Vulcan Towing & Recovery. 

                                                -2-                                             6642 

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debt, they agreed to put the lot in Creech's name alone.   Creech asserts that they agreed 

Creech   would   buy   the   lot   and   Kiernan   would   have   an     informal   lease-to-purchase 

agreement if Kiernan resolved his IRS problems.              They agree that they were to split all 

costs associated with the lot evenly.  The parties did not put their agreement in writing. 

While Creech asserts that, under the oral agreement, Kiernan was merely a lessee with 

a conditional option to purchase a 50% interest, Kiernan testified in a sworn deposition 

that, in exchange for paying half of the costs, he was to receive a 50% ownership in the 


                Creech purchased the lot in the name of his towing company only, and 

arranged   the   bank   loan.   Kiernan   paid   half   of   the   earnest   money,   half   of   the   down 

payment, and half of the closing costs to Creech.             The parties evenly split the costs of 

improving the property for their use, including building a drainage culvert, filling the lot 

and paving the driveway, fencing the lot, hooking up utilities, and installing lights.  Each 

month Kiernan paid Creech $776.21, which Kiernan claimed was half of the monthly 

mortgage payment.   Kiernan also paid Creech half of the utility costs and property taxes. 

As of May 2008, Kiernan had not solved his problems with IRS debt. 

                The   relationship   between   the   parties   eventually   broke   down.      In   2007 

Kiernan became aware that Creech had taken out a second mortgage on the property 

without telling him, and Kiernan sued Creech. 

        B.      Proceedings 

                Kiernan brought suit on several grounds, all of which rested on one of two 

theories:   (1) that Kiernan and Creech had an enforceable agreement to co-own the lot, 

or (2) that Kiernan and Creech were partners under the Uniform Partnership Act. Creech 

moved for summary judgment on both the ownership and partnership theories.  Kiernan 

opposed only the motion as to the ownership theories.               Superior Court Judge Peter A. 

                                                   -3-                                             6642

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Michalski granted summary judgment for Creech on the grounds that the statute of frauds 

made any oral co-ownership agreement between the parties unenforceable and that no 

exception to the statute of frauds applied. 

                The     superior    court   first  rejected   Kiernan's    argument      that  the   part 

performance exception to the statute of frauds applied, holding that Kiernan's alleged 

part performance was "consistent with either a purchase or a lease arrangement," and not 

"notorious."     The court also rejected Kiernan's argument that the promissory estoppel 

exception   to   the   statute   of   frauds   applied,   because   there   was   "substantial   ambiguity 

concerning what the parties allegedly agreed to."  The court concluded that "because of 

the uncertainty as to the terms of agreement, the exceptions of part performance and 

estoppel do not apply."        Holding that Kiernan's remaining claims required either an 

enforceable co-ownership agreement or partnership to sustain them, the court dismissed 


                Kiernan appeals. 

                We     review   a  superior   court's   grant   of   summary    judgment   de    novo.2 

Summary judgment is appropriate only when the moving party establishes that there are 

no genuine issues of material fact and that it is entitled to judgment as a matter of law.3 

We draw all reasonable factual inferences in favor of the party against whom summary 

judgment was granted,4 in this case, Kiernan.             When we review a grant of summary 

        2        Valdez Fisheries Dev. Ass'n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 664 

(Alaska 2002). 

        3       Id.

        4       Id.

                                                   -4-                                            6642

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judgment and disputed facts exist, we assume to be true the sworn allegations of the 

party against whom summary judgment was granted.5 


        A.	     The Promissory Estoppel Exception To The Statute Of Frauds May 
                Apply In This Case. 

                The     superior   court   rejected    Kiernan's    argument     that  the   promissory 

estoppel exception to the statute of frauds applies in this case "because of the uncertainty 

as to the terms of agreement."   But the terms of the agreement are a disputed question of 

material fact, and the agreement Kiernan alleges existed could be sufficiently specific to 

support   promissory   estoppel.       If   he   can   establish   at   trial,   by   clear   and   convincing 

evidence,  the terms of the agreement that he alleges, it is possible that he could succeed 

on this claim. 

                The doctrine of promissory estoppel allows the enforcement of contract-like 

promises despite a technical defect or defense that would otherwise make the promise 

unenforceable.7     The elements of promissory estoppel are:  "(1) an 'actual promise' that 

induces the action or forbearance; (2) the action or forbearance was actually foreseen or 

        5       Angleton      v.   Cox,   238  P.3d   610,   612  n.1   (Alaska   2010)    (citing  Mat- 

Su/Blackard/Stephan & Sons v. State, 647 P.2d 1101, 1102 n.1 (Alaska 1982)). 

