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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Airline Support, Inc. v. ASM Capital II, L.P. (6/29/2012) sp-6685

Airline Support, Inc. v. ASM Capital II, L.P. (6/29/2012) sp-6685

        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, email 

        corrections@appellate.courts.state.ak.us. 



                 THE SUPREME COURT OF THE STATE OF ALASKA 



AIRLINE SUPPORT, INC.,                           ) 

                                                 )       Supreme Court Nos. S-13584/13593 

                        Appellant and            ) 

                        Cross-Appellee,          )       Superior Court No. 3AN-07-05082 CI 

                                                 ) 

        v.                                       )       O P I N I O N 

                                                 ) 

ASM CAPITAL II, L.P.,                            )      No. 6685 - June 29, 2012 

                                                 ) 

                        Appellee and             ) 

                        Cross-Appellant.         ) 

                                                 ) 



                Appeal from the Superior Court of the State of Alaska, Third
 

                Judicial District, Anchorage, John Suddock, Judge.
 



                Appearances:          Charles      E.    Tulin,     Anchorage,        for
 

                Appellant/Cross-Appellee.           Allen     F.  Clendaniel,     Sedor,
 

                Wendlandt,        Evans     &    Filippi,   LLC,      Anchorage,      for
 

                Appellee/Cross-Appellant.
 



                Before:      Carpeneti,      Chief   Justice,   Fabe,    Winfree,    and
 

                Stowers,    Justices. [Christen, Justice, not participating.]
 



                CARPENETI, Chief Justice.
 

                WINFREE, Justice, concurring.
 

                STOWERS, Justice, concurring in part and dissenting in part.
 



I.      INTRODUCTION 



                A   limited   partnership   based   in   New   York   that   invests   in   the   claims   of 



unsecured creditors sent a letter to an Alaska corporation offering to purchase one such 


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

claim   for   about   one-third   of   its   face   value. The   letter   was   addressed   to   the   credit 



manager and was sent to the corporate offices.  Upon receiving the envelope, the Alaska 



corporation forwarded it unopened to the manager of its accounts receivable department 



in Georgia.    The manager executed the enclosed assignment agreement and returned it 



back to the limited partnership, which then sent a check in payment for the claim.  The 



Alaska corporation eventually filed suit in superior court to have the agreement set aside. 



The superior court declined to do so.   Because we conclude that there is a genuine issue 



of fact as to whether the manager of the accounts receivable department had apparent 



authority to execute the agreement as a matter of law, we reverse and remand for further 



proceedings. 



II.     FACTS AND PROCEEDINGS 



                Airline    Support,    Inc.  is  an  Anchorage-based       Alaska    corporation     that 



provides support services for airlines at the Ted Stevens Anchorage International Airport 



in   Anchorage.      On   September   15,   2005,   Northwest   Airlines        filed  for   Chapter   11 



bankruptcy in the Southern District of New York.   At the time of the bankruptcy filing, 



Northwest owed Airline Support $62,071.              After the filing, Airline Support continued 



to provide services to Northwest and bill for those services. 



                ASM      Capital   II,   L.P.   invests   in   the   claims   of   unsecured   creditors   in 



domestic bankruptcy cases.         ASM monitors bankruptcy filings and offers to purchase 



claims from bankruptcy creditors at a percentage of their face value.  On May 15, 2006, 



ASM sent Airline Support a letter proposing to purchase Airline Support's bankruptcy 



claim for $19,862.72, which was 32% of the claim's face value.  ASM sent the letter to 



                                                  -2-                                             6685
 


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

Airline   Support's   corporate   office   in   Anchorage,   to   the   attention   of   "A/R   -   Credit 

Manager."1     The page-long letter read, in pertinent part: 



                ASM Capital ("ASM") is a firm that invests in the claims of 

                unsecured creditors in domestic bankruptcy cases. The above 

                information refers to an unsecured claim ("Claim") that has 

                been scheduled by Northwest Airlines Corporation in its case 

                filed in the United States Bankruptcy Court for the Southern 

                District of New York, Case. No. 05-17930 ("Case"). 



                ASM is currently buying claims in the Case and is interested 

                in purchasing your Claim: 



                        Percentage:                     32.00% (cents on the dollar) 



                        Claim Amount:                    $62,071.00 



                        ASM Purchase Price:              $19,862.72 



                If you are interested  in  selling your Claim, you must send 

                ASM,   via   fax   or   mail,   an   executed   Assignment   of   Claim 

                Agreement, a copy of which is attached.           ASM reserves the 

                right (i) to review the validity of the Claim; and (ii) to refuse 

                to purchase the Claim for any reason without further notice 

                or   obligation.   If   accepted,   payments   are   typically   sent   by 

                regular mail within 7 to 10 business days.  Alternate payment 

                methods may be available upon request. 



With the exception of two closing lines, this is ASM's letter in its entirety. 



                In response, ASM received a letter on Airline Support letterhead signed by 



Katie Land, who identified herself as Airline Support's "Accounting Manager."                     Land 



lived   in   Georgia,   and   remotely   acted   as   Airline   Support's   "accounts   manager"   and 



"bookkeeper."       Enclosed      with   the  letter  from  Land    was   the  executed    assignment 



agreement, dated June 14, 2006.          The letter read: 



        1       "A/R" stands for "Accounts Receivable." 



                                                  -3-                                             6685 


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

                Dear Mr. Corey, 



                Enclosed you will find the Airline Support, Inc. invoices that 

                were part of the Northwest Airlines bankruptcy filing. The 

                letter you sent to our company listed   our claim amount at 

                $62,071.00.        We    actually   have   a  total  amount    open    of 

                $71,404.00.     Copies of all open invoices are attached. 



                Please contact me if you have further questions regarding this 

                claim. . . .
 



