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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc. (3/14/2014) sp-6874

ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc. (3/14/2014) sp-6874

         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  



CONOCOPHILLIPS ALASKA, INC.,  )  

                                                     )        Supreme Court Nos. S-14654/14674/14953  

                           Appellant and             )        (Consolidated)  

                           Cross-Appellee,           )  

         v.                                          )        Superior Court No. 3AN-08-08998 CI  

                                                     )  

WILLIAMS ALASKA                                      )        O P I N I O N  

PETROLEUM, INC.,                                     )  

                                                     )        No. 6874 - March 14, 2014  

                           Appellee and              )  

                           Cross-Appellant.          )  

                                                     )  



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

                  Judicial District, Anchorage, John Suddock, Judge.  



                  Appearances:  Spencer  C.  Sneed  and  Katherine  Demarest,  

                  Dorsey  & Whitney, LLP, Anchorage, for Appellant/Cross- 

                             

                  Appellee.  Paul L. Davis, K&L Gates, LLP, Anchorage, and  

                                            

                  Randolph  L.  Jones,  Jr.,  Conner  &  Winters,  LLP,  Dallas,  

                  Texas, for Appellee/Cross-Appellant.  



                  Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                                                 

                  Bolger, Justices.  



                  FABE, Chief Justice.  



I.       INTRODUCTION  



                  Williams  Alaska  Petroleum  owned  and  operated  a  refinery,  which  



ConocoPhillips Alaska supplied with crude oil pursuant to an Exchange Agreement.  

                                 


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

                         

ConocoPhillips demanded that Williams tender a payment of $31 million as adequate  



assurances of Williams's ability to perform if an ongoing administrative rate-making  



process resulted in a large retroactive increase in payments that Williams would owe  



ConocoPhillips  under  the  Exchange  Agreement.    ConocoPhillips  offered  to  credit  



Williams  with  a  certain  rate  of  interest  on  that  principal  payment  against  a  future  



retroactive invoice.  Williams transferred the principal of $31 million but demanded,  



                                                                                                      

among other terms, credit corresponding to a higher rate of interest. Williams stated that  



                                                                      

acceptance and retention of the funds would constitute acceptance of all of its terms.  



ConocoPhillips received and retained the funds, rejecting only one particular term in  



Williams's latest offer but remaining silent as to which rate of interest would apply.  



                                                    

Years  later,  after  the  conclusion  of  the  regulatory  process,  ConocoPhillips  invoiced  



Williams retroactively pursuant to the Exchange Agreement.  ConocoPhillips credited  



Williams for the $31 million principal already paid as well as $5 million in interest on  



        

that  principal  calculated  using  the  lower  of  the  two  interest  rates.    Williams  sued  



ConocoPhillips, arguing that a contract had been formed for the higher rate of interest  



               

and that it was therefore owed a credit for $10 million in interest on the $31 million  



principal.  



                                                                                                               

                    On cross-motions for summary judgment, the superior court initially ruled  



                                                                                             

for Williams, concluding that a contract for the higher rate of interest had formed under  



                                                

the Uniform Commercial Code (UCC)  2-207(1) when ConocoPhillips retained the $31  



                                                                              

million while rejecting one offered term but voicing no objection to Williams's specified  



                              

interest  term.    On  a  motion  for  reconsideration,  the  superior  court  again  ruled  for  



                                                                                            

Williams, this time determining that a contract for the higher rate of interest had formed  



                                                                                                                           

based on the behavior of the parties after negotiation under UCC  2-207(3), or, in the  



                                                                                                                

alternative, that Williams was entitled to a credit for a different, third rate of interest in  



                                                               -2-                                                         6874
  


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

quantum meruit.  The superior court also ruled in favor of Williams on all issues related  

                                                                                    



to attorney's fees and court costs.  



                   ConocoPhillips and Williams both appeal.  We conclude that the superior  

                                                                                                             



court was right the first time and that the parties entered into a contract for the higher rate  

                            



of interest under UCC  2-207(1).  Thus, it was incorrect for the superior court to rescind  

                                                                                                        



its initial summary judgment order as improvidently granted.  Accordingly, we do not  



                                                                                          

reach the UCC  2-207(3) or quantum meruit holdings of the superior court's order on  



reconsideration.  Finally, we affirm all of the superior court's actions with regard to  



attorney's fees and court costs.  



II.       FACTS AND PROCEEDINGS  



          A.       Facts  



                   1.        The parties and the contract  



                                                                                            

                   In  December  1999,  BP  Oil  Supply  Company  and  Williams  Energy  



Marketing & Trading Company entered into a contract for the sale of crude oil, called  



                                                                                                     

                                        

an Exchange Agreement.   Within months, the rights and duties of the original parties to  



this   Exchange   Agreement   were   assigned   to   the   parties   to   the   present   case:  



ConocoPhillips and Williams.  



                   Under the Exchange Agreement, ConocoPhillips would provide Williams's  



                                 

refinery at North Pole with crude oil from the Trans-Alaska Pipeline System.  Williams  



                                                                                

would extract valuable components from the crude oil and provide an equal volume of  



lower-quality crude back to ConocoPhillips, and ConocoPhillips would then return the  



                       

crude oil to the pipeline.  The Trans-Alaska Pipeline System operates a "Quality Bank,"  



                                                                                                                

which compensates all pipeline shippers for the degradation in the average quality of  



crude in the pipeline downstream caused by tender of less-valuable crude upstream.  The  



             

Quality  Bank  Administrator  assesses  "degradation  charges"  to  shippers  tendering  



comparatively lower-value crude to the pipeline based on a quality pricing scheme set  



                                                             -3-                                                      6874
  


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

                       

by the Federal Energy Regulatory Commission (FERC) and the Regulatory Commission  



of Alaska (RCA).  ConocoPhillips, as the shipper tendering lower-quality crude back into  



                                                                                                    

the  pipeline,  would  be  assessed  degradation  charges  by  the  Administrator.    The  



                                                                                

Exchange  Agreement's  pricing  provision,  on  top  of  a  flat  per-barrel  fee,  required  



Williams  to  reimburse  ConocoPhillips  for  such  degradation  charges,  including  any  



retroactive adjustments resulting from new FERC regulations.  