        6       The clear and convincing evidence standard applies to promissory estoppel 

claims.  See King v. Richards, 584 P.2d 50, 51 (Alaska 1978).  Creech argues that there 
is a presumption that he is the sole owner because he is the sole recorded owner, and he 
cites Sugg v. Morris, 392 P.2d 313 (Alaska 1964), in support of this argument.  That case 
did   not   discuss   the   statute   of   frauds. Although   we   agree   with   Creech   that   such   a 
presumption exists, we disagree that it adds anything to the barrier that the statute of 
frauds creates in this case.  The clear and convincing evidence standard does not get any 
higher when the opposing party is also the sole title holder. 

        7       Alaska Trademark Shellfish, LLC v. State, Dep't of Fish & Game, 172 P.3d 

764, 768 (Alaska 2007) (quoting Brady v. State, 965 P.2d 1, 10 (Alaska 1998)). 

                                                   -5-	                                            6642

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

reasonably foreseeable; (3) the action or forbearance amounted to a substantial change 

of position; and (4) enforcement of the promise is necessary in the interest of justice."8 

              We have both upheld and denied the use of promissory estoppel as an 

exception to the statute of frauds in the case of oral agreements that last for more than 

one    year.  We    upheld   it  in Alaska  Democratic    Party   v.  Rice,9  observing  that 

"[c]ommentators have noted that 'there is no question that many courts are now prepared 

to use promissory estoppel to overcome the requirements of the statute of frauds.' " In 

that case we upheld an oral employment agreement lasting two years.10        We denied the 

use of promissory estoppel in  Valdez Fisheries Development Ass'n v. Alyeska Pipeline 

Service Co.,11 because the alleged oral contract in that case (for lease of land) did not 

establish two critical terms: the price and duration of the lease.12 

              Creech argues that, like the agreement in Valdez Fisheries, the agreement 

in this case is too indefinite to support the use of promissory estoppel to overcome the 

statute of frauds, but he points only to the essential dispute in this case: whether the 

       8      Id. at 766 (citing Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 

1284 (Alaska 1985)).     See also RESTATEMENT  (SECOND) OF  CONTRACTS   90 (1981) 
(establishing similar elements when defect in the contract is failure of consideration); 
RESTATEMENT  (SECOND) OF  CONTRACTS           139 (1981) (establishing similar elements 
when defect in contract is non-compliance with the statute of frauds). 

       9      934 P.2d 1313 (Alaska 1997). 

       10     Id. at 1316-17 (citing 2 ARTHUR  L. CORBIN, CORBIN   ON  CONTRACTS  

281A (1950 & Supp. 1966)). 

       11     45 P.3d 657 (Alaska 2002). 

       12     Id. at 668-69. 

                                             -6-                                       6642

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contract was for an ownership share or a lease arrangement.13               We conclude that this 

issue is not appropriate for resolution on summary judgment.  As noted, the alleged oral 

contract   to   lease   in Valdez   Fisheries unquestionably   did   not   provide   for   price   and 

duration, two terms material to a lease.14   The       oral contract that Kiernan alleged in his 

sworn deposition does not suffer these disabilities:  A sale has no duration, and the price 

was half of all costs associated with ownership of the property.  In return for paying half 

of the costs, Kiernan alleges that he would receive a 50% ownership interest in the lot. 

According to Kiernan, his ownership interest vested at the time of purchase.                 And the 

parcel of land in question is well-defined.         Taking Kiernan's sworn allegations as true, 

as we must in reviewing a grant of summary judgment,15 we conclude that a trier of fact 

could    determine    that  there   are  no  material   ambiguous      terms.   There    is  simply   a 

        13      Creech's appellate argument on this point follows: 

                               Kiernan      claims     that  Willie    Creech 
                        promised     him   a  half-interest   in  the  Vulcan 
                        property,    Willie    contends    that  they   had   a 
                        contingent      lease-purchase      arrangement      by 
                        which he promised to make Kiernan a co-owner 
                        of the property and apply his lease payments to 
                        the purchase  if Kiernan ever got his financial 
                        affairs    in   order,   such    that    a  co-owner 
                        relationship     would    not   be   risky   to   Willy 
                        Creech's own financial interests - something 
                        that never happened. 

(Emphasis in original; internal citations omitted.) And we note that in the superior court 
Creech did not assert facts under oath that would have established that key terms of the 
contract were too indefinite to enforce. 

        14      45 P.3d at 668-69. 

        15      See supra note 5 and accompanying text. 

                                                  -7-                                           6642

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straightforward dispute of fact for the trier to resolve: whether the agreement called for 

co-ownership or a lease.16 

                We remand because promissory estoppel may apply in cases where the key 

terms of the oral agreement are not ambiguous.17           We thus join the many jurisdictions 

that recognize some form of promissory estoppel as an exception to the statute of frauds 

