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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Sea Hawk Seafoods, Inc. v. City of Valdez (7/27/2012) sp-6699

Sea Hawk Seafoods, Inc. v. City of Valdez (7/27/2012) sp-6699

        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 



SEA HAWK SEAFOODS, INC.,                        ) 

an Alaskan corporation,                         )       Supreme Court Nos. S-14078/14098 

                                                ) 

                Appellant and                   )       Superior Court No. 3VA-07-00014 CI 

                Cross-Appellee,                 ) 

                                                )      O P I N I O N 

        v.                                      ) 

                                                )      No. 6699 - July 27, 2012 

CITY OF VALDEZ,                                 ) 

a municipal corporation,                        ) 

                                                ) 

                Appellee and                    ) 

                Cross-Appellant.                ) 

                                                ) 



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

                Judicial District, Valdez, Daniel Schally, Judge pro tem. 



                Appearances:  James E. Torgerson and Leonard J. Feldman, 

                Stoel   Rives   LLP,   Anchorage,   for   Appellant.     William   M. 

                Walker     and    Joseph    N.  Levesque,     City   of   Valdez,    for 

                Appellee. 



                Before: Carpeneti, Chief Justice, Fabe, and Stowers, Justices. 

                [Winfree and Christen, Justices, not participating.] 



                STOWERS, Justice. 



I.      INTRODUCTION 



                Sea Hawk Seafoods, Inc. sued the City of Valdez for damages after Valdez 



applied for a grant from the State of Alaska for funding to convert Sea Hawk's seafood 


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processing facility into a fish meal plant but then declined to accept the $600,000 grant 



that the State conditionally awarded to Valdez.  On pre-trial motions, the superior court 



dismissed Sea Hawk's claims for breach of contract, breach of an agreement to negotiate, 



and    breach   of  a  duty  to  negotiate  in  good   faith.  Valdez    and   Sea  Hawk    filed 



cross-motions for summary judgment on Sea Hawk's remaining claim for promissory 



estoppel, which the court denied.     Shortly before trial, the court dismissed Sea Hawk's 



promissory estoppel claim as a discovery sanction.  Sea Hawk and Valdez both appeal. 



               Sea Hawk's claims are based on statements made and a letter sent by the 



Valdez City Manager to the owner of Sea Hawk.  Because these communications, even 



when viewed in the light most favorable to Sea Hawk, are insufficient as a matter of law 



to   support  Sea   Hawk's    claims,  we   affirm  the  superior  court's  rulings  dismissing 



Sea Hawk's breach of contract and negotiation claims, but we reverse the court's ruling 



denying Valdez summary judgment on Sea Hawk's promissory estoppel claim. 



II.    FACTS AND PROCEEDINGS 



       A.      Facts 



               Sea Hawk owned and operated a seafood processing plant in Valdez.  In 



2003 in response to declining salmon prices, the State established the Fisheries Economic 



Development Grant Program to assist qualifying businesses in the seafood industry. 



Sea Hawk was struggling to survive as a traditional seafood processor at that time, so 



Terry    Bertoson,   Sea  Hawk's    owner    and  sole  shareholder,   developed    a  plan  with 



Norquest Seafoods, Inc. to convert Sea Hawk's processing facility into a fish meal plant. 



Sea Hawk agreed to contribute its existing buildings and equipment, Norquest agreed to 



contribute meal plant equipment, and the grant would provide the funds necessary to 



purchase and install additional odor abatement equipment.  Bertoson initially planned to 



submit his own proposal directly to the State, but decided to ask Valdez to submit the 



                                               -2-                                         6699
 


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

grant application in order to demonstrate to the State that the project would benefit not 



only a private business but also the local community. 



                In April 2003 Bertoson contacted David Dengel, the Valdez City Manager, 



and requested that Valdez submit the grant application on Sea Hawk's behalf. According 



to Bertoson, Dengel indicated Valdez would be interested in supporting the project and, 



in the course of their discussions over the next two months, promised him Valdez would 



submit the grant application and, if awarded the grant, pass the funds through to Sea 



Hawk. 