                                                                                                                     

                    The Exchange Agreement contained two additional provisions relevant to  



                                                                             

this  case.    First,  an  adequate-assurances  clause  specified  that  when  one  party  "has  



reasonable grounds for insecurity," that party may demand "adequate security for, or  



                       

assurances  of  [the  other  party's]  ability  to  perform,  all  of  its  obligations  under  the  



                          

Agreement."  If adequate security or assurances were not forthcoming within 48 hours,  



                                              

the  demanding  party  would  "have  the  right  to  liquidate  the  Agreement"  and  cease  



                                                                       

performance of its other obligations under the Exchange Agreement.  Second, a signed- 



                                                                                                                         

writing  clause  specified  that  "[n]o  changes,  alterations,  or  modifications  .  .  .  of  the  



Agreement shall be effective unless agreed to in writing by an authorized representative  



of the Parties."  



                    2.         The dispute  



                                    

                    In  2002,  ConocoPhillips  believed  that  it  had  reasonable  grounds  for  



                                                                                                                      

insecurity.  The FERC and the RCA initiated a regulatory rate-making process that could  



result in a retroactive increase in Quality Bank degradation charges to ConocoPhillips  



                                                        

for its tender of lower-quality crude back into the pipeline.  Under the pricing provision  



of the Exchange Agreement requiring reimbursement for retroactive degradation charges,  



                                                                                   

Williams could owe ConocoPhillips substantial sums of money, the precise amount of  



                                                          

which would depend on the agencies' promulgation of a revised pricing scheme, perhaps  



                                                                                                 

years in the future.  ConocoPhillips, believing Williams and its parent company to be in  



                                                                                               

a precarious financial position, doubted Williams's ability to pay a large, retroactively  



                                                                -4-                                                         6874
  


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

assessed  charge  in  the  future.    Invoking  the  adequate-assurances  provision  of  the  



Exchange  Agreement,  ConocoPhillips  sent  Williams  an  initial  demand  letter  on  



October 4 stating its position that Williams "now owes" $31,268,645 in "Quality Bank  



                                                              

adjustments to the price of oil" already exchanged over the prior two years under the  



                                                                       

contract.  ConocoPhillips proposed a range of options for providing adequate financial  



                                                                                         

assurances:  a cash payment, a trust with ConocoPhillips as beneficiary, a letter of credit,  



or a senior security interest in Williams's property.  This letter did not mention whether  



                                                                                                       

or at what rate ConocoPhillips would credit Williams for interest on any such assurance  



payment or security.  



                                                     

                    Following a series of telephone calls, Williams sent ConocoPhillips a letter  



                                                                                            

on October 8.  Williams disputed that it was in financial peril or that ConocoPhillips had  



reasonable grounds for insecurity.  Williams also stated its view that potential future  



                                                      

Quality Bank adjustments "are not currently due," as ConocoPhillips would have it, but  



                                                                                                       

rather "may become due in the future upon resolution of the Quality Bank proceedings."  



                                                                                                         

Nonetheless, fearing the harm that would come from ConocoPhillips halting the flow of  



                                                                                                                 

crude, Williams offered to settle the dispute in a package deal that included, among other  



                   

terms, wire transfer of $29.01 million to ConocoPhillips.  This principal, plus interest  

                                                                                                                   1 would be  

that would accrue on the principal "calculated at the LIBOR six-month rate," 



"held  by  ConocoPhillips for Williams'[s] account" pending a resolution in the rate- 

                



making case, at which point "the advance payments to ConocoPhillips, including all  

                          



interest thereon, will be applied toward any Quality Bank Amounts so determined to be  



due from Williams."  On October 11, ConocoPhillips responded, saying it might be  



                                                                        

willing to meet some of Williams's conditions for settlement but demanding a payment  



          1  

                                  

                    LIBOR, or the London Interbank Offered Rate, is the interest rate that large  

London banks charge each other for short-term loans.  



                                                               -5-                                                             6874  


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

                                  

of $35,245,181.  The letter made no mention of Williams receiving credit for interest on  



                                     

that sum in the future.  In a follow-up letter dated October 17, ConocoPhillips proposed  



that Williams pay $35,245,181 "as a partial preliminary settlement payment" of any  



                                                                                                      

retroactively   assessed   Quality   Bank   degradation   charges.                                     For   the   first   time,  



ConocoPhillips offered to credit Williams for interest earned on the principal at the  



LIBOR rate.  



                                                                                                                          

                     On October 18, Williams wired $31,268,645 to ConocoPhillips. Later that  



day,  Williams  sent  ConocoPhillips  a  letter  stating  that  the  money  was  intended  to  



                                                                                                         

"avoid[] litigation and resolv[e] the disputes" over retroactive price modifications under  



                                                                                                                     

the  Exchange  Agreement.    Williams  specified  that  "ConocoPhillips'[s]  receipt  and  



                          

retention of the $31,268,645 . . . shall constitute ConocoPhillips'[s] agreement with the  



terms  set  forth  in  .  .  .  this  letter."    The  letter's  terms  included  three  substantive  



                                

provisions:  (1) that the "full principal amount" already wired to ConocoPhillips receive  



                                                            2  

                                                                                                                             

interest at a "rate prescribed by FERC"                       and that the principal and interest would be held  



                                                                                       

by  ConocoPhillips  for  Williams's  account  and  later  be  credited  toward  any  final  



retroactive assessments; (2) that ConocoPhillips agree to "continue good faith efforts"  



                                                                                                                          

in "vigorous support" of a preexisting joint-negotiating agreement that would present a  



                                          

united front in the FERC rate-making case; and (3) that the parties agree to keep the  



agreement "in strictest confidence."    