in land transactions.18 

        16      Kiernan   also   argues   that   the   critical   language   in Valdez   Fisheries  - 

"promissory estoppel cannot be used to defeat the statute of frauds' requirement that an 
agreement for a lease with a term that exceeds one year must be in writing where . . . the 
purported oral agreement contains substantial ambiguity as to key terms," 45 P.3d at 670, 
- was dicta, but we disagree.        In  Valdez Fisheries, the plaintiff and defendant were in 
a three-way transaction in which the plaintiff would purchase land from a third party and 
the defendant would lease it.  Id. at 663.       The plaintiff believed that the defendant had 
agreed to lease the property, and in reliance on that agreement, purchased the land to be 
leased.  Id. at 663-64.    But the plaintiff did not even claim that the parties had reached 
an agreement about the price or term of the lease.  Id. at 665.         The plaintiff alleged two 
bases for the contract: first, a letter stating an intent to enter "the process of negotiating 
a contract as soon as possible"; and second, an oral promise that the defendant would 
lease the property, although that oral promise did not include price or duration for the 
lease. Id. at 668.  We first held that the letter, which only promised to negotiate, was not 
an enforceable contract.  Id. at 667.  We then held that the alleged oral promise was too 
indefinite to support promissory estoppel:           "We . . . decline to extend [Restatement 
(Second) of Contracts  139] to cases involving the sale or lease of real estate[] in which 
the purported oral agreement is ambiguous as to key terms."             Id. at 669. 

        17      Neither party discusses whether Kiernan's actions were in reliance on the 

alleged oral promise, nor do they discuss the question whether injustice can only be 
avoided   by   enforcement   of   the   oral   agreement.    Kiernan   will   have   the   burden   of 
establishing these elements on remand. 

        18      See, e.g.,Jacobson v. Gulbransen, 623 N.W.2d 84, 90-91 (S. Dakota 2001); 

Nessralla v. Peck, 532 N.E.2d 685, 688 (Mass. 1989) (quoting Glass v. Hulbert, 102 
Mass. 24, 36 (1869)) (stating doctrine only applies "where the party seeking relief suffers 
'the   infliction   of  an  unjust   and   unconscientious     injury   and   loss'  ");  Landow    v. 

                                                 -8-                                           6642

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        B.	      The   Part   Performance   Exception   To   The   Statute   Of   Frauds   May 
                 Apply In This Case. 

                 The part performance doctrine is a particular application of promissory 

estoppel in the context of land transfer contracts that do not comply with the statute of 

frauds.19  Under the part performance doctrine, an oral agreement for the sale of land may 

be specifically enforceable if the purchaser has acted in reliance on the agreement by, in 

addition   to   paying    some    consideration,   taking   possession   of   the   land   and   making 

improvements on the land.20          It also requires that the contract for sale be "reasonably 

definite and certain as to its terms."21       Thus, the doctrine of part performance is similar 

to the doctrine of promissory estoppel in that the purchaser must substantially change his 

        18       (...continued) 

Georgetown-Inland West Corp., 454 A.2d 310, 313-14 (D.C. 1982); Miller v. Lawlor, 
66 N.W.2d 267, 272-73 (Iowa 1954). 

        19       See    RESTATEMENT        (SECOND)       OF  CONTRACTS           129   (1981)     cmt.   a 

(explaining that  129 restates the part performance doctrine); RESTATEMENT (SECOND) 
OF  CONTRACTS  139 cmt. a (noting "this Section overlaps in some cases with rules 
based on estoppel or fraud . . . .  Sections 128 and 129 state particular applications of the 
same principle to land contracts . . . ."). 

        20       See   Mitchell   v.   Land,  355   P.2d   682,   686   (Alaska   1960)   ("It   is   a   well 

established principle of law that the mere payment of the purchase price by the vendee, 
without other acts, is not sufficient as an act of part performance to take an oral contract 
for the sale of real estate out of the Statute of Frauds. . . .           However, when the vendee 
takes    and    retains   possession     in  pursuance      of  the   verbal   agreement      and   makes 
improvements upon the land, he thereby acquires an equitable estate in the premises."); 
Jackson   v.   White,   556   P.2d   530,   534   n.7   (Alaska   1976)   (noting   that   party   "met   the 
requirements for part performance . . . -            possession and improvements in reliance on 
the verbal agreement" (citations omitted)). 

        21       Rego    v.  Decker,     482   P.2d   834,   837   (Alaska     1971)    (quoting  Alaska 

Creamery Prods., Inc. v. Wells, 373 P.2d 505, 510 (Alaska 1962)). 

                                                    -9-	                                             6642

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or her position - by payment, possession, and improvement of the property - pursuant 

to an oral agreement. 

                The superior court, addressing part performance, stated why it rejected 

Kiernan's argument based on the doctrine: 

                The plaintiffs argue that this case should be taken out of the 
                Statute of Frauds by the doctrines of promissory estoppel or 
                part performance.  However, part performance requires first, 
                that plaintiffs show by clear and convincing evidence that 
                there was payment, continuous and notorious use and that 
                improvements were made to the property.  Second, plaintiffs 
                must   prove   the   existence   of   an  oral   contract   sufficiently 
                definite and certain in its terms to warrant a grant of specific 
                performance.      Although plaintiffs provided one-half of the 
                down payment and made improvements to make the property 
                a tow lot, these actions are consistent with either a purchase 
                or a lease agreement.      Further, Kiernan's use was consistent 
                as a leaseholder and cannot be construed as notorious. . . . 
                Therefore,   because   of   the   uncertainty     as   to  the   terms   of 
                agreement, the exceptions of part performance and estoppel 
                do not apply. 