                Regards,
 



                Katie Land
 

                Accounting Manager 



Accompanying Land's letter were over 50 pages of invoices relating to Airline Support's 



claim in the Northwest bankruptcy.   In the space provided on the assignment agreement, 



Land had handwritten "$71,404.00" as the amount of Airline Support's claim in the 

bankruptcy proceedings.2         Preprinted on the assignment agreement was the purchase 



price for the assignment of the claim, $19,862.72.              On the "Name/Title" line of the 



signature block, Land had written "Katie Land/Acct. Mng."                  The executed assignment 



agreement contained a clause stating that "the individuals whose signatures appear below 



hereby expressly represent that they have the authority to bind the party for which they 



sign    this  agreement."     The    assignment     agreement   also    included    an  attorney's   fee 



provision     requiring   Airline   Support    to  reimburse     ASM     for  all  of  its  expenses   in 



connection   with   enforcing   the   agreement,   "including   without   limitation,   reasonable 



attorneys' fees at the trial and appellate levels." 



                Following receipt of the executed assignment agreement, ASM filed a proof 



of claim in bankruptcy court against debtor Northwest on June 26, 2006, indicating that 



        2       In   fact,   the   bankruptcy   claim   only   had   a   $62,071   value,   as   ASM   had 



originally stated.  Northwest's additional debt to Airline Support was not part of the 

bankruptcy claim, and was directly paid in full by Northwest. 



                                                  -4-                                               6685 


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

Airline Support had assigned its claim to ASM.               On June 27, 2006, ASM sent a check 



to Airline Support for $19,862.72 in exchange for Airline Support's unsecured claim. 



In early August, Airline Support received a notice of transfer of its $62,071 bankruptcy 



claim.   The notice stated that the bankruptcy claim had been transferred and informed 



Airline Support that it had until August 22, 2006, to object to the transfer. On September 



29, Airline Support brought a challenge to the transfer of the bankruptcy claim in the 



United States Bankruptcy Court for the Southern District of New York. Airline Support 



moved for leave to file late, explaining that its objection to the transfer was late because, 



after receiving notice of the transfer, it conducted an internal investigation, retained 



counsel, and attempted to resolve the issue outside of court.                  Airline Support sought 



reconsideration of the bankruptcy court's decision, arguing that the transfer was null and 



void because Land had not been authorized to sell the corporation's assets. 



                 After briefing and a hearing, the bankruptcy judge denied Airline Support's 



motion and ordered that ASM be substituted as "the transferee of all claims asserted by 



Airline Support in the captioned bankruptcy cases."               However, the court also noted: 



                 [T]he consequences of refusing to allow Airline Support to 

                 file a late objection to transfer are not fatal to its position, or 

                 even   detrimental.       The   Court's   denial   of   its   motion  was 

                 without   prejudice   and   thus   remitted   Airline   Support   to   its 

                 State   court   rights   and   remedies.   .   .   . [T]his   is   where   the 

                 dispute   [regarding   Land's   authority   to   transfer   the   claim], 

                 which is entirely tangential to the bankruptcy case, should be 

                 resolved.[3 ] 



ASM incurred and paid $21,247.94 in attorney's fees responding to Airline Support's 



challenge in bankruptcy court. 



        3       In re Northwest Airlines Corp. , 2007 WL 498285, *4 (Bankr. S.D.N.Y. 



2007) (Feb. 9, 2007). 



                                                    -5-                                                 6685 


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

                On February 15, 2007, Airline Support   sued   ASM in superior court in 



Anchorage. Airline Support's amended complaint asserted, among other things, a claim 

to set aside the assignment agreement.4           ASM counterclaimed for breach of contract, 



asserting that Airline Support had failed to reimburse ASM for the attorney's fees ASM 



incurred in bankruptcy court in violation of the terms of the assignment agreement. 



                Both parties moved for summary judgment as to whether Katie Land had 



authority to execute the assignment agreement.             Superior Court Judge Michael Spaan 



denied both motions.        When Superior Court Judge John Suddock succeeded to Judge 



Spaan's   caseload,   the   parties   renewed   their   motions   for   summary   judgment.      Judge 



Suddock denied Airline Support's motion for summary judgment but granted summary 



judgment in favor of ASM, holding that Land had apparent authority as a matter of law. 



Specifically, the court held that no genuine material issue of fact remained because all 



three   elements   of   apparent   authority   were   satisfied   as   a   matter   of   law: (1)   Airline 



Support made manifestations that Land was its agent to ASM, (2) ASM relied on those 



manifestations,   and      (3)  ASM     reasonably    interpreted    Land's   communication       as   an 



expression   of   authority   on   behalf   of   Airline   Support.   Airline   Support   moved   for 

reconsideration; the superior court denied its motion.5           The superior court also awarded 



ASM full reasonable fees arising from the state court proceeding pursuant to the fees 



provision of the assignment agreement.  However, the superior court declined to award 



        4       Airline Support also asserted an Alaska Securities Act claim and an Unfair 



Trade Practices Act claim, neither of which are at issue on appeal. 



        5       After the superior court granted ASM's motion for summary judgment with 



respect    to  the  apparent    authority    issue,  Airline   Support    may    have   abandoned     its 

Securities Act claim and the court granted ASM summary judgment on Airline Support's 

Unfair   Trade   Practices   Act   claim.   This   disposed   of   all   of   Airline   Support's   claims 

against ASM. 



                                                   -6-                                            6685
 


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

ASM the fees it had incurred in bankruptcy court, ruling that it did not have authority to 



award such fees. 



                Airline   Support   appeals   the   superior   court's   conclusion   that   Land   had 



apparent authority arguing that ASM's interpretation of Airline Support's conduct was 



unreasonable as a matter of law.  Airline Support also appeals the superior court's award 



of attorney's fees, arguing that the fees awarded were not "reasonable." ASM cross- 



appeals,   arguing   that   the   superior   court   erroneously   concluded   that   it   did   not   have 



authority to award fees incurred in bankruptcy court. 