                                                

                     On  October  29,  ConocoPhillips  responded,  acknowledging  that  it  had  



                                                             

"received and retained the Payment as a preliminary partial settlement," using language  



mirroring  Williams's  specification  of  the  mode  of  acceptance  of  the  terms  in  its  



                                                                   

October 18 letter.  ConocoPhillips stated that it "does not agree with all of the terms  



          2  

                                                                                        

                     The parties expected the FERC to impose interest on any retrospectively  

                                                                                              

assessed degradation charges.  The FERC rate imposed by regulation was expected to  

be substantially higher than the LIBOR rate.  



                                                                 -6-                                                               6874  


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

                                                  

stated in [Williams's October 18 letter]" and "also do[es] not believe it would prove  



productive to conduct a letter writing campaign as to what the Payment represents or  



specific terms and conditions associated with the Payment."  ConocoPhillips did object  



                                                 

to one term in particular.  It noted that it would voluntarily continue to support the joint- 



                                       

negotiating efforts in front of the FERC under the terms of the preexisting agreement on  



the issue, but it denied "[any] linkage whatsoever between ConocoPhillips['s] right to  



adequate  assurance  under  the  Agreement  and  ConocoPhillips'[s]  performance  with  



respect to" the independent joint-negotiating agreement.   ConocoPhillips did not address  



the issue of whether or at what rate the cash payment would accrue interest.  



                   After      ConocoPhillips's           October        29    letter,    there     was      no    further  



communication between the parties about the principal payment or accrual of interest  



                                                                                  

until the FERC rate-making case finally came to a close in July 2007.  In August 2007,  



                                      

ConocoPhillips  invoiced  Williams  for  reimbursement  of  the  retroactively  assessed  



Quality Bank degradation charges amounting to over $167 million, giving Williams  



credit for the $31 million prepayment as well as accrued interest at the LIBOR rate  



amounting to an additional $5 million, yielding a final billed amount of $131 million.  



                                                                                       

Williams paid ConocoPhillips about $5 million less than the invoiced amount, claiming  



                                                                      

it deserved credit on the $31 million prepayment at the (higher) FERC interest rate which  



                                                                   

would amount to a $10 million interest credit.  ConocoPhillips responded by revising its  



                                                                            

invoice to give no credit for any interest on the $31 million prepayment, claiming that  



no agreement had been reached on the issue.  



                                                            -7-                                                      6874
  


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

            B.         Judicial Proceedings And The Superior Court's Holdings  



                                                      3 

                       Litigation ensued,  and in 2009 both parties moved for summary judgment 



                                                                                                 

on the effect of the October 2002 correspondence with respect to interest credits.  Both  



                           

parties agreed that "no issues of material fact prevent[ed] summary resolution of that  



                                                   

issue."    The  superior  court  applied  Ohio's  substantive  contract  law  pursuant  to  the  



                                                                     

Exchange Agreement's choice-of-law provision and found that there was no conflict  



with Alaska law because both states had adopted the Uniform Commercial Code.  



                                                         

                       The superior court granted summary judgment to Williams.  The superior  



                                                                                                                                              4  

                                                                                                                                                  the  

court  concluded  that  under  the  Uniform  Commercial  Code    2-207(1)  &  (2) 



            3          In September 2007, the parties entered into a Quality Bank Interest Dispute   



Resolution  Agreement  in  which  the  parties  agreed  to  "jointly  file  for  a  Declaratory  

Judgment Order" and to limit discovery and briefing.  As relevant to the attorney's fee  

                                                                                                                     

dispute in this case, the parties also agreed that "[t]he prevailing Party in the Declaratory  

                                                                                                               

Judgment proceeding shall be entitled to recover reasonable attorney fees and court  

costs" to be "paid within twenty (20) days after receipt of an invoice for such costs  

                                                                                        

containing documentation reasonably supporting the amounts."   



            4  

                                                                                                                                 

                       Sections 2-207(1) & (2) of the Uniform Commercial Code, codified and  

slightly amended at Ohio Rev. Code Ann.  1302.10(A) & (B) (West 2013), state:  



                                                                                                         

                       (1)         A definite and seasonable expression of acceptance or  

                       a written confirmation which is sent within a reasonable time  

                       operates  as  an  acceptance  even  though  it  states  terms  

                                                                                                         

                       additional to or different from those offered or agreed upon,  

                                                                                                          

                       unless acceptance is expressly made conditional on assent to  

                                                                                        

                       the additional or different terms.  



                       (2)         The additional terms are to be construed as proposals  

                                                                                         

                       for addition to the contract.  Between merchants such terms  

                       become part of the contract unless:  



                                   (a)        the  offer  expressly  limits  acceptance  to the  

                                                                                    

                       terms of the offer;  

                                                                                                                               (continued...)  



                                                                         -8-                                                                  6874
  


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

                                                                                                                

October  18  and  October  29  letters  modified  the  Exchange  Agreement  and  that  the  



resulting  contract  required  ConocoPhillips  to  credit  Williams  with  interest  on  the  



                                                                                                             

prepayment at the higher FERC interest rate proposed by Williams in its October 18  



letter.  ConocoPhillips's October 29 reply letter constituted a "definite and seasonable  



expression of acceptance" of Williams's October 18 offer.  Because ConocoPhillips  



acknowledged  receipt  and  retention  of  the  $31  million  prepayment,  mirroring  the  



                                                                             

conditions of acceptance in Williams's October 18 offer, and explicitly objected to only  



                                                           

one term of the offer, while remaining silent as to interest and otherwise just hinting at  



                                                                           

unspecified additional quibbles, the court found that ConocoPhillips "grudgingly but  



definitively assented" to Williams's reasonable proposal of FERC interest.  