                In May 2003 Bertoson sent a draft grant application to Dengel.  On May 27 

Dengel presented the plan to the Valdez City Council at a work session.1                     Bertoson 



claims that after this work session, Dengel informed him the City Council had approved 



the project and reiterated his earlier promise that Valdez would submit the application 



and, if awarded the grant, pass the funds through to Sea Hawk.  On May 30 Dengel sent 



Bertoson a letter confirming Valdez's support for the grant application and outlining the 



remaining issues to be resolved.        The letter stated: 



                I am finalizing the application for [the] Fisheries Economic 

                Development Matching Grant Program grant.                If the City is 

                successful in the application process for the Fish Meal Plant, 

                there are a number of issues   that will need to be resolved 

                before the City accepts the grant. 



                As I have indicated previously, the City will not be putting 

                any of its own funds into the project.           Any match or cost 

                overruns will need to be covered by you and any partners. 

                Because this is a pass through grant, there will need to be 

                assurance[s]      in  place   that   indemnify     the  City   for   any 

                compliance   issues   that   may   arise   in   the   future. Since   the 

                State    in  the  application    states  that  the   Program     is  still 



        1       A work session is an informal meeting where the City Council receives and 



reviews information; no official decisions are made at a work session. 



                                                  -3-                                               6699 


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

                evolving all of the policy decisions have not yet been made. 

                Another recurring issue is one of odor from the plant.  There 

                will need to be assurances that the plant will not produce an 

                offensive odor. Once the State informs the City as to whether 

                we    received    the  grant   we   will  need   to  put  together   an 

                agreement that addresses all of these issues and any others 

                that will arise[] between now and then. 



                If  the   City  is  not  successful    in  getting   the  grant   funds 

                requested for the fish meal plant, the City is not responsible 

                for the failure if any of Sea Hawk Seafoods. 



                Terry,    the   City   is  supportive     of  the   project   and    the 

                commercial fishing industry, we just need to make sure that 

                the City is protected and indemnified. 



Bertoson emailed Dengel that same day, agreeing to Valdez's conditions and asking 



whether there was anything he needed to do.            Dengel replied: "You do not need to do 



anything with the letter it is standard on the City's part." 



                Valdez     submitted    the  grant   application,    requesting    $950,000    for   the 



proposed fish meal plant.       The grant program required local government applicants to 



provide a resolution of support for their grant application.             On June 2, 2003, the City 



Council passed a formal resolution of support, stating: "The City of Valdez supports the 



State of Alaska Fisheries Economic Development Grant Application for a Fish Meal 



Plant." 



                In August 2003 state officials visited Sea Hawk's facility in Valdez and 



prepared an analysis of the proposed fish meal plant, noting several issues with the 



proposal.     The    report   recommended       the  State   set   aside  $600,000   for  the  project, 



contingent upon these issues being addressed. 



                On March 15, 2004, the State notified Valdez it had been selected as a 



"potential    recipient"    of  a  $600,000    grant   and   asked   Valdez    to  submit   additional 



information about the proposal.         On April 1 Dengel sent Bertoson a letter stating that 



                                                  -4-                                            6699
 


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

Valdez had received a $600,000 grant but would not accept it until it had negotiated an 



agreement with Sea Hawk:         "Be advised that even though the City has been notified of 



a grant award, the City has yet to accept the grant funds.           Acceptance of the grant is 



contingent upon an agreement being successfully negotiated between the City, SeaHawk 



Seafoods, and Norquest."       At a City Council meeting on April 5, council members and 



local citizens voiced concerns about odors from the proposed fish meal plant impacting 



the town's tourist industry.      The City Council decided to request proposals for a fish 



meal plant located outside the harbor area of town, but did not receive any proposals in 



response to its request.     On May 3, despite continuing concerns about potential odor 



issues, the City Council voted to negotiate an agreement with Sea Hawk for the operation 



of a fish meal plant. Valdez and Sea Hawk went through several proposed contracts, but 



were ultimately unable to reach a final agreement. 



                The State notified Valdez that it had until December 23, 2004, to make a 



decision   regarding   the   grant   award. On   December   20   a   council   member   moved   to 



approve a final agreement with Sea Hawk and the motion failed.  Consequently, Valdez 



did not accept the $600,000 grant.       Sea Hawk continued operating for a few weeks in 



2005 and 2007 before closing and selling its facility in 2008. 



        B.      Proceedings 



                In December 2006 Sea Hawk filed a complaint for damages against Valdez 



alleging six causes of action: (1) breach of contract; (2) promissory estoppel; (3) breach 



of a duty to negotiate in good faith; (4) breach of an agreement to negotiate a contract; 



(5) breach of fiduciary duties; and (6) failure to expend appropriated money.            Over the 



next three years, Superior Court Judge   pro tem Daniel Schally dismissed all of Sea 



Hawk's claims except for promissory estoppel, on motions for summary judgment and 



judgment on the pleadings. 