III.    STANDARD OF REVIEW 



                We review grants of summary judgment on questions of contract formation 

de novo.6    We will affirm a grant of summary judgment if the evidence in the record 



presents no genuine issue of material fact and the moving party is entitled to judgment 

as a matter of law.7   A genuine issue of material fact exists where reasonable jurors could 



disagree on the resolution of the issue.8       When making the determination whether there 



are genuine issues of material fact, we will draw all reasonable inferences in favor of the 

nonmoving party.9 



        6       Askinuk Corp. v. Lower Yukon Sch. Dist. , 214 P.3d 259, 264 (Alaska 2009) 



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



        7       Id. (citing Copper River, 9 P.3d at 283). 



        8       Burnett v. Covell , 191 P.3d 985, 990 (Alaska 2008) (citing McGee Steel Co. 



v. State for Use & Benefit of McDonald Indus. Alaska, Inc., 723 P.2d 611, 614 (Alaska 

1986)). 



        9       Fletcher v. S. Peninsula Hosp. , 71 P.3d 833, 840 (Alaska 2003). 



                                                  -7-                                            6685
 


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

                On questions of law, we exercise our independent judgment.10               We adopt 



the rule of law that is most persuasive in light of precedent, reason, and policy.11 



IV.     DISCUSSION 



        It Was Error To Hold That Katie Land Had Apparent Authority To Execute 

        The Assignment Agreement As A Matter Of Law. 



                In granting ASM's motion for summary judgment, the superior court held 



that Airline Support's accounting manager Katie Land had apparent authority to execute 



the assignment agreement as a matter of law.  Airline Support argues that this was error. 



                We have adopted the Restatement's general rule for creation of apparent 

authority.12   "Apparent authority to do an act is created   as to a third person when a 



principal's conduct, reasonably interpreted, 'causes the third person to believe that the 



principal consents to have the act done on his behalf by the person purporting to act for 

him.'    "13  We   consider   three   factors  when    evaluating    apparent   authority:   "(1)   the 



manifestations of the principal to the third party; (2) the third party's reliance on the 



principal's manifestations; and (3) the reasonableness of the third party's interpretation 

of the principal's manifestations and the reasonableness of the third party's reliance."14 



                A.      Manifestations by the principal 



        10      Askinuk , 214 P.3d at 264 (citing Copper River, 9 P.3d at 283).
 



        11      Id.
 



        12
     Anderson v. PPCT Mgmt. Sys., Inc. , 145 P.3d 503, 509 (Alaska 2006) 



(citing City of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130 (Alaska 1983)). 



        13      Askinuk , 214 P.3d at 264 (quoting Anderson , 145 P.3d at 509). 



        14      Id. (citing Anderson , 145 P.3d at 509). 



                                                  -8-                                           6685
 


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

              The manifestation may be in the form of the principal's  "written or spoken 

words or any other conduct."15   "The manifestation may be directly communicated to the 



third party or may come through, among other things, signs or advertising."16      However, 



no agency relationship exists where the principal never indicated to the third party that 

the supposed agent had authority.17 



              The superior court appears to have found that two instances of Airline 



Support's conduct were   "manifestations" under the first prong of the apparent authority 



test.  First,  the  superior  court  noted  that  Airline  Support   had  forwarded   ASM's 



solicitation letter and assignment agreement to Katie Land.       Second, the superior court 

emphasized that Airline Support had furnished Land with Airline Support stationery.18 



              Airline Support argues that forwarding the solicitation to Land   is not a 

"manifestation."  Citing Bruton v. Automatic Welding & Supply Corp. ,19 Airline Support 



argues that its conduct will qualify as a manifestation relevant to an apparent authority 



determination only if that conduct occurred before ASM sent the letter to Airline.  The 



argument lacks merit.    Bruton stands for the proposition that the only manifestations 



       15     Anderson , 145 P.3d at 509 (quoting Delta Junction , 670 P.2d   at 1130) 



(internal citations omitted). 



       16     Id. (citing RESTATEMENT (SECOND) OF AGENCY   8 cmt. b (1958)). 



       17     Id. (citing Bruton v. Automatic Welding & Supply Corp. , 513 P.2d 1122, 



1126 (Alaska 1973)). 



       18     Although the superior court looked to only these two facts in the record to 



support its conclusion that the manifestation prong of the apparent authority test was met 

- forwarding ASM's letter to Land and supplying her with company stationery - we 

note that other facts in the record support the conclusion: Airline Support provided Land 

with access to Airline Support billing invoices and it gave her the title of "accounting 

manager." 



       19     513 P.2d 1122 (Alaska 1973). 



                                             -9-                                        6685
 


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

relevant to an apparent authority determination are those that occurred before the third 



party   relied    -    not   those   that  occurred     before    the  third   party   acted   in   any   way 

whatsoever.20      Because Airline Support forwarded the letter to Land, supplied her with 



company stationery, and provided billing invoices to her before ASM sent its check - 



that is, before ASM relied - ASM was entitled to rely and the superior court did not err 



in considering these acts a manifestation that Airline Support clothed Land with the title 

of accounting manger and the authority implied by that title.21 



         20      Id.   at   1126   ("After   the   fact   manifestations   .   .   .   are   not   evidence   that   a 



purported agent had apparent authority."). 



         21      The partial dissent disagrees with our conclusion that there are no genuine 



issues of material fact with regard to this first factor in the apparent authority analysis. 

But    the   dissent    defines    this  factor   too   broadly,    first  characterizing      it  as  "  'the 

manifestations of the principal to the third party' to determine whether the principal has 

signaled, by word or deed, that the agent has authority to act on the principal's behalf," 

(Dissent 23) and then equating "authority to act" with the ultimate issue in this dispute: 

"[w]hether Land had apparent authority to bind Airline Support to the terms of ASM's 

assignment agreement."(Dissent 24).              This places too much weight on the first factor. 

While, as a generality, referring to an apparent agent's                  "authority to act" is fine, in 

applying the first factor we look only to the principal's manifestations and whether those 

manifestations   clothe   the   agent   with   some   authority   -   here,   with   a   given   title   and 

whatever authority is implied by that title. 