                    Neither party had briefed the application of UCC  2-207.  ConocoPhillips  



                                                                                                                

moved for reconsideration, and the superior court ordered further briefing.  The superior  



court concluded that it "improvidently granted summary judgment that a contract was  



                                                                                                                  

formed pursuant to [UCC  2-207(1)]" because ConocoPhillips's "express rejection of  



                                                                        

Williams's joint-negotiating provision" renders disputable the material factual inference  



that  ConocoPhillips's  letter  of  October  29,  2002  was  a  definite  and  seasonable  



                                                                            

expression of acceptance.  Nevertheless, the court again granted summary judgment for  



                                                                                                           

Williams, this time concluding that the parties' behavior after October 2002 created an  



                                                                     5 

                                                                                               

implied-in-fact contract under UCC  2-207(3)  and that one of the terms of that contract 



          4(...continued)  



                              (b)       they materially alter it; or  

                                    



                              (c)       notification  of  objection  to  them  has already  

                                                                                                    

                    been given or is given within a reasonable time after notice of  

                                                                                           

                    them is received.  



          5  

                                                         

                    Section 2-207(3) of the UCC, codified and slightly amended at Ohio Rev.  

Code Ann.  1302.10(C) (West 2013), states:  

                                                                                                              (continued...)  



                                                               -9-                                                         6874
  


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

                       

was the FERC interest that Williams had proposed on October 18 and ConocoPhillips  



                                                                                             

had objectively accepted on October 29.  In the alternative, the superior court held that,  



                                                                             

if this court were to reverse summary judgment as to contract formation, Williams would  



                                                                                    

be entitled to recovery in quantum meruit for the benefit to ConocoPhillips of the time- 



                                                                                          

value  of  the  $31  million  prepayment,  measured  by  the  average  market  rate  for  



commercial paper during the relevant period.    



                    The  superior  court  granted  Williams's  motion  to  enlarge  time  to  file  a  



motion for attorney's fees and subsequently granted Williams full attorney's fees and  



court costs as the prevailing party under the Dispute Resolution Agreement between  



Williams and ConocoPhillips.  



          C.        Arguments On Appeal  



                                                                                                

                    Both parties appeal.  ConocoPhillips seeks reversal of summary judgment  



                                                

and entry of summary judgment in its own favor on a theory that no contract was formed  



                                           

for any interest rate.  It also argues that no interest should be paid to Williams under a  



                                                                                             

theory of quasi-contract or quantum meruit.   Williams seeks reversal of the superior  



court's  order  on  reconsideration  rescinding  the  initial  summary  judgment  order  as  



improvidently granted, arguing that a contract was formed under UCC  2-207(1) & (2)  



                                                      

as the superior court originally held.  Williams also seeks reversal of the superior court's  



          5(...continued)  



                    (3)      Conduct   by          both     parties      which       recognizes        the  

                                                                        

                    existence of a contract is sufficient to establish a contract for  

                                          

                    sale  although  the  writings  of  the  parties  do  not  otherwise  

                    establish a contract.  In such case the terms of the particular  

                                                                                         

                    contract consist of those terms on which the writings of the  

                                             

                    parties   agree,   together   with   any   supplementary   terms  

                    incorporated under any other provisions of this Act.  



                                                             -10-                                                       6874
  


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

alternative quantum meruit holding, arguing that it should receive FERC interest rather  



than commercial-paper interest awarded in quantum meruit.  



                    As  to  attorney's  fees  and  court  costs,  ConocoPhillips  argues  that  the  



                                                           

superior court abused its discretion by granting Williams's motion to enlarge time to file  



a motion for attorney's fees, by enlarging Williams's time to file a cost bill with the  



                                                                                                        

Clerk of Court, and by granting full attorney's fees and costs without reducing the award  



for various reasons.  



III.      STANDARD OF REVIEW  



                    We review rulings on motions for summary judgment de novo, "reading the  



record in the light most favorable to the non-moving party and making all reasonable  



                                    6  

                                                                         

inferences in its favor."   A party is entitled to summary judgment only if there is no  



                                                                                                                                  7  

                                                                                                            

genuine issue of material fact and if the party is entitled to judgment as a matter of law. 



      

"A genuine issue of material fact exists where reasonable jurors could disagree on the  



                                              8  

resolution of a factual issue."   "Whether the evidence presented a genuine issue of  



                                                                                                    9  

                                                                                                       Determinations of  

material fact is a question of law that we independently review." 



                                                                10  

                                                                    and  interpretations  of  what  those  legal  

which  legal  authorities  apply  in  a  case 



          6          Witt v. State, Dep't of Corr., 75 P.3d 1030, 1033 (Alaska 2003).                                The same  



standard applies to orders granting, denying, and reconsidering summary judgment, all            

of which are presented on appeal in this case.  



          7         Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985).  



          8  

                                                                                                 

                    Kalenka v. Jadon, Inc. , 305 P.3d 346, 349 (Alaska 2013) (quoting Burnett  

v. Covell, 191 P.3d 985, 990 (Alaska 2008)).  



          9         Id.  



          10  

                                       

                    Cf. L.D.G., Inc. v. Brown , 211 P.3d 1110, 1118 (Alaska 2009) ("Where 'the  

                                                                                             

admissibility  of  evidence  turns  on  whether  the  trial  court  applied  the  correct  legal  

                                                                                                               (continued...)  