                                                -5-                                           6699
 


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

                In   August     2009   both   parties   moved     for  summary      judgment     on  the 



promissory estoppel claim.          The superior court denied both parties' motions, ruling 



"[f]actual issues remain including most importantly whether an actual promise was made 



by the City to Sea Hawk." 



                In September 2010, shortly after deposing Sea Hawk's expert witnesses, 



Valdez filed a motion to compel discovery, alleging Sea Hawk had failed to respond to 



discovery requests and produce all of the materials its experts relied on in calculating 



Sea Hawk's damages.  Valdez asked the court to exclude Sea Hawk's expert witnesses 



from   testifying   at   trial   or,   alternatively,   to   impose   litigation-ending   sanctions   under 



Alaska Civil Rule 37(b).  On October 12, the day before trial was scheduled to begin, the 



superior court granted Valdez's motion for litigation-ending sanctions and entered a final 



judgment in favor of Valdez. 



                Sea Hawk and Valdez both appeal.  Sea Hawk contends the superior court 



erred by dismissing its breach of contract claim on the pleadings under Alaska Civil Rule 



 12(c), dismissing its claims for breach of an agreement to negotiate and breach of a duty 



to negotiate in good faith on summary judgment, and dismissing its promissory estoppel 



claim   as   a   discovery   sanction   under   Alaska   Civil   Rule   37(b). Valdez   contends   the 



superior   court   erred   by   denying   its   motion   for   summary   judgment   on   Sea   Hawk's 



promissory estoppel claim. 



III.    STANDARD OF REVIEW 



                We review the superior court's rulings under Alaska Civil Rule 12(c) and 

on summary judgment de novo.2           The standard for a Rule 12(c) motion is identical to the 



standard for a summary judgment motion: the superior court will grant the motion only 



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



(Alaska     2002)    (summary      judgment);     Hebert    v.  Honest    Bingo,    18   P.3d   43,   46 

(Alaska 2001) (judgment on the pleadings). 



                                                  -6-                                               6699 


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

if there are no genuine issues of material fact and, drawing all inferences in the light most 



favorable to the non-moving party, the moving party is entitled to judgment as a matter 

of   law.3  A   Rule   12(c)   motion   is   based   solely   on   the   pleadings,   while   a   summary 



judgment motion may be supported by evidence outside the pleadings, such as affidavits, 

and depositions.4 



IV.	    DISCUSSION 



        A.	     The     Superior     Court     Properly     Dismissed     Sea   Hawk's      Breach     Of 

                Contract Claim Under Civil Rule 12(c). 



                 Sea Hawk contends the superior court erred by dismissing its breach of 



contract   claim,   arguing   it   alleged   all   of   the   essential   elements   of   a   contract   in   its 



complaint and whether those allegations established a valid contract is a question of fact 



to be resolved at trial.     A valid contract requires "an offer encompassing all essential 

terms, unequivocal acceptance by the offeree, consideration, and an intent to be bound."5 



Valdez      argues,    as  it  did   in  its  motion     to  dismiss    Sea    Hawk's     claim    under 



Civil Rule 12(c), that Sea Hawk's pleadings failed to allege an unequivocal expression 



        3       See Valdez Fisheries, 45 P.3d at 664 (citing Reeves v. Alyeska Pipeline 



Serv.   Co.,   926   P.2d   1130,   1134   (Alaska   1996));  Hebert ,   18   P.3d   at   46-47   (citing 

Jennings v. State , 566 P.2d 1304, 1310 n.23 (Alaska 1977)). 



        4       See Alaska R. Civ. P. 12(c) ("After the pleadings are closed but within such 



time as not to delay the trial, any party may move for judgment on the pleadings. If, on 

a motion for judgment on the pleadings, matters outside the pleadings are presented to 

and    not   excluded    by   the  court,  the   motion    shall  be  treated   as  one   for  summary 

judgment . . . .");  Hebert, 18 P.3d at 46 ("The purpose of a Rule 12(c) motion   is to 

'provide a means of disposing of cases when the material facts are not in dispute and a 

judgment on the merits can be achieved by focusing on the content of the pleadings and 

any facts of which the court will take judicial notice.' ") (quoting 5A CHARLES ALAN 

WRIGHT     & ARTHUR  R. MILLER , FEDERAL  PRACTICE   AND  PROCEDURE  2D  1367, at 

509-10 (1990)). 