                 Thus, the after-the-fact protestations of Airline Support's president that the 

corporation was unaware of Katie Land's actions, that the corporation had not authorized 

them,   and   that   it   took   steps   to   undo   them,   are   all   irrelevant   to   the   first   factor:   the 

manifestations that Airline Support made to ASM. There is no genuine issue of material 

fact that Airline Support, in forwarding ASM's solicitation letter to Land, in providing 

Land   with   Airline   Support   letterhead,   in   providing   billing   invoices   to   her,   and   in 

conferring the title of "accounting manager" upon her, had made manifestations to ASM 

that she held such a title and whatever authority was implied by that title.  Whether that 

authority included executing the contract at issue in this case is covered under the third 

factor   -   the   reasonableness   of   Airline   Support's   reliance   -   an   issue   about   which 

genuine material facts are in dispute. 



                                                     -10-                                               6685
 


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

                B.      Third party's reliance 



                As to the second factor, the superior court found that ASM relied on Airline 



Support's manifestations by sending a check for $19,862.72 to Airline Support.  Airline 



Support does not challenge this finding and has support in the record. Moreover, nothing 



in our case law or the Restatement suggests ASM's check did not satisfy the reliance 

requirement.22 



                C.      Reasonableness of the third party's reliance 



                The   third   element   of   apparent   authority   is   satisfied   if   the   third   party's 



interpretation of the principal's manifestations and reliance on those manifestations were 

reasonable.23    On appeal, Airline Support asserts that the superior court erred in holding 



that ASM's interpretation of Airline Support and Land's actions was reasonable as a 



matter of law. Although we do not agree with all aspects of Airline Support's argument, 



we agree that Airline Support has raised genuine issues of material fact.  Accordingly, 



we reverse and remand for further proceedings. 



                The reasonableness of a third party's reliance on an alleged principal's 

manifestations is generally a question of fact.24        A court should resolve a factual issue as 



        22      In fact, the Restatement explains that "an action or forbearance on the part 



of a third party as a result of the agent's action and the principal's manifestation" will 

generally satisfy the reliance requirement.          RESTATEMENT  (THIRD) OF  AGENCY   2.03 

cmt. e (2006).   Furthermore, "[t]o establish that an agent acted with apparent authority, 

it is not necessary for the plaintiff to establish that the principal's manifestation induced 

the plaintiff to make a detrimental change in position.  Id. 



        23      Askinuk Corp. v. Lower Yukon Sch. Dist. , 214 P.3d 259, 264 (Alaska 2009) 



(citing Anderson v. PPCT Mgmt. Sys., Inc. , 145 P.3d 503, 509 Alaska 2006)). 



        24      See Cummins, Inc. v. Nelson, 115 P.3d 536, 544 (Alaska 2005). 



                                                  -11-                                            6685
 


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

a matter of law only if no reasonable juror could reach a different conclusion.25                We have 



been reluctant to decide the reasonableness issue as a matter of law.26                  It is only in the 



most straightforward cases - those where reasonable jurors could not disagree - that 

it is appropriate for a court to decide the issue on summary judgment.27 



                 This is not one of those cases.         The two manifestations the superior court 



identified give rise to a narrow set of factual inferences.                First, the fact that Airline 



Support   furnished   Land   with   its   stationery   gives   rise   to   the   inference   that   she   is   an 



Airline Support employee who has some authority to speak for the corporation. Second, 



the   fact   that   Airline   Support   forwarded   an   envelope   addressed   to   the   "A/R   Credit 



Manager" Katie Land gives rise to the inference that Land held the position of "credit 



manager" at Airline Support or a position akin to "credit manager." 



                 ASM   argues   that   because   it   sent   the   letter   to   Airline   Support's   "credit 



manager" in Anchorage and received a response from someone identifying herself as 



        25       Cf. Holland v. Union Oil Co. of Cal., Inc., 993 P.2d 1026, 1031 (Alaska 



1999) ("Because it is 'generally . . . a question of fact whether the manual did modify the 

employment agreement,' this court should only conclude, as a matter of law, that the 

memo did not create a 'just cause' employment relationship, if no reasonable juror could 

conclude that it did." (citing Parker v. Mat-Su Council on Prevention of Alcoholism & 

Drug Abuse , 813 P.2d 665, 666 (Alaska 1991))); Drobny v. Boeing Co., 907 P.2d 299, 

302 (Wash Ct. App. 1995) ("Only if reasonable minds could not differ in resolving this 

[question of fact] should a trial court decide it as a mater of law.") 



        26       See, e.g., City of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130- 



31   (Alaska   1983)   (reversing       superior   court's   decision   that    there   was   no  apparent 

authority   as   a   matter   of   law   on   grounds   that   reasonable   jurors   could   disagree   as   to 

whether inference of authority was reasonable); Cummins, 115 P.3d at 544 (affirming 

superior court's decision to have jury evaluate evidence of apparent authority and decide 

whether third party's interpretation was reasonable). 



        27       Cf.  Delta Junction,      670 P.2d at 1130-31. 



                                                    -12-                                              6685
 


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

Airline Support's "accounting manager" in Georgia,28 it was reasonable to infer that 



Airline Support had intentionally routed the letter to a company official with authority 



to sell the claim.    The superior court seems to have agreed with ASM's assertion that 



routing     the  envelope    to  another    office  gave   rise  to  "an   inference    of  affirmative 



forwarding."      From the fact that Airline Support forwarded the envelope to Land in 



Georgia, the superior court concluded that Airline Support "opted to put that matter 



under her purview."       We disagree. 



                "Accounting manager" and "credit manager" are nebulous titles that do not 



obviously apply to distinct positions within the corporate structure.  Having addressed 



a letter to the "credit manager" and having received a response from the "accounting 



manager," ASM's inference - on this basis alone - that Airline Support had purposely 



put   the   solicitation   before   the   accounting   manager   because   she   had   the   authority   to 



transfer the claim, is not the only inference possible. Another reasonable inference is that 



Airline Support routed the letter to Land because she functioned as the "credit manager" 



- (or something like it). But it cannot be said that this must mean that Airline Support 



had intentionally put the matter before Land because she had the authority to assign 



Airline Support's claim. 