                                                              -11-                                                         6874
  


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

                            11  

authorities   mean               are   questions   of   law   subject   to   de   novo   review.      Contract  



                                                                                                 12  

interpretation is a question of law subject to de novo review.                                       When applying the de  



                                                 

novo standard of review, we apply our "independent judgment to questions of law,  



                                                                                                                                  13  

adopting the rule of law most persuasive in light of precedent, reason, and policy."                                                   



IV.	       DISCUSSION  



           A.	       UCC    2-207  Applies  To  This  Case  To  Determine  Whether  An  

                     Original  Contract  For  Sale  Of  Oil  Has  Been  Modified,  And  The  

                                         

                     Additional Requirements Of  2-209 Regarding Modification Have  

                     Been Satisfied Or Waived.  



                     The  parties  vigorously  dispute  which  article  and  sections  of  the  UCC  



                                                         

govern this case.  We conclude that the superior court correctly held that Article 2 of the  



                                                           

UCC and  2-207 apply to this case, notwithstanding ConocoPhillips's arguments that  



Article 9 or  2-209 should govern to the exclusion of  2-207.  



                                                                                

                     1.	        Article 2 of the UCC, rather than Article 9, applies to this case.  



                     ConocoPhillips  and  Williams  disagree  as  to  which  article  of  the  UCC  



applies  in  this  case:  Article  2,  which  governs  "transactions  in  goods"  but  not  "any  



           10(...continued)  



standard,   we   review   the   [lower]   court's   decision   using   our   independent   legal  

judgment.' " (quoting Marsingill v. O'Malley , 128 P.3d 151, 155-56 (Alaska 2006))).  



           11        Cf.  id.  ("Issues regarding the constitutionality of statutes are questions of   



law that we review de novo.  We review the interpretation of a statute de novo . . . ."       

(citing Alaskans For Efficient Gov't, Inc. v. Knowles , 91 P.3d 273, 275 (Alaska 2004);            

State v. Alaska Civil Liberties Union, 978 P.2d 597, 603 (Alaska 1999))).  



           12  

                                                                        

                      Villars v. Villars, 277 P.3d 763, 768 (Alaska 2012) (citing Burns v. Burns ,  

 157 P.3d 1037, 1039 (Alaska 2007)).  



           13  

                                                                                                                 

                     Russell ex rel. J.N. v. Virg-In , 258 P.3d 795, 802 (Alaska 2011) (quoting  

                                                                       

Jacob v. State, Dep't of Health & Soc. Servs., Office of Children's Servs. , 177 P.3d 1181,  

 1184 (Alaska 2008)) (internal quotation marks omitted).  



                                                                 -12-	                                                          6874
  


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

                                                                                                   14  

                                                                                                        

transaction . . . intended to operate only as a security transaction,"                                 or Article 9, which  



                                                                                                                                 15  

                                                                                    

governs transactions that "create[] a security interest in personal property or fixtures." 



                                                                                                                      

ConocoPhillips argues that Article 9 should apply because the parties intended to "create  



                             

an  interest  in  the  $31  million  to  secure  Williams'[s]  future  payment  obligations."  



Williams  argues  that  Article  2  should  apply  because  the  parties'  correspondence  in  



              

October 2002 was a modification of the original Exchange Agreement for the sale of  



                                                                                                                                 16  

                                                                                     

goods and the $31 million was a prepayment of a future obligation under that contract. 



                                                                                                      

                    The superior court concluded that the $31 million was a prepayment as part  



     

of a contract modifying the original Exchange Agreement for a sale of goods and was  



thus covered by the provisions of Article 2.  We agree.   



                                                                                                

                    First, the superior court concluded that the parties intended the $31 million  



                                           

and  subsequent  agreement  to  constitute  a  "prepayment  of  an  unliquidated  account  



payable" rather than a security transaction.  We agree and conclude that there is no  



genuine issue of material fact on this point.  ConocoPhillips styled the payment as a  



                                                                       

"preliminary partial settlement" in its letter of October 29.  ConocoPhillips now argues  



that it meant to indicate that the payment was a partial settlement of ConocoPhillips's  



          14        OHIO REV . CODE ANN .  1302.02 (West 2013) (codifying U.C.C.  2-102).  



          15        Id.  1309.109(A)(1) (codifying U.C.C.  9-109).  



          16        The  parties  vigorously  dispute  this  preliminary  issue  because  of  their  



perception that Article 2 and Article 9 differ substantially in how they would apply to  

                         

this case.  ConocoPhillips argues that Article 9 imposes no duty to give credit for interest  

                                                                                                    

on cash collateral absent any actual interest earned and that any agreement for interest  

would  have  to  be  established  under  traditional  common  law  rules  of  offer  and  

acceptance.  Williams seeks to benefit from the relaxed contract-formation provisions of  

                                                                        

  2-207  to  find  a  contract  for  FERC  interest  resulting  from  the  October  2002  

                                                                                                             

correspondence.  Because we hold in favor of Williams under  2-207(1), we do not  

reach ConocoPhillips's argument about the outcome of the case under Article 9.  