        5       Davis v. Dykman , 938 P.2d 1002, 1006 (Alaska 1997). 



                                                   -7-	                                            6699
 


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

of acceptance.       We therefore examine Sea Hawk's complaint to determine whether it 



contains any factual allegations that could   directly or inferentially be considered an 

unequivocal expression of acceptance.6 



                 Sea Hawk alleged that it offered Valdez the right to use its fish meal plant 



proposal to apply for a grant from the State and that the May 30, 2003 letter from Dengel 



to Bertoson, which is set out verbatim in the complaint, confirmed Valdez's acceptance 



of this offer.    Sea Hawk also alleged the City Council ratified this agreement when it 



passed a formal resolution of support for the grant application on June 2, 2003.  On 



appeal, Sea Hawk maintains that Valdez's acceptance is reflected in the May 30 letter. 



                 In   Valdez     Fisheries     Development       Association      v.  Alyeska     Pipeline 



Service Co., we held that a plaintiff failed to allege unequivocal acceptance under similar 

circumstances.7       In   that   case   we   examined   a   letter   from   Alyeska   informing   Valdez 



Fisheries that its proposal for a wildlife rehabilitation center had been selected as the 



winning   bid   and   stating   the   parties   would   begin   to   negotiate   a   contract   as   soon   as 

possible.8    The   parties'   negotiations   were   unsuccessful,   and   Valdez   Fisheries   sued 



Alyeska for breach of contract.9        We affirmed the superior court's dismissal of the claim 



under Alaska Civil Rule 12(b)(6), holding Alyeska's award letter did not communicate 



unequivocal acceptance of Valdez Fisheries' offer: 



        6        See Valdez Fisheries, 45 P.3d at 665. 



        7       Id . at 664-65. 



        8       Id . at 663-64.  Sea Hawk was also a party to this case - Valdez Fisheries 



had entered into an agreement with Sea Hawk to purchase its processing plant for use as 

a wildlife rehabilitation center if Alyeska awarded Valdez Fisheries the contract for the 

center.  Id . at 662-63. 



        9       Id . at 664-65. 



                                                    -8-                                              6699
 


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

                 The   letter's   second   paragraph   contains   the   language   most 

                 strongly    supporting     Valdez    Fisheries'    contract   claim.     It 

                 states, "you have been selected as the winning bidder."  But 

                 this   language   does   not   unequivocally   express   acceptance 

                because       it  is  susceptible     to   at  least   two    alternative 

                 interpretations.    These words could mean either "we accept 

                your     bid   as  written,"    or  "we    have    chosen    you   as   the 

                 contractor with whom we will negotiate."  The remainder of 

                 the   letter   fully   resolves   this   ambiguity. The   letter's   next 

                paragraph . . . states that "[w]e intend to begin the process of 

                negotiating   a   contract   as   soon   as   possible."  This   passage 

                requires a conclusion that Alyeska was not communicating an 

                unequivocal acceptance of Valdez Fisheries' offer.[10] 



                 Here,    the   May    30   letter  stated   Dengel     was    "finalizing    the   [grant] 



application" but warned "[i]f the City is successful in the application process . . . there 



are a number of issues that will need to be resolved before the City accepts the grant." 



It also noted that the State's grant program was "still evolving" and "all of the policy 



decisions have not yet been made."            The letter concluded "[o]nce the State informs the 



City as to whether we received the grant we will need to put together an agreement that 



addresses all of these issues and any others that will arise[] between now and then." 



Even     when    viewed     in  the  light   most   favorable   to  Sea   Hawk,   the    letter  does   not 



communicate   unequivocal   acceptance   of   an   offer.          Rather,   it   demonstrates   Valdez 



contemplated entering into a future agreement with Sea Hawk addressing various issues 



- both those set forth in the letter and any others that might arise in the meantime - 



after the State finalized the grant program and determined whether to award a grant to 



Valdez. 



                Nor     does    the   City   Council's     June    2,  2003    resolution     of  support 



communicate        unequivocal      acceptance.      The    resolution    simply    stated   that  Valdez 



        10      Id. 



                                                    -9-                                                6699 


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

supported   the   grant   application:   "The   City   of   Valdez   supports   the   State   of   Alaska 



Fisheries Economic Development Grant Application for a Fish Meal Plant."  It did not 



state or imply the City Council was agreeing to unequivocally accept the grant if the 



State awarded it, or agreeing to pass those funds through to Sea Hawk. 