        28      Apparent authority is based on a principal's manifestations not the agent's. 



See Anderson v. PPCT Mgmt. Sys., Inc., 145 P.3d 503, 509 (Alaska 2006) (quoting 

RESTATEMENT  (SECOND) OF  AGENCY   27 (1958)).                  Consequently, the fact that Land 

identified herself as "accounting manager" would not, on its own, be relevant.  However, 

in Land's affidavit - which Airline Support submitted with its motion for summary 

judgment - she identifies herself as Airline Support's "accounts manager," suggesting 

that, at the very least, Airline Support allowed her to use this title, and at most, bestowed 

it   upon   her.  For   this   reason,   it   is   appropriate   to   conclude   that   Land's   "accounting 

manager" title was also a manifestation by Airline Support, and therefore, relevant to the 

apparent authority inquiry.  Cf. City of Delta Junction, 670 P.2d at 1131 (holding that it 

could reasonably be inferred that Alaska Mack's use of Mack, Inc.'s corporate name and 

trademark was with Mack, Inc.'s knowledge and approval). 



                                                  -13-                                            6685
 


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

                In   its   order   denying   Airline   Support's   motion   for   reconsideration,   the 



superior court appears to have departed slightly from its earlier position.  Instead of the 



conclusion that Airline Support's manifestations gave rise to the reasonable inference 



that it  had "opted to put [the] matter under [Land's] purview," it adopted the more 



moderate position that the forwarding gave rise to the inference that Land was Airline 



Support's credit manager.         Rejecting Airline Support's motion for reconsideration, the 



superior court wrote: 



                The letter from ASM to Airline Support was addressed to the 

                "credit manager".       Airline Support tends to minimize her as 

                a mere bookkeeper.        ASM, having mailed the letter to the 

                credit manager, could reasonably assume that the mail was 

                routed to a company official of that or comparable rank. . . . 

                None   of   [the   arguments   in   Airline   Supports's   motion   for 

                reconsideration]   in   any   way   detracts   from   the   reasonable 

                conclusion that this particular credit manager had authority 

                by    virtue   of  her   corporate     status to    consummate       the 

                assignment of a bankruptcy claim.          In this instance, there is 

                simply no logical link between [those arguments] and her 

                apparent authority to act consistently with her perceived rank 

                in the corporate hierarchy. (Emphasis added.) 



                We agree with the superior court that it was reasonable for ASM to assume 



Land occupied a position comparable to credit manager.  We disagree, however, that it 



was reasonable as a matter of law for ASM to conclude "by virtue of [Land's] corporate 



status" that she had the authority to sell a company asset potentially worth over $60,000. 



"[A]pparent authority can be created by appointing a person to a position, such as that 



of manager or treasurer, which carries with it generally recognized duties; to those who 



know of the appointment there is apparent authority to do the things ordinarily entrusted 



                                                 -14-                                            6685
 


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

to   one   occupying   such   a   position   .   .   .   ."29 However,   neither   "credit   manager"   nor 



"accounting manager" so obviously carries with it the authority to sell a company's 

significant assets as to make it a matter of law.30        While a reasonable juror bringing his 



or her broad practical experience to bear could reach this conclusion, we cannot say that, 



as a matter of law, this is the only reasonable conclusion.           Accordingly, we reverse the 



superior court's grant of summary judgment and remand for trial. 



                ASM argues that the superior court's conclusion that Land had apparent 

authority is supported by a case from Maine, Steelstone Industries, Inc. v. North Ridge.31 



In that case, the Maine Supreme court held that the trial court could infer that the alleged 



principal had cloaked the alleged agent with apparent authority where the principal had, 

among other things, forwarded certain documents to the agent.32                   We   conclude that 



Steelstone is of limited relevance to the present case for two reasons. 



        29      RESTATEMENT        (SECOND)   OF     AGENCY         27  cmt.   a  (1958).   See    also 



RESTATEMENT (THIRD) OF AGENCY   3.03 cmt. b (2006) ("A principal may . . . make a 

manifestation by placing an agent in a defined position in an organization. . . . Third 

parties who interact with the principal through the agent will naturally and reasonably 

assume that the agent has authority to do acts consistent with the agent's position or role 

unless they have notice of facts suggesting that this may not be so."). 



        30      Neither party appears to have submitted evidence directly on point. ASM's 



senior vice-president did submit an affidavit explaining that his company directed the 

letter to "A/R Credit Manager" because "the credit manager of the company's accounts 

receivable department . . . manages the debts owed to the company." 



        31      735 A.2d 980, 983 (Maine 1999).           Although the superior court discussed 



Steelstone in the context of summarizing ASM's arguments, to what extent, if any, the 

superior court actually relied on the case is unclear. 



        32      Id. 



                                                  -15-                                            6685
 


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

                 First, the Maine Supreme Court was reviewing the trial court's conclusion 

that the agent had apparent authority as an issue of fact - not as a matter of law.33 



Accordingly, the Steelstone court applied the clear error standard and determined that 

the record could support such a finding,34 but did not ask whether reasonable jurors could 



disagree on the issue, which is the question here.               Consequently, Steelstone has only 



limited relevance to the current case.           Second, the facts of Steelstone are distinct from 



those currently before us. In that case, the principal - a business operating an apartment 



complex - hired the agent as a sub-contractor, allowed the agent to operate an office out 

of its building, and arranged for one of its employees to work for the agent.35                         The 



principal also orchestrated a meeting between the principal's representative, the agent, 



and the third party, during which the principal's representative introduced the agent to 



the   third   party   as  the  project   manager,   and      failed  to  mention     anything     about   the 

contractor/subcontractor relationship.36  While it is true that the Steelstone court observed 



that   the   principal   had   forwarded   the   third   party's   proposals   to   the   agent,   the   court 



considered       this  detail   as  only    one   of  many     facts,   including     many     which    were 



demonstrably more significant.           In short, the     factual landscape was quite distinct from 



the one currently before us.  Although Steelstone suggests that a principal's decision to 



forward documents to an agent is relevant to an apparent authority determination, it in 



no way suggests that it is dispositive of the question.  For these reasons, Steelstone is of 



limited value to the resolution of this case. 