                                                              -13-                                                         6874
  


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

demands for an adequate security interest, but the record supports the superior court's  



                                                                  

contrary conclusion.  The October 29 letter refers to the payment as a preliminary partial  



                                                                                                                      

settlement, not of ConocoPhillips's demands for an adequate security interest, but rather  



                                                                   

of  a  dispute  over  the  pricing  provision  of  the  Exchange  Agreement  with  respect  to  



                                                           17  

retroactive Quality Bank  adjustments.                         The course of negotiations provides further  



                                                                                                             

support for this view.  ConocoPhillips's first demand letter argued that Williams "now  



                                                                                                          

owes" ConocoPhillips $31 million under the Exchange Agreement's pricing provision  



                                                                                           

due to forthcoming Quality Bank adjustments that would be made retroactive.  Williams  



                                                                       

disagreed, arguing in its letter of October 8 that the money was "not currently due" under  



                                                                    

the contract.  It was this dispute over when the retroactive assessment charges would  



come  due  that  the  parties  intended  to  settle  with  the  wire  transfer  and  subsequent  



agreement.    The  superior  court  correctly  interpreted  the  Exchange  Agreement's  



                                                          

adequate-assurances provision, not as providing a right to demand security interests, but  



                                                                                                                

rather as "invit[ing] a negotiation between the parties regarding the nature and extent of  



additional consideration for the [continued] sale of goods" with a "contemplated outcome  



                                                                                              

[of] a modification of the original sale contract such that the ground for insecurity be  



abated  or  ameliorated."    ConocoPhillips  treated  the  adequate-assurances  provision  



                                              

similarly in its initial demand letter of October 4 when it cited the adequate-assurances  



provision and then laid out a number of options for settling the dispute going beyond  



                                                                  

mere security interests, including making a cash payment, establishing a trust, providing  



a letter of credit, and providing a security interest.  



                    Second, as a matter of law, the Ohio courts have held that Article 2's scope,  



                                                                                       

covering "transactions in goods," encompasses far more than just the original contract  



          17        Five years later, ConocoPhillips continued to view the $31 million payment  



as an "advance[]," at least in an internal email.  



                                                              -14-                                                             6874  


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

for sale and also includes subsequent agreements to modify the original contract, such  

                                                           18  Thus, we conclude that the superior court  

                                                               

as by establishing new payment schedules.                                



correctly determined that, due to the parties' intent to modify the original contract for the  

                                                                                         



sale of goods, Article 2 would apply to the question of contract formation in this case.  



                   2.	      UCC  2-207 applies to the contract modification in this case  

                            alongside the additional requirements of  2-209.  



                   ConocoPhillips and Williams also disagree as to which specific sections of  



Article 2 of the UCC, if any, should  apply  in this case:  2-209 to the  exclusion of  

                                                                



  2-207,  or    2-209  in  addition  to    2-207?    We  conclude  that  the  superior  court  

                                                        



correctly held that  2-209 should apply in addition to  2-207, and we further conclude  



that the superior court correctly determined that the additional requirements of  2-209  



have been satisfied in this case.  



                   As  relevant  here,  UCC    2-209,  titled  "Modification,  Rescission  and  



                                                               

Waiver," establishes several important rules governing modification of contracts within  



                   

the scope of Article 2 of the UCC.  First,  2-209(1) abrogates the common law and  



specifies that "[a]n agreement modifying a contract within [Article 2 of the UCC] . . .  

                                                     19  Second,  2-209(2) establishes that "[a] signed  

needs no consideration to be binding."                                                              



agreement which excludes modification  or rescission except by a signed writing" is  

                                                           

enforceable  and  that  the  agreement  "cannot  be  otherwise  modified  or  rescinded."20  



         18  

                   See, e.g., May Co. v. Trusnik , 375 N.E.2d   72, 74-                   75 (Ohio App.   1977)  

(holding that Article 2 governed an installment payment agreement modifying an original  

sales contract for consumer goods after the buyer defaulted under the original payment  

plan).  



         19        OHIO REV .  CODE ANN .   1302.12(A) (West 2013) (codifying U.C.C.  2- 



209(1)).  



         20  

                  Id.  1302.12(B) (codifying U.C.C.  2-209(2)).  



                                                         -15-	                                                   6874
  


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

Finally,  2-209(4) states that even if an attempted modification "does not satisfy the  

requirements of [subsection (2)] . . . it can operate as a waiver."21  



                       As discussed in greater detail in section IV.B below, UCC  2-207, titled  



                                                                                                          

"Additional Terms in Acceptance or Confirmation," relaxes the common law mirror- 



image rule, which held that a contract could be formed only if the acceptance was a  



"mirror  image"  of  the  offer,  replicating  all  of  the  terms  of  the  offer  without  adding  



                                                        22  

                                                                                                    

conflicting  or  additional  terms.                           Instead  of  requiring  a  mirror-image  acceptance,  



UCC    2-207(1)  permits  contract  formation  whenever  "[a]  definite  and  seasonable  



                                                                                                                 

expression of acceptance . . . is sent within a reasonable time . . . even though it states  



                                                                                       

terms additional to or different from those offered or agreed upon, unless acceptance is  



                                                                                                                               23  

expressly made conditional on assent to the additional or different terms."                                                          



                                                                                                                

                       ConocoPhillips argues that, even if Article 2 of the UCC were to apply in  



                                                                                                         

this case, UCC  2-209 should govern to the exclusion of the lenient contract-formation  



                             24  

rules of  2-207.                ConocoPhillips reasons that  2-207 addresses only initial contract  



                                                                                              

formation and that any subsequent modification must satisfy  2-209.  ConocoPhillips  



           21          Id.  1302.12(D) (codifying U.C.C.  2-209(4)).  



           22          RESTATEMENT (SECOND) OF CONTRACTS  59 (1981); 1 JAMES J.  WHITE ,  



R 

                                                                                

   OBERT S. SUMMERS & ROBERT A. HILLMAN , UNIFORM COMMERCIAL CODE  2:9, at 79  

(6th ed. 2012). 



           23  

                                           

                       OHIO REV . CODE ANN .  1302.10(A) (codifying U.C.C.  2-207(1)).  