                Thus, the letter and resolution Sea Hawk relied on to demonstrate Valdez's 



acceptance of Sea Hawk's offer do not communicate unequivocal acceptance and are, 



therefore, insufficient as a matter of law to support Sea Hawk's breach of contract claim. 



Nor do any other allegations in Sea Hawk's complaint support a reasonable inference of 



unequivocal   acceptance.        Accordingly,   we   affirm   the   superior   court's   dismissal   of 

Sea Hawk's breach of contract claim under Civil Rule 12(c).11 



        B.	     Valdez      Was     Entitled    To    Summary        Judgment       On    Sea   Hawk's 

                Promissory Estoppel Claim. 



                Valdez contends the trial court erred by denying its motion for summary 

judgment on Sea Hawk's promissory estoppel claim. 12                 Valdez argues, as it did in its 



summary judgment motion, that Sea Hawk's allegations failed to establish an "actual 



        11      Valdez also argued in its motion to dismiss Sea Hawk's breach of contract 



claim and on appeal that no valid contract was formed as a matter of law because neither 

the   May   30   letter   nor   the   City   Council   resolution   complied   with   Valdez's   charter 

provisions requiring that all contracts be authorized by the council, signed by the mayor 

and   city   clerk,   and   approved   by   the   city   attorney. Because   we   hold   the   letter   and 

resolution did not communicate unequivocal acceptance, we do not reach the issue of 

whether, even if Sea Hawk had alleged all of the necessary elements of a contract, its 

contract claim would fail as a matter of law for failure to comply with Valdez's charter 

requirements. 



        12      Valdez   also   challenges   several   of   the   superior   court's   rulings   striking 



evidence   offered   in   support   of   its   summary   judgment   motion   and   in   opposition   to 

Sea Hawk's summary judgment motion.  Because we do not rely on any of this excluded 

evidence in holding that Valdez was entitled to summary judgement on Sea Hawk's 

promissory   estoppel   claim,   the   error,   if   any,   was   harmless.   Therefore,   we   do   not 

separately analyze those issues. 



                                                  -10-	                                            6699
 


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

promise."13     Sea   Hawk   contends   it   produced   sufficient   evidence   to   at   least   create   a 



question of fact regarding whether Valdez made an actual promise, relying, as it did in 



its summary judgment motion, on Dengel's alleged oral promises to Bertoson and the 



May 30 letter. 



                 A   party   must   allege   four   elements   to   support   a   claim   for   promissory 



estoppel:   "(1)   an   actual   promise   that   induced   action   or   forbearance;   (2)   the   action 



induced was actually foreseen or reasonably foreseeable; (3) the action amounted to a 



substantial change in position; and (4) enforcement of the promise is necessary in the 

interest of justice."14   An actual promise must be "definitive, . . . very clear, . . . and must 



use precise language."15       "An actual promise is 'analytically identical' to the acceptance 



of an offer in contract law," meaning the promise "must manifest an unequivocal intent 

to be bound."16     "Were it otherwise, promissory estoppel, which is intended 'to enable 



courts to enforce contract-like promises made unenforceable by technical defects or 



        13       Alternatively,   Valdez   argues   Sea   Hawk's   promissory   estoppel   claim   is 



barred by its discretionary function immunity under AS 09.65.070(d)(2) and Ellis v. City 

of Valdez, 686 P.2d 700, 705-06 (Alaska 1984), in which we held that a city's decision 

to   spend   appropriated   funds   is   generally   discretionary   absent   a   legislative   mandate 

directing the city to use the funds to accomplish a specific purpose.                  Because we hold 

Sea Hawk's pleadings failed to establish the "actual promise" element of promissory 

estoppel, we do not reach this alternative argument. 



        14       Safar   v.   Wells   Fargo   Bank,   N.A.,   254   P.3d   1112,   1117   (Alaska   2011) 



(internal quotation marks omitted). 



        15      Id. at 1119 (quoting Alaska Trademark Shellfish, LLC v. State, Dep't of 



Fish & Game , 172 P.3d 764, 767 (Alaska 2007)). 



        16      Alaska Trademark Shellfish , 172 P.3d at 767 (quoting Brady v. State , 965 



P.2d 1, 6, 11 (Alaska 1998)). 