                We consider each of these arguments in turn. 

                First, we disagree that Kiernan's performance is consistent with a lease of 

half the property.     Although Creech claims that the parties agreed to a lease in which 

Kiernan would "pay half of what it would cost to get into this property," these are very 

unusual terms.  It is not normal for a lease to require the tenant to pay the down payment, 

earnest money, and closing costs on property the tenant leases.   Even the most stringent 

commercial   leases   -   in   which   the   tenant   pays   real   estate   taxes,   mortgage   interest, 

maintenance, and insurance - do not require the tenant to cover the landlord's expenses 

                                                  -10-                                            6642

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in purchasing the property.22       In fact, one of the generally accepted advantages of such 

a lease, from the tenant's point of view, is that it gives ownership-like control without 

requiring a capital investment.23       Here, however, the evidence suggests that Kiernan has 

made one-half of all capital expenditures.           Thus, we are not convinced that Kiernan's 

payments are "consistent with either a purchase or a lease agreement" because they are 

quite unlike the payments a lessee would make. 

                Furthermore, Creech has not proven the existence of a lease any more than 

Kiernan has proven the existence of a co-ownership agreement.                      Creech argues that 

Kiernan's actions were "consistent not only with an intended purchase but also with the 

lease   that   is   shown   by   testimony   and   the   consistent   history   of   monthly   receipts   for 

'rent.' "   However, this is a factual argument appropriately directed to the trier of fact, 

not one sufficient for summary judgment as a matter of law.                Thus, we conclude that it 

was error for the superior court to rely on this rationale in granting Creech summary 


        22      See, e.g., Sauve v. Winfree, 985 P.2d 997, 998 (Alaska 1999) (describing 

a " 'triple-net' lease" as requiring the tenant to pay "all insurance, taxes, and costs of 
maintenance and repair for the leased premises"); BLACK 'S LAW DICTIONARY 972 (9th 
ed.   2009)   ("Lease:   Net-Net-Net   Lease":   "A   lease   in   which   the   lessee   pays   all   the 
expenses, including the mortgage interest and amortization, leaving the lessor with an 
amount free of all claims."). 

        23      See Wyle Labs., Inc. v. 128 Maryland Assocs., LLC, No. B158163, 2003 

WL   21546112,   at   *7   (Cal.   App.   Sept.   4,   2003)   ("The   [triple   net]   lease   entitles   the 
landlord to rent net of costs for maintenance, repair, replacement, insurance, and taxes. 
The   long-term   net   lease   is   essentially   a   financing   device   that   gives   the   tenant   the 
advantages of ownership without the investment of capital or direct obligation under a 
deed of trust and   gives the owner of the property a return on his or her investment 
without the active responsibilities of investment management.") (quoting 6 MATTHEW 
BENDER, CALIFORNIA REAL ESTATE LAW  & PRACTICE   154.10[2], at 154-10.1). 

                                                  -11-                                             6642

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

                We also disagree with the superior court's assertion that part performance 

requires  "continuous and notorious" possession in all cases, including cases such as this 

one where the alleged oral contract is for joint ownership and possession.  It is true that 

we generally require exclusive and notorious possession.24             But we are persuaded by the 

opinions of courts from other jurisdictions that have waived these requirements when 

faced with oral contracts providing that the parties were to share the property.25                Those 

courts hold that, in such cases, the party asserting part performance must have possessed 

the property to the full extent of the alleged oral contract.26   We adopt that approach.  If 

the superior court on remand finds that the parties' agreement called for joint possession 

        24      Mitchell, 355 P.2d at 686.         In this regard, Creech argues that "notorious" 

possession means that the owner could "see that a hostile flag was being flown over his 
property."  Nome 2000 v. Fagerstrom, 799 P.2d 304, 309 (Alaska 1990) (quoting Shilts 
v. Young, 567 P.2d 769, 776 (Alaska 1977)) (discussing "notorious" in the context of 
adverse possession).   Because the parties shared the property amicably, Creech argues, 
Kiernan's possession was neither exclusive nor notorious. 

        25      See, e.g., In re Shinoe's Estate, 250 N.W. 505, 508 (Wis. 1933) (holding 

that,   although   generally   part   performance   requires   notorious,   exclusive   possession, 
"where the contract is for the conveyance of an undivided interest in the premises, the 
promisee who is in possession jointly with the promisor is in possession in the only way 
that the circumstances permit, and this should, it would seem, be sufficient"); Brown v. 
Freudenberg, 17 N.E.2d 865, 868 (Ind. App. 1938) (holding that possession need not be 
exclusive and notorious for application of part performance where defendant promised 
that if plaintiff would live with and care for defendant for the rest of defendant's life, 
defendant would transfer property to plaintiff at defendant's death). 