        33       Id. 



        34       Id. 



        35       Id. at 982. 



        36       Id. 



                                                    -16-                                               6685
 


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

                Airline Support cites a number of outside cases that it argues show that 



Land did not have apparent authority.           But like Steelstone, these cases are of limited 

value.    In  CSX   Transportation,   Inc.   v.   Recovery   Express,   Inc.,37   a   federal   court   in 



Massachusetts held that a third party's inference of a purported agent's authority was 



unreasonable as a matter of law when the principal's sole manifestation was the issuance 

to the agent of an email address utilizing the principal's domain name.38            Airline Support 



analogizes CSX to the current case, arguing that Land's possession of Airline Support 



letterhead is insufficient to create apparent authority.   Indeed, many courts have held that 



furnishing someone with the trappings of corporate legitimacy - letterhead, business 



cards, company paraphernalia, etc. - does not necessarily give rise to apparent authority 

as a matter of law.39      But the act of furnishing Land with letterhead was not Airline 



Support's only manifestation; as discussed above, by forwarding the envelope to Land, 



Airline Support also gave rise to the reasonable inference that she was the credit manager 



of its accounts receivable department. 



        37      415 F. Supp. 2d 6 (D. Mass. 2006). 



        38      Id. at 10-11. 



        39      See, e.g., Muscletech Research & Dev., Inc. v. E. Coast Ingredients, LLC , 



No. 00-CV-0753A(F), 2004 WL 941815, at *32 (W.D.N.Y. Mar. 25, 2004) (holding that 

issuance   of   company   credit   card,   business   cards   with   company   logo,   possession   of 

company paraphernalia, and appearing in company advertisements was insufficient to 

create   apparent   authority   were   circumstances   triggered   duty   to   inquire   into   agent's 

purported authority); Asplund v. Selected Invs. in Fin. Equities, Inc. , 103 Cal. Rptr. 2d 34, 

48-49   (Cal.   App.   2000)    (holding   purported   issuance   of   plaque   and   business   cards 

insufficient to create apparent authority); Cowburn v. Leventis, 619 S.E. 2d 437, 448 (S.C. 

App. 2005) (holding that supplying forms and business cards were not sufficient to create 

apparent authority). 



                                                 -17-                                            6685
 


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

                 Airline Support also analogizes this case to Trustees of the Ohio Bricklayers 

Pension Fund v. Skillcraft Systems of Toledo, Inc. ,40 an unpublished opinion from the 



Sixth Circuit.  As ASM argues in response, this case is distinguishable.  In Skillcraft, the 



third party argued that the principal's bookkeeper had apparent authority to execute a 



binding      collective    bargaining     agreement      because     the   principal    had   granted    the 



bookkeeper        authority    to   perform     other   related    functions     in  the   past,   such    as 



communicating with the public and filling out and signing payroll and fringe benefit 

documents that had   a   binding effect upon the principal.41               The court held that prior 



limited   grants   of   authority   like   these   did   not   create   apparent   authority   to   execute   a 

binding collective bargaining agreement.42             The court also emphasized two additional 



details.   First, it expressed skepticism regarding the authenticity of the third party's 



argument, noting that the third party presented no evidence that it had known before the 

litigation began that the bookkeeper had filled   out   the form.43               Second, it favorably 



quoted the district court's conclusion that the third party's argument would have been 



much stronger had the agreement contained spaces for the principal's signature - spaces 



which, along with "anything purporting to be an actual signature," were absent from the 

hard copy of the agreement.44 



                 Unlike Skillcraft, there is nothing that prompts us to doubt the authenticity 



of ASM's argument.          Additionally, the assignment agreement form at issue here came 



        40       99 Fed. Appx. 600 (6th Cir. 2004). 



        41       Id. at 601. 



        42       Id. at 601-02. 



        43       Id . 



        44       Id. at 602 (describing the form's format as "confusing"). 



                                                    -18-                                              6685
 


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

complete with signature lines, and the executed agreement contained what was clearly 



Land's signature.      But even without these differences, Skillcraft is distinguishable.  In 



Skillcraft, the Sixth Circuit held that the kinds of acts the bookkeeper had done in the 



past did not create apparent authority to do a very different kind of act - that is, to 

execute   a   binding   collective   bargaining   agreement.45         But   ASM      does   not   base   its 



argument on the kind of authority Land exercised in the past.                  Rather, ASM bases its 



argument on the fact that Airline Support forwarded the envelope to Land.  As discussed 



above, this fact reasonably gives rise to the inference   that Land was ASM's "credit 



manager";   the   question   remains   whether   a   credit   manager   of   a   company's   accounts 



receivable department would typically have the authority to sell one of the company's 

significant assets.46     Because this question is quite different from the one addressed in 



Skillcraft, that case is not relevant.47 



        45      Id. at 601-02. 



        46       See RESTATEMENT (SECOND) OF AGENCY  27 cmt. a (1958) ("[A]pparent 



authority can be created by appointing a person to a position, such as that of manager or 

treasurer, which carries with it generally recognized duties; to those who know of the 

appointment   there   is   apparent   authority   to   do   the   things   ordinarily   entrusted   to   one 

occupying such a position, regardless of unknown limitations which are imposed upon 

the particular agent."). 



        47       Airline Support presents several other arguments that are both waived and 



unpersuasive.      First, it makes the policy argument that holding that Land had apparent 

authority on these facts will harm small Alaskan businesses, which often rely on outside 

bookkeepers to collect on accounts and debts.   This argument is waived because Airline 

Support failed to raise it below. Millette v. Millette , 177 P.3d 258, 267-68 (Alaska 2008) 

(explaining that issues are waived for purposes of appeal if not adequately raised below). 

In any event, this argument is unpersuasive.   It is just as likely that precluding apparent 

authority in a case like this one, where a reasonable juror could reach the conclusion that 

the third party's reliance on the principal's manifestations was reasonable, could harm 

Alaskan businesses. If this court were to depart from the current reasonableness standard 

                                                                                           (continued...) 



                                                   -19-                                              6685
 


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

V.      CONCLUSION 



                Because whether Land had apparent authority to execute the assignment 



agreement is a disputed question of material fact, we REVERSE and REMAND to the 



        47      (...continued) 



in the way Airline Support seems to suggest,  out-of-state companies like ASM could be 

unsure   about   which   kinds   of   manifestations   they   can   safely   rely   on   and   in   turn   be 

hesitant to contract with Alaskan companies. 