                                                   -11-                                              6699
 


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

defenses,' would become a device by which parties could be held to contracts they did 

not accept."17 



                 Valdez   Fisheries  is   once   again   instructive.   In   addition   to   a   breach   of 



contract claim, Valdez Fisheries asserted a promissory estoppel claim against Alyeska 

based on the award letter stating "you are the winning bidder."18  Because we had already 



held    the  letter  did   not   constitute   unequivocal   acceptance         of  an  offer   for  contract 



purposes, "[i]t therefore was not an 'actual promise,' and thus fails as a matter of law to 

satisfy the 'actual promise' element of promissory estoppel."19               Likewise in this case, we 



have already held the May 30, 2003 letter from Dengel to Bertoson does not constitute 



unequivocal acceptance of an offer for contract purposes.  This letter therefore "fails as 

a matter of law to satisfy the 'actual promise' element of promissory estoppel."20 



                 We   also hold that Dengel's alleged oral promises were not sufficiently 



specific to constitute an "actual promise" for promissory estoppel purposes.                      Bertoson 



alleged in an affidavit that at some point during his discussions with Dengel in April and 



May 2003, Dengel promised him "the City would submit the grant application for the 



fish meal plant at Sea Hawk's facility in the City's name, and if the State . . . awarded the 



grant, then the City would 'pass through' those funds to Sea Hawk."                     Bertoson alleged 



Dengel "reiterated his earlier promise on behalf of the City" after the May 27, 2003 City 



Council   work   session,   but   also   "advised   that   the   City   had   three   conditions   prior   to 



submitting the Sea Hawk grant application."   Three days after this alleged conversation, 



         17      Valdez FisheriesDev. Ass'n v. Alyeska Pipeline Serv. Co. , 45 P.3d 657, 668 



(Alaska 2002) (quoting Brady , 965 P.2d at 11). 



         18      Id . at 668-69. 



         19      Id . at 668. 



        20       Id . 



                                                    -12-                                               6699
 


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

Dengel sent the May 30 letter outlining Valdez's conditions, informing Sea Hawk these 



issues would need to be resolved before Valdez accepted the grant funds, and stating the 



parties would need to enter in to an agreement once the State decided whether to award 



Valdez the grant. Thus, even assuming Dengel made such promises, he alerted Bertoson 



that Valdez would not accept the grant unconditionally and then specifically outlined 



those conditions in the May 30 letter. 

               Sea Hawk relies on Zeman v. Lufthansa German Airlines21 to argue these 



alleged oral promises at least create a question of fact regarding whether Valdez made 



an actual promise to Sea Hawk.         In Zeman we considered whether letters exchanged 



between an airline and the owner of an apartment building established mutual assent to 



enter into a binding contract to lease the owner's building as accommodations for the 

airline's flight crews.22  The parties had previously discussed the proposal in detail over 



dinner, including the number of units needed, cost per unit per month, and the length of 

the proposed lease.23    We held the parties' letters were ambiguous and, therefore, must 



be interpreted in light of the parties' previous discussions, which raised questions of fact 

that could not be resolved on summary judgment.24 



               Unlike Zeman, where the parties' ambiguous letters had to be interpreted 



in light of their more detailed verbal discussions regarding terms, conditions, and prices, 



Dengel's alleged oral promises were general and his letter more specific.  These alleged 



        21     699 P.2d 1274 (Alaska 1985). 



        22     Id . at 1278-79, 1281. 



        23     Id . at 1278. 



        24     Id . at 1281-82. 



                                               -13-                                          6699
 


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

oral promises were not sufficiently "definitive," "clear," and "precise" to constitute an 

actual promise, particularly when considered in conjunction with the May 30 letter.25 



                Because Sea Hawk's allegations, even if accepted as true, do not establish 



that   Valdez   made   an   actual   promise   to   Sea   Hawk,   Valdez   was   entitled   to   summary 



judgment on Sea Hawk's promissory estoppel claim and the superior court should have 

granted Valdez's summary judgment motion.26 



        25      Safar   v.   Wells   Fargo   Bank,   N.A.,   254   P.3d   1112,   1119   (Alaska   2011) 



(quoting Alaska Trademark Shellfish, LLC v. State, Dep't of Fish & Game , 172 P.3d 764, 

767 (Alaska 2007)). 