        26      Brown, 17 N.E.2d   at 868   ("We believe it to be the rule that where the 

grantee takes such possession of the property as is consistent with the existing conditions 
and   circumstances   imposed   by   the   contract   .   .   .   specific   performance   should   not   be 
denied for the sole reason that the possession taken was not exclusive in the ordinary 
meaning of the term.").       Shinoe's Estate, 250 N.W. at 508. 

                                                  -12-                                             6642

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

of the property, then the court should waive the exclusivity and notoriety requirements, 

because they would be impossible to meet under these circumstances. 

                Finally, in addition to payment, possession, and improvements, a party 

asserting the part performance exception to the statute of frauds must show that the oral 

contract was sufficiently definite to be specifically enforced.27           As discussed above, the 

dispute over the terms of the agreement renders this case inappropriate for summary 

judgment, but it does not necessarily establish that the terms of the agreement were 

uncertain or ambiguous.         If Kiernan can prove, by clear and convincing evidence, that 

the terms of the contract were as he alleges, and were therefore not ambiguous, he will 

have met the requirement for relief under the contract. 

        C.      Kiernan's Other Claims 

                Because   we   have   determined   that   factual   disputes   precluded   summary 

judgment on Creech's argument that defenses to the statute of frauds were not viable, we 

also   conclude   that   Kiernan's   numerous   other   claims   resting   on   a   co-ownership   or 

        27      Prokopis v. Prokopis, 519 P.2d 814, 816 (Alaska 1974). Kiernan compares 

his case to Prokopis, but we do not find it helpful here.            Although it arose from similar 
facts,   the   parties   in   that   case   did   not   appeal   the   holding   that   the   non-titled   party's 
performance   was   sufficient   to   meet   the     requirements   of   payment,   possession,   and 
improvements.  In that case, the parties had no written agreement, but the party without 
title took possession of half a duplex and paid half the costs and mortgage to the title- 
holder believing he was getting a half interest.          Id. at 815-16. The trial court found the 
non-titled party credible, and held that an oral agreement for co-ownership existed, as 
opposed to a lease, and that the plaintiff met the requirements of payment, possession, 
and improvements.  Id. at 816.   The title-holder did not appeal that ruling. Id.  The only 
dispute was whether the oral contract was sufficiently definite to be enforced.  Id.  The 
court did not discuss the problems that the superior court found this case to present (i.e., 
the consistency of the performance with a lease or the requirement that possession be 
exclusive and notorious). 

                                                  -13-                                             6642

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

contract theory must be remanded for further proceedings.28         These claims are breach of 

fiduciary duty, breach of covenant of good faith and fair dealing, breach of contract, and 

violation of the Alaska Securities Act.   We likewise conclude that it was error to dismiss 

Kiernan's unjust enrichment claim.29      But we reject Kiernan's argument that the superior 

court erred in dismissing his claim for conversion on statute of limitations grounds. That 

claim was premised upon his exclusion from the property,30 and Kiernan admitted he 

knew about the exclusion at the time that the limitation period began to toll.  Therefore, 

the superior court properly barred the claim. 


               Because the terms of the agreement between Kiernan and Creech are in 

dispute and are material to resolution of Kiernan's contract-based claims, we REVERSE 

the grant of summary judgment on the contract-based claims and REMAND them to the 

superior    court  for  proceedings    consistent   with  this  opinion.   Because     the  unjust 

enrichment claim does not depend on the existence of a contract, we REVERSE the 

dismissal of that claim and REMAND for proceedings consistent with this opinion. 

        28     Neither party has addressed the statutory exception to the statute of frauds 

articulated at AS 09.25.020(4).   We express no opinion regarding the application of this 
exception to the present case. 

        29     The    superior   court  dismissed    this  claim  (and   the  other  claims   just 

remanded) on the grounds that it must fail because Kiernan had failed to show that a 
contract   existed.   But   recovering   restitutionary   damages   under   a   theory  of   unjust 
enrichment "does not depend on any actual contract, or any 'agreement between the 
parties, objective or subjective.' "   George v. Custer, 862 P.2d 176, 180 (Alaska 1993) 
(internal citation omitted). 

        30     The superior court's order states:   "The alleged 2004 conversion claim for 

exclusion from the premises could be a valid leasehold claim, but it is time barred by the 
statute of limitations." 

                                              -14-                                          6642

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

Because   the   superior   court   correctly   dismissed   the   conversion   claim   on   statute   of 

limitations grounds, we AFFIRM the dismissal of that claim. 

                                                  -15-                                           6642

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

CHRISTEN, Justice, with whom FABE, Justice, joins, dissenting. 