                Second,   Airline   Support   argues   that   its   alleged    repudiation     precludes 

apparent authority.  Because Airline Support raised this argument for the first time in its 

reply brief, it is waived.  See Weiner v. Burr, Pease & Kurtz, P.C., 221 P.3d 1, 6 n.14 

(Alaska   2009).     In   any   case,   the   argument   lacks   merit.  Where   a   principal   timely 

repudiates an agreement entered by an otherwise unauthorized agent, the agreement is 

not ratified.  See Trs. of Am. Fed'n of Musicians & Emp'rs Pension Fund v. Steven Scott 

Enters., Inc., 40 F. Supp. 2d 503, 511 (S.D.N.Y. 1999).  But timely repudiation has no 

bearing on apparent authority in this context. See Bruton v. Automatic Welding & Supply 

Corp.,    513    P.2d   1122,   1126-27     (Alaska    1973)   (treating   ratification   and   apparent 

authority as two distinct and independent bases for binding a principal).  Consequently, 

timely repudiation has no bearing on apparent authority here. 



                Finally, Airline Support implies that ASM had a duty to inquire.                 Again, 

because Airline Support failed to raise this argument in its opening brief, the argument 

is waived.  See   Weiner, 221 P.3d at 6 n.14.   And in any event, it lacks merit.  In Sea Lion 

Corp. v. Air Logistics of Alaska, Inc., this court rejected the argument that the third party 

always has an affirmative duty to investigate the actual extent of the alleged agent's 

authority.    787 P.2d 109, 117 n.3 (Alaska 1990).            Moreover, as the Second Circuit has 

observed, the duty to inquire is merely "an alternative way of asking whether the third 

party reasonably relied on the representations of the agent that he possessed authority to 

bind the principal."     Herbert Const. Co. v. Cont'l Ins. Co. , 931 F.2d 989, 996 (2d Cir. 

1991).     By   analyzing   whether   ASM's   reliance   was   reasonable,   we   have   effectively 

addressed whether ASM had a duty to inquire as a matter of law.                   We do not need to 

separately analyze the issue in this case.   Although there may be circumstances in which 

investigating   the   scope   of   the   purported   agent's   authority   is   the   third   party's   only 

reasonable course of action, we decline to consider them here. 



                                                  -20-                                             6685
 


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

superior court for further proceedings.   Accordingly, we also VACATE the superior 

court's order awarding ASM full reasonable fees.48 



      48      Because we remand to the superior court for further proceedings regarding 



the assignment agreement's enforceability, we do not reach ASM's cross-appeal as to 

whether it is contractually entitled to fees incurred in bankruptcy court. 



                                           -21-                                      6685 


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

WINFREE, Justice, concurring. 



              I agree with the court's conclusion that the summary judgment ruling in 



favor of ASM Capital II. L.P., must be reversed and the matter remanded for trial on the 



reasonableness of ASM's reliance on Katie Land's position as "accounting manager" for 



apparent authority to enter into the contract on behalf of Airline Support, Inc. There is 



no dispute that ASM sent its offer to Airline Support's "A/R - Credit Manger" at its 



Anchorage office, that Airline Support routed the mail to Land, that Land was Airline 



Support's "accounting manager," and that Land responded to ASM using that title on 



Airline Support letterhead.  In my view it is unnecessary to delve into questions about 



whether Airline Support's internal workings were or were not manifested to ASM for 



purposes of apparent authority or what may or may not be manifested by the mere use 



of company letterhead.    I therefore do not join in that portion of today's decision.  The 



only issue reasonably in dispute is the issue remanded for trial: whether Land's company 



title of "accounting manager" would reasonably manifest apparent authority to enter into 



the contract tendered by ASM.    I agree with this portion of today's decision. 



                                           -22-                                     6685
 


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

STOWERS, Justice, concurring in part and dissenting in part. 



                I agree that there is a genuine issue of material fact as to whether Airline 



Support's accounting manager, Katie Land, had apparent authority to execute ASM 



Capital's assignment agreement.           The court concludes that a genuine issue of material 



fact arises from the third factor in our apparent authority analysis, namely, that on the 



state of the evidence it cannot be said as a matter of law that ASM acted reasonably in 



relying on the principal's (Airline Support's) manifestations to the third party (ASM) of 



the agent's (Katie Land's) authority to bind Airline Support to the assignment agreement. 



I agree with this determination and to this extent concur with the court's opinion. 



                I disagree with the court's conclusion that there are no genuine issues of 



material fact with respect to the first factor in our apparent authority analysis.  The first 



factor   looks   to   "the   manifestations   of   the   principal   to   the   third   party"   to   determine 



whether the principal has signaled, by word or deed, that the agent has authority to act 

on the principal's behalf.1     The court concludes that because Airline Support gave Land 



the title "accounts manager," because it provided Land with company stationery, because 



it sent ASM's offer and assignment agreement to Land in Georgia, and because it sent 



Land the relevant billings from Airline Support to Northwest Airlines, these facts are 



"manifestations" of Land's authority to execute the assignment agreement as a matter of 



law. 



                The court is mistaken.         These facts might be accepted by a factfinder  as 



sufficient to establish a manifestation by the principal of authority in the agent, but these 



facts,   in   the   context   of   all   of   the   relevant   facts,   do   not   establish   a   manifestation   of 



apparent authority as a matter of law. 



        1       Anderson   v. PPCT Mgmt. Sys., Inc ., 145 P.3d 503, 509 (Alaska 2006) 



(citing RESTATEMENT (SECOND) OF AGENCY  8 cmt. b, 27 (1958)). 



                                                   -23-                                               6685 


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

              This appeal comes to the court from summary judgment granted by the 



superior court.   The question is whether there are any genuine issues of material fact 

proffered by the opponent of summary judgment.2         If there is a single genuine issue of 



material fact, summary judgment is precluded. I believe that the court overlooks several 



critical genuine issues of material fact. 