        26      In light of our holding that Valdez was entitled to summary judgment on 



Sea Hawk's promissory estoppel claim, we need not determine whether the superior 

court abused its discretion in dismissing this claim as a discovery sanction under Civil 

Rule 37(b).      However, we   take this opportunity to reiterate that this is an "extreme 

sanction which should be used only in extreme cases." Hughes v. Bobich , 875 P.2d 749, 

752 (Alaska 1994).   "[A] party should not be barred from his or her day in court where 

an alternative remedy would suffice to make the adverse party whole."                    Sandstrom & 

Sons, Inc. v. State, 843 P.2d 645, 647 (Alaska 1992).  Therefore, a trial court is required 

to   make    several   specific    findings   before    imposing    litigation-ending     sanctions    - 

including a finding that the noncompliant party willfully violated a specific court order 

- and carefully consider alternative remedies.  See Whittle v. Weber, 243 P.3d 208, 214 

(Alaska 2010).      A party's "general abuse of the discovery process" or "broader pattern 

of discovery abuse" is not an appropriate basis for litigation-ending sanctions because 

the party's "attitude in the abstract" is not at issue; rather, the sanctions must be based 

on a party's violation of a specific discovery order.           See Hughes, 875 P.2d at 754 n.5; 

Otis Elevator Co. v. Garber, 820 P.2d 1072, 1074 (Alaska 1991); see also Alaska R. Civ. 

P. 37(b)(2) (allowing a court to impose sanctions when a party "fails to obey an order 

to provide or permit discovery . . . .") (emphasis added). 



                Here, the superior court's order imposing litigation-ending sanctions did 

not   identify   a   specific   discovery   order   that   Sea   Hawk   failed   to   comply   with   or   the 

discovery materials that Sea Hawk failed to produce.  Instead, the court appeared to rely 

on Sea Hawk's general pattern of discovery abuse, describing the "long and tortured 

history of discovery issues and problems in this case."             Additionally, the court did not 

                                                                                         (continued...) 



                                                  -14-                                             6699
 


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

        C.	     The     Superior     Court    Properly     Dismissed     Sea   Hawk's      Claims     For 

                Breach Of An Agreement To Negotiate And Breach Of A Duty To 

                Negotiate In Good Faith On Summary Judgment. 



                 Sea    Hawk    also   contends    the   superior   court   erred   by   dismissing     its 



negotiation claims on summary judgment.               In granting Valdez's motion for summary 

                                                                                                 27   and 

judgment      on   these   issues,   the   superior    court   relied  on   Valdez     Fisheries 

A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chemical Group, Inc.28 



to rule: "The linchpin is the Dengel letter of May 30, 2003.              This letter is too indefinite 



to   constitute   a   letter   of   intent." Sea   Hawk   argues,   as   it   did   in   its   motion   opposing 



Valdez's summary judgment motion, that the May 30 letter was sufficiently definite to 



constitute a binding agreement to negotiate and established a duty to negotiate in good 



faith. 



                The     cases   the  superior    court   relied  on   outline   the  requirements      for 



establishing an enforceable agreement to negotiate giving rise to a duty to negotiate in 



good   faith.   In  Valdez   Fisheries,   we   considered   whether   Valdez   Fisheries'   wildlife 



        26(...continued) 



analyze the Rule 37(b) factors, instead stating "[f]or the most part the court agrees with 

the City's assessment of the Rule 37(b)(3) factors," without identifying which parts or 

factors the court agreed with, and concluding "Sea Hawk willfully failed to provide 

discovery as alleged." Finally, the order did not adequately address alternative remedies. 

The court found that with trial scheduled to commence "less than 24 hours from now" 

it would be "impossible for the City to prepare to meet Sea Hawk's damages claims even 

if at this very moment Sea Hawk fully complied with all discovery requests."                     But the 

court did not consider ordering Sea Hawk to produce the requested expert materials and 

granting a short continuance to allow Valdez to prepare for trial and depose Sea Hawk's 

experts again, if necessary.   Such a conclusory ruling is inadequate to support imposing 

litigation-ending sanctions. 



        27      45 P.3d 657 (Alaska 2002). 



        28       873 F.2d 155 (7th Cir. 1989). 