                 I disagree with the court's decision to expand the promissory estoppel and 

part performance exceptions to the statute of frauds. In my view, the promise in this case 

was insufficiently definite as a matter of law to be enforced by the promissory estoppel 

exception;      the  alleged    oral  contract    was   likewise    insufficiently    definite   to  permit 

application of the part performance exception.   I would affirm the superior court's grant 

of summary judgment on these claims, but I would reverse the superior court's summary 

judgment on the unjust enrichment claim and remand that claim for trial. 

                 The   key   dispute   between   the   parties   here   concerns   the   terms   of   their 

contract.   Did they enter into a lease agreement with an option for purchase in the event 

Kiernan resolved his troubles with the IRS, as Creech contended?  Or did they agree to 

purchase the property jointly, with Kiernan taking the role of a "silent partner" because 

of his IRS debt, as Kiernan maintained?               It was fundamentally   unclear whether the 

parties entered into a lease-purchase agreement or a contract to buy the property jointly. 

And because the contract involved real estate, this case fits squarely within the coverage 

of the black-letter rule of the statute of frauds.1         The court's decision ignores the sound 

and   well-established   policy   reasons   for   the   legislature's   enactment   of   the   statute   of 

frauds, and permits Kiernan the opportunity to enforce a contract that he concedes was 

based on his desire to hide assets from his creditors. 

                 Although       the   court    characterizes     the   dispute    in   this   case   as   "a 

straightforward dispute of fact as to the existence of the contract for the trier [of fact] to 

resolve," whether a contract was ever formed is a distinct question from whether the 

         1       AS 09.25.010(a)(6) provides that an agreement for "the sale of real property 

or any interest in real property" is unenforceable unless it or some note or memorandum 
of it is in writing and subscribed by the party charged. 

                                                    -16-                                                6642 

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

contract, if formed, is unenforceable because of the statute of frauds.2           We have adopted 

the part performance exception to the statute of frauds when a buyer of real property 

takes and retains possession of the property and makes improvements on the land in 

reliance on an oral agreement.3      But when presented with claims for specific performance 

under     the  part   performance      doctrine,   we    have   required    that  the   party   seeking 

enforcement   must   show   by   clear   and   convincing   evidence   that   the   "contract   [was] 

sufficiently     definite   and   certain    in  its  terms   to   warrant    the  grant    of  specific 

performance."4       Construing the evidence in the light most favorable to Kiernan, the 

parties' agreement simply was not sufficiently definite or certain to warrant specific 

performance.     Kiernan testified about the agreement as follows: 

                Q:      Okay. Why were you making your payments to Willie 
                and Vulcan Towing instead of to the bank and Prudential and 
                the other parties on the other side of the transaction? 

                A:      To protect Willie's interest, I agreed to keep my name 
                off of it. 

                Q:      How would - 

                A:      Until I got my IRS debt cleared up. 

        2       See    Salmine    v.   Knagin,   645   P.2d  148,   150-51    (Alaska    1982)   (citing 

RESTATEMENT (SECOND) OF CONTRACTS  20 (1981)) (noting material misunderstanding 
can prevent contract formation).  The parties here appear to agree that they entered into 
a contract but they do not agree upon its terms.            Even if the terms of their agreement 
could be determined, violation of the statute of frauds makes a contract unenforceable, 
not void.  See AS 09.25.010(a). The legislature set out exceptions to the statute of frauds 
that make an otherwise unenforceable contract enforceable.               See AS 09.25.020. 

        3       Jackson v. White, 556 P.2d 530, 533 n.7 (Alaska 1976). 

        4       Id. at 533-34. 

                                                  -17-                                            6642

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

In addition, Kiernan actually indicated that he did not know what type of ownership 

rights he had in the property, testifying that he and Creech "never talked about" what the 

agreement   allowed   him   to   do   with   his   alleged   interest   in   the   property.  Kiernan's 

testimony demonstrates   that a material term of the contract - what type of interest 

Kiernan had in the property - was absent.               Using the part performance doctrine, we 

have enforced an oral real estate contract when "the terms of the contract . . . can be 

inferred without too much difficulty."5          But here, even accepting Kiernan's account of 

the contract, there is no fixed time for his performance of the condition related to his IRS 

debt or for official transfer of title of his interest.6         The lack of a deadline by which 

Kiernan was to fulfill his obligation and the lack of a mechanism to transfer title are fatal 

to the enforceability of the contract. 

                In   addition   to   the   lack   of   definite   terms   in   the   parties'   agreement,   the 

superior court could not order specific enforcement of the alleged real estate contract. 

Even accepting Kiernan's version of the contract, he had not performed his part of the 

bargain because he had not "cleared up" his IRS debt. Kiernan admitted at his deposition 

that he had not yet paid off his IRS debt, and by the time the superior court heard the 

motion for summary judgment, the IRS had filed a lien against Kiernan. Kiernan himself 

stated that he agreed to "keep his name off" the property until he "got [his] IRS debt 

cleared up" yet he never satisfied this alleged contract term.             In my opinion, Kiernan's 

testimony, taken as true at the summary judgment stage, establishes that the contract was 

        5       Prokopis v. Prokopis, 519 P.2d 814, 817 (Alaska 1974). 

        6       Cf. Hollaus v. Arend, 511   P.2d   1074, 1075 (Alaska 1973) (refusing to 

enforce writing for land sale when writing had no date for transfer of title and no terms 
relating to exercise of option to purchase). 