           24  

                       Williams argues that ConocoPhillips failed to make this argument to the                                              

superior court and thus should not be able to raise it for the first time in this court.                                                       But  

a review of the record reveals that ConocoPhillips did argue to the superior court in its                           

motion  for  reconsideration  that  "UCC  2-209  preempts  UCC  2-207"  and  styled  its  

arguments about UCC  2-207's application to this case in the alternative.  Thus, the  

                                                                                                               

superior court was premature in stating in its order on motion for reconsideration that  

"Conoco and Williams now agree that UCC section 2-207 is applicable."  We conclude  

                                                                   

that ConocoPhillips did not waive its  2-209 argument.  



                                                                       -16-                                                                 6874
  


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

contends modifications governed by  2-209 can gain no help from  2-207's limited  



                                                                                       

alterations  of  the  common  law  because    2-209  leaves  untouched  the  common  law  



                                                                                                25  

mirror-image rule for agreements modifying a contract.                                              



                       The superior court held that both  2-209 and  2-207 apply to the issue of  



contract modification in this case, and we agree.  Precedent indicates that under Ohio  



                                                                                                                                                  26  

                                                                                                              

law,  2-207 applies to contract formation as well as subsequent contract modification. 



                                                                                                                           27  

                                                                                

Nor  is  Ohio  alone  in  this  conclusion;  many  other  jurisdictions  agree.                                                   The  text  of  



                

 2-209 supports this conclusion.  It does not purport to supplant any other provisions  



                                                                                                                    

of  Article  2;  rather,  it  is  best  read  as  providing  five  additional  rules  that  apply  to  



                                                                                               

modifications of preexisting contracts, supplementing other applicable rules elsewhere  



            25  

                       ConocoPhillips presses this point because, in its view,  2-209 and common  

law rules of acceptance would mean that "[e]ven if ConocoPhillips'[s] October 29 letter                                                 

had assented to all terms of Williams'[s] October 18 letter except the FERC interest term,     

UCC  2-209 would still require that the parties                                       expressly  assent to FERC interest."  

Because we hold that  2-207 applies to the contract modification in this case, we do not                                            

address what the outcome would be under common law rules of contract formation and               

modification.  



            26  

                                                                                                                                  

                       See Energy Mktg. Servs., Inc. v. Homer Laughlin China Co. , 186 F.R.D.  

                                                                                                                

369, 375 (S.D. Ohio 1999) (applying the substantive contract law of Ohio and analyzing  

under UCC  2-207 a non-mirroring acceptance of an offer to modify a preexisting  

contract), aff'd, 229 F.3d 1151 (6th Cir. 2000).  



            27  

                       See, e.g., Step-Saver Data Sys., Inc. v. Wyse Tech ., 939 F.2d 91, 98 (3d Cir.  

 1991) ("In the absence of evidence demonstrating an express intent to adopt a writing  

                                                                                                                       

as a final expression of, or a modification to, an earlier agreement, we find UCC  2-207  

                                                                                                                                          

to provide the appropriate legal rules for determining whether such an intent can be  

                                                                                                  

inferred from continuing with the contract after receiving a writing containing additional  

                                                                                                           

or different terms." (emphasis added)); U.S. Surgical Corp. v. Orris, Inc., 5 F. Supp. 2d  

 1201, 1206 (D. Kan. 1998) (same), aff'd sub nom. U.S. Surgical Corp. v. Lorris, Inc.,  

                                                                                              

 185 F.3d 885 (Fed. Cir. 1999); Ariz. Retail Sys., Inc. v. Software Link, Inc. , 831 F. Supp.  

                                                                                              

759,  764  (D.  Ariz.  1993)  (applying    2-207  and    2-209  to  an  attempted  contract  

modification).  



                                                                       -17-                                                                 6874
  


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

                                                                                                        

in the Code. Nothing in  2-209 purports to restrict the application of  2-207 to contract  



modifications, nor does anything in  2-207 indicate that its scope should be restricted  



to initial contract formation to the exclusion of subsequent contract formations modifying  



                                                      

the initial contract.  Therefore, we conclude that  2-207 may apply alongside  2-209  



                                                                                                                                 28  

                              

to modifications of a preexisting contract, at least under the facts presented in this case. 



          28  

                    ConocoPhillips cites no authority for the proposition that  2-209 displaces   

  2-207  and  requires  that  all  modifications  of  preexisting  contracts  satisfy  the  old  

common  law  mirror-image  rule.    Those  cases  that  ConocoPhillips  does  cite  do  not  

address this issue but rather establish a distinct proposition: because all modifications  

(like all contracts) require mutual assent, unilateral modification of a preexisting contract  

                                        

is impossible and mere silence in the face of an offer to modify a contract is ineffective  

                                     

to convey acceptance of the offered modification.  See U.S. Surgical Corp., 5 F. Supp. 2d  

                                                                                                                 

at 1206 (when seller attached a label to the packaging of surgical equipment purporting  

                                                                                                   

to limit the customer to a single use of the equipment the buyer had already purchased  

                                                        

pursuant to contract, no contract modification occurred simply by performing the original  

agreement and opening the package); Ariz. Retail Sys., Inc. , 831 F. Supp. at 764 (when  

                                                                                                                

seller  attached  a  shrink-wrap  license  to  software  packaging  that  buyer  had  already  

                                                

contracted  to  purchase,  merely  opening  the  package  and  continuing  to  perform  the  

                                                  

original contract did not function as a modification for lack of mutual assent); Wachter  

                                                    

Mgmt. Co. v. Dexter & Chaney, Inc. , 144 P.3d 747, 752-55 (Kan. 2006) (same); Jones  

                                     

v. Best , 950 P.2d 1, 5 (Wash. 1998) (when a realtor and seller of real property had a  