                                                  -15-	                                            6699
 


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

rehabilitation center proposal and Alyeska's award letter stating "[w]e intend to begin 



the process of negotiating a contract as soon as possible" constituted a binding agreement 

to  negotiate.29     We     noted   we    will  enforce    agreements      to  negotiate,   but   observed 



"[p]articipation in negotiations . . . 'does not necessarily mean that the parties will be 

able    to  agree   on   mutually-acceptable        terms.'   "30  Therefore,     we    will  "enforce    an 



agreement         to   negotiate      only     if   it   contains     'a    more     specific     way      to 



resolve . . . differences,' such that we are able to discern when the agreement to negotiate 

has   been   breached."31     We   then   held:   "That   standard   is   not   met   here.  At   best,   the 



proposal and Alyeska's reply letter are evidence of an agreement to negotiate that fails 

to spell out a method by which differences are to be resolved."32 



                 Similarly, a duty to negotiate in good faith arises out of an agreement to 



negotiate and is defined by the scope of that agreement.               In Apothekernes , the Seventh 



Circuit explained "the purpose and function of a preliminary letter of intent [to negotiate] 



is not to bind the parties to their ultimate contractual objective" but " 'to provide the 



initial framework from which the parties might later negotiate a final . . . agreement, if 

the deal works out.' "33       "The obligation to negotiate in good faith has been generally 



described      as   preventing     one   party    from,   'renouncing      the   deal,   abandoning      the 



negotiations,      or  insisting    on  conditions     that   do   not   conform     to  the   preliminary 



        29       Valdez Fisheries, 45 P.3d at 663, 667. 



        30       Id . at 667 (quoting Davis v. Dykman , 938 P.2d 1002, 1008-09 (Alaska 



1997)). 



        31       Id . (quoting Davis , 938 P.2d at 1009). 



        32       Id . 



        33       Apothekernes , 873 F.2d at 158 (quoting Runnemede Owners, Inc. v. Crest 



Mortg. Corp. , 861 F.2d 1053, 1056 (7th Cir. 1988)). 



                                                    -16-                                              6699
 


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

agreement.' "34     However, "the scope of any obligation to negotiate in good faith can 



only be determined from the framework the parties have established for themselves in 

their letter of intent [to negotiate]."35     "In the absence of any agreed upon terms or even 



a general framework within which to conduct the negotiations, the parties [are] free to 

insist on or reject any proposed terms to the contract that they wish[]."36 



                Consistent with the principles discussed in Apothekernes , we considered 



and rejected a claim for breach of an agreement to negotiate in good faith in Brady v. 

State .37  We noted "[m]any courts enforce promises to negotiate in good faith," but held 



the plaintiffs' claim failed because they could "allege no broken promise about a specific 

process of negotiation, for the State made none."38 



                Here, the May 30 letter did not provide the type of framework contemplated 



in these cases.      Even viewing the letter in the light most favorable to Sea Hawk, the 



parties simply   agreed to negotiate an agreement in the future without establishing a 



specific process of negotiation or a method for resolving disputes.                   The parties then 



attempted to negotiate a contract but were unable to reach a final agreement.  Based on 



this   letter,   we   would   not   be   able   to   discern   when   the   agreement   to   negotiate   was 



breached.    As in  Valdez Fisheries, this letter is "[a]t best . . . evidence of an agreement 



        34      Id. (quoting Teachers Ins. & Annuity Ass'n of Am. v. Tribune Co., 670 F. 



Supp. 491, 498 (S.D.N.Y. 1987)). 



        35      Id . at 159. 



        36      Id . (discussing Feldman v. Allegheny Int'l, Inc. , 850 F.2d 1217 (7th Cir. 



1988)). 



        37      965 P.2d 1 (Alaska 1998). 



        38      Id . at 11, 13. 



                                                  -17-                                                6699 


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

to negotiate that fails to spell out a method by which differences are to be resolved."39 



Accordingly, we affirm the superior court's dismissal of Sea Hawk's claims for breach 



of an agreement to negotiate and breach of a duty to negotiate in good faith on summary 

judgment. 40 



V.     CONCLUSION 



              We AFFIRM the superior court's orders dismissing Sea Hawk's breach of 



contract claim under Civil Rule 12(c) and dismissing Sea Hawk's claims for breach of 



an agreement to negotiate and breach of a duty to negotiate in good faith on summary 



judgment.   We REVERSE the superior court's denial of Valdez's summary judgment 



motion on Sea Hawk's promissory estoppel claim, and REMAND for the court to enter 



judgment in favor of Valdez. 



       39     Valdez Fisheries Dev. Ass'n v. Alyeska Pipeline Serv. Co., 45 P.3d 657, 667 



(Alaska 2002). 



       40     Sea Hawk also requested that we remand to a different venue and superior 



court judge, if we remanded this case for trial.   Because we do not remand for trial, we 

do not address those issues. 



                                           -18-                                        6699 

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