                                                   -18-                                               6642 

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

too indefinite to allow specific performance; the part performance doctrine could not 


                In   Valdez     Fisheries,   we    declined   to  extend    the  promissory      estoppel 

exception to the statute of frauds "to cases involving the sale or lease of real estate, in 

which the purported oral agreement is ambiguous as to key terms."7                    The court today 

interprets this   sentence as permitting promissory estoppel to take an oral real estate 

agreement   outside   the   statute   of   frauds   when   the   terms   of   the   oral   contract   are   not 

ambiguous.      But there is simply no way to characterize the terms of the oral agreement 

in this case as "not ambiguous."   When parties cannot agree whether their oral real estate 

contract was a lease-purchase agreement or an outright purchase, the agreement can only 

be termed ambiguous as to key terms.               Kiernan's case thus fits squarely within our 

holding in Valdez Fisheries - it involves real property and an ambiguous oral contract. 

This case illustrates the reasons why the legislature adopted the statute of frauds in the 

first place.   As we explained in Valdez Fisheries: 

                         The statute of frauds serves many purposes.             First, it 
                provides   certain,   consistent,   and   predictable   principles   to 
                guide   negotiators.      It   recognizes   the   inherent   evidentiary 
                worth of written evidence, and the potential injustice created 
                by relying on the memories of interested parties to provide 
                the exact language of an agreement, which   is necessary to 
                discern   the   limits   of   the   promise.  It   also   recognizes   the 
                natural tendency of peoples' memories to contour the words 
                they recall to fit their understanding of the agreement.             The 
                statute     of  frauds    encourages       people    to   commit     their 
                agreements       to  writing,    and   the   process    of  putting    the 
                agreement in writing helps impress upon them the importance 
                of their agreements.       It reduces litigation over alleged oral 

        7        Valdez Fisheries Dev. Ass'n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 669 

(Alaska 2002). 

                                                   -19-                                               6642 

----------------------- Page 20-----------------------

                 contracts.   Finally, a limited application of exceptions to the 
                 statute of frauds preserves the legislative intent behind the 
                 statute, and gives effect to the legislative judgment that the 
                 benefits    conferred     by  the   statute  outweigh     the   potential 
                 injustice produced by its application.[8] 

                 This case, like Valdez Fisheries, "implicate[s] the concerns motivating the 

statute of frauds."9      Because there is no writing memorializing the contract here, the 

superior   court   must   "rely[]   on   the   memories   of   interested   parties"   to   determine   the 

material terms of a real estate contract.10         Presumably, those memories could "contour 

the    words    they   recall  to  fit  their  understanding     of  the   agreement."11      Expanding 

promissory       estoppel    in  this  case   does    not  "encourage[]      people    to  commit     their 

agreements to writing" to "impress upon them the importance of their agreements," nor 

does    it   "reduce[]   litigation  over   alleged    oral  contracts."12    In   short,   expansion     of 

promissory estoppel here goes against the sound policies underlying the statute of frauds. 

                 I disagree with the court's conclusion that the issue "whether the contract 

was for an ownership share or a lease arrangement" is not appropriate for summary 

judgment because the contract Kiernan described did not "suffer [the same] disabilities" 

of lack of price and duration as the contract at issue in  Valdez Fisheries.                  Even if the 

court credited Kiernan's characterization of the contract as an outright sale which hid his 

share in the property until he "cleared up" his debt to the IRS, the contract was missing 

         8       Id. (citations omitted).

         9       Id.

         10      Id.

         11      Id.

         12      Id.

                                                   -20-                                              6642

----------------------- Page 21-----------------------

a   critical element   -   a   date   by   which   Kiernan   had   to   meet   his   obligation. Kiernan 

alleged that the parties agreed to purchase the lot jointly in 2001, yet he still had an 

outstanding IRS debt in 2008, when the court considered the summary judgment motion. 

Setting aside the important question whether an oral contract motivated by a desire to 

hide   assets   from   the   IRS   would   be   unenforceable   as   against   public   policy13   -   an 

outcome permitted by the court's decision - the existence of such a contract raises 

numerous problems.   Would Creech have been required to seek Kiernan's permission to 

sell the property, even though Kiernan's name was not on the title?                   How could third 

parties protect themselves from a claim by Kiernan if Creech sold the lot?                      Kiernan 

himself was unsure of the nature of his interest in the property - he testified that he did 

not know if he could transfer his interest in the property to his daughter. 