              Airline Support's president, director, and sole shareholder, Donald Tulin, 



provided the superior court with an affidavit in which he swore: 



              I emphasize that the corporation was unaware of the transfer 

              of the corporate claim by bookkeeper, Katie Land, until after 

              the fact.  I emphasize that Airline Support, Inc.'s Board of 

              Directors did not authorize the transfer of its claim, and when 

              the transfer was discovered, the corporation took action by 

              contacting ASM and attempting to resolve this matter, and 

              also took action to set the transfer aside. 



Tulin also attested: 



              Katie Land is, in fact, a bookkeeper.     She does not sit on the 

              Board of Directors; she is not a signatory on the corporation's 

              bank accounts; she does not buy or sell corporate assets in the 

              normal course of our business; and . . . her transfer of [Airline 

               Support's] claims to ASM was a mistake. 



These affidavit statements are sufficient to raise a genuine issue of material fact as to the 



factual question whether Land had apparent authority to bind Airline Support to the 



terms of ASM's assignment agreement, including the question whether Airline Support 

did or said anything to create an appearance of authority in its agent, Land.3 



       2      Alaska R. Civ. P. 56(c). 



       3      It is undisputed that neither Airline Support's president, director, and sole 



shareholder, Donald Tulin, nor anyone at Airline Support's office in Anchorage, ever 

communicated directly with ASM prior to ASM's receipt of the assignment agreement 

signed by Land. 



                                             -24-                                       6685
 


----------------------- Page 25-----------------------

                 The factual context is critical to the proper analysis.   ASM sent a letter and 



an Assignment of Claim Agreement to Airline Support seeking to purchase, at "deep 



discount,"   amounts   owed   to   Airline   Support   by   Northwest   Airlines,   which   was   in 



bankruptcy.      The assignment form contains the following language: 



                 Assignor   represents   and   warrants   that   it   .   .   .   has   the   full 

                 authority to enter into this Agreement and that the individuals 

                 whose signatures appear below hereby expressly represent 

                 that they have the authority to bind the party for which they 

                 sign this Agreement. 



                                          * * * 



                 This    Agreement       shall  be   governed     by   and   construed     in 

                 accordance with the laws of the State of New York . . . . Any 

                 action    under    or  relating   to  this  Agreement   may       only   be 

                 brought   in   any    State   or   Federal   court   located   in   Nassau 

                 County,      in  the  State   of  New     York.    .  .  .  In  any  action 

                 hereunder the Assignor waives the right to demand a trial by 

                 jury. 



                                           * * * 



                 Assignor will indemnify Assignee . . . and save [it] harmless 

                 from and against all claims, actions, liabilities and Assignee 

                 shall    not  be   liable  for   any   damages,     or   any   lost  profits 

                 whatsoever,   relating   to   the   performance   of   its   obligations 

                 hereunder. 



What is important to understand is that the assignment agreement did not merely seek 



Airline     Support's     assent   to  sell  its  Northwest     Airlines    accounts     receivable.      The 



agreement also sought Airline Support's promises to bestow huge litigation benefits on 



ASM in the event that litigation ensued. Putting aside the question whether Land, Airline 



Support's account manager and bookkeeper, had authority to sell the accounts receivable, 



there   was   no   evidence   proffered   by   ASM   (other   than   the   fact   that   Land   signed   the 



agreement and used company stationery in her correspondence with ASM) that Land had 



                                                    -25-                                               6685
 


----------------------- Page 26-----------------------

authority   to:   waive   Airline   Support's   right   to   jury   trial;   bind   Airline   Support   to   an 



indemnification and hold harmless agreement; and give up Airline Support's right to seek 



damages   or   lost   profits   from   ASM.      What   bookkeeper   or   accounts   manager   (whose 



authority did not even include being a signatory on Airline Support's checks, according 



to   Tulin's    affidavit)   has  the   authority   to  bind   its  employer     to  such    one-sided    and 



potentially     devastating     promises,     even   where     she   received    her   employer's      billing 



statements, company stationery, and an unopened letter soliciting a purchase at deep 



discount   of   the   company's   accounts   receivable?   And   based   on   what?   -   the   agent's 



signature to a form contract prepared by the third party that states that she "represents and 



warrants that [she] . . . has the full authority to enter into this Agreement and that [she] 



. . . expressly represent[s] that [she] ha[s] the authority to bind the party for which [she] 



sign[s] this Agreement." 



                 But it never is the case that a third party can bind the principal based on the 

agent's representation of authority.4         Yet that appears to be exactly what has happened in 



this case.    Because I believe there are genuine issues of material fact as to both the first 



factor (manifestation by the principal) and third factor (reasonable reliance by the third 



party)   of   this   court's   apparent   authority   analysis,   I   dissent   in   part   from   the   court's 

opinion.5 



        4        RICHARD A. LORD , 12 WILLISTON ON CONTRACTS   35:12 (4th ed. 1990) 



("Agents   often   attempt   to   create   an   appearance   of   authority       by   their   own   acts   or 

statements, but such an appearance does not create apparent authority; the principal is 

only liable for the appearance of authority caused by the principal's own conduct."). 



        5        There is an important issue unaddressed by the parties and the superior 



court, and not at issue on appeal.           Because there are genuine issues of material fact, at 

least   as  to  the   reasonableness      of   ASM's     reliance    on  Airline    Support's     purported 

manifestations giving rise to Land's apparent authority to bind Airline Support, the case 

is being remanded for trial.  But tried by who?             Airline Support filed a demand for jury 

                                                                                             (continued...) 



                                                    -26-                                               6685
 


----------------------- Page 27-----------------------

       5      (...continued) 



trial. ASM's form contract provides that Airline Support has waived its right to jury 

trial. The superior court granted   ASM's motion for an order providing that Airline 

Support is not entitled to a jury trial.  But whether Airline Support's  waiver of trial by 

jury is valid depends on whether Land had apparent authority to bind Airline Support to 

all terms of the assignment agreement, and that will be the subject of the trial. To the 

extent that ASM relied on Airline Support's purported waiver of jury trial in its motion, 

the superior court's reliance on that waiver may have been premature. 



                                            -27-                                       6685 

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