                To accept Kiernan's version of the contract is to endorse the use of oral 

contracts expressly intended to prevent third parties - all of Kiernan's creditors, and 

specifically the IRS - from possibly attaching his interest in the property.  Section 139 

of   the   Restatement   sanctions   using   promissory   estoppel   when   a   contract   would   be 

unenforceable       under    the  statute   of  frauds    "if  injustice   can   be  avoided    only    by 

enforcement of the promise."14         Because any injustice to Kiernan could be avoided by 

permitting his unjust enrichment claim to proceed, there is simply no justification for 

extending   the   promissory   estoppel   exception   of   the   statute   of   frauds   to   real   estate 

contracts in this case. 

        13      See Pavone v. Pavone, 860 P.2d 1228, 1231 n.2 (Alaska 1993) (setting out 

rule from Restatement about when contract is unenforceable as being against public 

        14      RESTATEMENT (SECOND) OF CONTRACTS  139(1) (1981) (emphasis added). 

                                                   -21-                                               6642 

----------------------- Page 22-----------------------

                In spite of my disagreement with the court, I would not affirm the superior 

court's summary judgment on all of Kiernan's claims.               I would hold that the superior 

court erred by dismissing Kiernan's claim for unjust enrichment.                 The superior court 

decided that Kiernan's unjust enrichment claim failed "without an underlying contract 

or partnership."     But a claim for unjust enrichment "does not depend on any actual 

contract, or any agreement between the parties, objective or subjective."15                 There are 

three essential elements of unjust enrichment: "1) a benefit conferred upon the defendant 

by the plaintiff; 2) appreciation by the defendant of such benefit; and 3) acceptance and 

retention by the defendant of such benefit under such circumstances that it would be 

inequitable for him to retain it without paying the value thereof."16 

                In Mitchell v. Land, we affirmed the trial court's refusal to enforce an oral 

contract for the sale of an easement as barred by the statute of frauds, but we remanded 

the case for consideration of "relief as justice might have called for" - even though the 

plaintiff's   complaint   did   not   include   a   claim   for  equitable   relief   or   compensatory 

damages - because the complaint alleged the plaintiff paid $300 and received nothing 

in return.17  We held "where a party to a contract unenforceable by reason of the Statute 

of   Frauds    refuses  to  go   on  with   the  contract   after  having   received    a  part   of  the 

consideration      from   the   other   party,  the   consideration     received   by   him    may   be 

        15      Darling   v.   Standard   Alaska   Prod.,   818   P.2d   677,   679   (Alaska   1991) 

(quoting Alaska Sales & Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska 1987)) (internal 
quotation marks omitted). 

        16      Alaska Sales & Serv., Inc., 735 P.2d at 746. 

        17      355 P.2d 682, 687 (Alaska 1960). 

                                                 -22-                                            6642

----------------------- Page 23-----------------------

recovered."18     The   Restatement   likewise   permits   restitution   under   a   contract   that   is 

unenforceable because of the statute of frauds.19 

                Viewing the evidence in the light most favorable to the non-moving party, 

Kiernan showed that he conferred benefits on Creech.   Kiernan paid half of the earnest 

money and closing costs on the property; he supplied improvements that benefitted both 

businesses; he assisted in developing the property by applying for permits from the city; 

and he joined Creech in opposing a development in the area that could have damaged the 

property.     Although the superior court noted that these actions were consistent with a 

lease agreement, they were also consistent with a joint-purchase agreement, so summary 

judgment was improper.20         Kiernan also showed that Creech appreciated the benefit. 

Viewing      the  evidence     in  Kiernan's    favor,   he  showed     that  he  made    substantial 

improvements that benefitted Creech's business. Finally, Kiernan created a factual issue 

about whether it would be unjust to permit Creech to retain the benefits.               In my view, 

material factual issues prevented the superior court from entering summary judgment on 

Kiernan's   unjust   enrichment   claim.      I   would   reverse   the   superior   court's   summary 

judgment on that count. 

                Because the parties' agreement was too ambiguous as a matter of law for 

the superior court to order specific performance, Kiernan should not prevail under the 

part performance doctrine.  Promissory estoppel should not be expanded to include real 

estate contracts in this case: section 139 of the Restatement only applies "if injustice can 

        18      Id. 

        19      RESTATEMENT (SECOND) OF  CONTRACTS   375 (1981). 

        20      I agree with the court that a lease requiring the tenant to pay half the closing 

costs for purchasing the real property he will rent is "very unusual" and "not normal." 

                                                 -23-                                           6642

----------------------- Page 24-----------------------

be   avoided   only  by  enforcement   of   the   promise."21 Kiernan   has   another   remedy 

available - an unjust enrichment claim - so injustice can be avoided without broadly 

expanding the promissory estoppel exception to the statute of frauds.        In my view, the 

court's expansion of the exceptions to the statute of frauds undercuts the purposes of this 

well-settled rule of law.  I therefore respectfully dissent. 

       21     RESTATEMENT (SECOND) OF  CONTRACTS   139(1) (1981). 

                                             -24-                                         6642 
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