                                                                                                                           

preexisting  contract  for  realty  services,  the  realtor's  proposed  modification  to  his  

commission did not effect a modification because the seller's silence to the proposal did  

not manifest mutual assent); Alaska Pac. Trading Co. v. Eagon Forest Prods., Inc. , 933  

                                                               

P.2d  417, 420  (Wash. App. 1997) (when  seller sent a proposal for modification  of  

                                                                                                           

preexisting  contract  to  buyer  and  buyer  did  not  respond,  no  contract  modification  

occurred because modification requires mutual assent).  These cases do not establish  

what type of mutual assent is required to effectuate a contract modification - mirror- 

image acceptance as under the common law  or something less as permitted by  2- 

                                                                       

207(1).  Accordingly, ConocoPhillips's unsupported assertion that  2-209 displaces  2- 

207 with regard to contract modification does not affect our conclusion to the contrary,  

                                                                                            

which  is  supported  by  the  case  law  of  Ohio  and  other  jurisdictions  as  well  as  a  

commonsense reading of the statute.  



                                                              -18-                                                         6874
  


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

                      3.	         The additional requirement of  2-209(2) for a signed writing to  

                                  modify the Exchange Agreement was satisfied or waived.  



                                                                                           

                       ConocoPhillips  argues  that  even  if    2-207  applies  in  this  case,  no  



agreement could have been reached to modify the Exchange Agreement because the  



                                                                                                                                         

negotiations in October 2002 did not comply with the signed-writing requirement of the  



                                                                                                                                     

Exchange Contract as made enforceable by  2-209(2).  Section 2-209(2) states that "[a]  



                                                                                                                   

signed agreement which excludes modification or rescission except by a signed writing  

cannot be otherwise modified or rescinded,"29 and the Exchange Agreement specifies  



                                                                                        

that "[n]o changes, alterations, or modifications . . . of the Agreement shall be effective  



                                                                                                                              

unless agreed to in writing by an authorized representative of the Parties."  The superior  



                                                                                                  

court concluded that the signed-writing requirement was satisfied in this case because  



                                                                                                       

"the parties communicated their offers by signed letters" or, in the alternative, because  



                                                                                                                                          

ConocoPhillips's actions in accepting and retaining the $31 million and behaving "as if  



                                  

a  contract  had  in  fact  been  formed"  constituted  a  waiver  of  the  signed-writing  



                                                                    30  

requirement as permitted by  2-209(4).                                 We agree.  



                       ConocoPhillips argues that a signed writing within the meaning of  2-209  



must  include  express  assent  to  all  proposed  terms  and  that  ConocoPhillips  never  



                                                                                                                         

explicitly agreed to FERC interest. But nothing in  2-209 indicates that a signed writing  



                                                              

must  include  express  assent  to  all  proposals,  and  we  have  already  concluded  that  



                                                                                                                     

 2-209's requirements are additions to other Article 2 rules such as those in  2-207.  



           29          OHIO  REV .   CODE  ANN .    1302.12(B)  (West  2013)  (codifying  U.C.C.  



 2-209(2)).  



           30  

                      Id.   1302.12(D) (codifying U.C.C.  2-209(4)) ("Although an attempt at           

modification . . . does not satisfy the [signed-writing] requirement[] of [subsection (2)]       

. . . it can operate as a waiver.").  



                                                                     -19-	                                                               6874
  


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

                                                                      

The signed-writing requirement of  2-209(2) is not a back-door route to reintroduce the  



common law requirements that are modified by  2-207.   



                                                                     

                    ConocoPhillips also argues that its October 2002 correspondence could not  



                                                                                           

be found to waive the signed-writing clause, citing Saydell v. Geppetto's Pizza & Ribs  



                                    31  

Franchise Systems, Inc .                But, as relevant here, that case indicates only that the delay of  



                                                                  

a franchisee in requesting the return of his franchise fee from the franchisor will not be  



held as a waiver of his right to recover the fee under the franchise contract at a later  



       32                                                                                                                        33 

                                                                                                            

date.       Moreover, that case rests on the common law of contract rather than the UCC.  



                                                                                                   

We agree with ConocoPhillips that waiver under  2-209(4) may be accomplished only  



              

through affirmative statements or actions indicating intent to waive and not merely by  



silence or inaction of ambiguous import, but we also agree with the superior court that  



ConocoPhillips's actions and statements in this case could be construed as a matter of  



                                                                                                 

law only as indicating waiver of a signed-writing requirement.  The following facts are  



decisive  on  this  matter:    ConocoPhillips's  characterization  of  the  payment  as  a  



                                                                                                     

"preliminary partial settlement" of the dispute over the Exchange Agreement's pricing  



provision,  ConocoPhillips's use of the "received and retained" language mirroring the  



                                                                                                        

mode of acceptance laid down in Williams's offer, and the entire course of conduct  



following these negotiations in which the parties indicated their belief that the deal was  



done and that they could move on to other matters.  



          31  

                    652 N.E.2d 218, 225-26 (Ohio App. 1994).  



          32        Id.  



          33  

                    Id.  



                                                              -20-                                                             6874  


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

           B.	        The  Superior  Court  Did  Not  Err  In  Its  Initial  Grant  of  Summary  

                      Judgment to Williams Under UCC  2-207(1) And Should Not Have  

                                                                                          

                      Rescinded Its Order As Improvidently Granted.  



                      At common law, a contract could be formed only if the acceptance were a  

                                                                     



"mirror  image"  of  the  offer,  replicating  all  of  the  terms  of  the  offer  without  adding  



                                                     34  

conflicting or additional terms.                          Bowing to the "modern realities of commerce" in  



                        

which parties exchange non-mirroring writings and nonetheless proceed as if the deal is  



done, the UCC abrogated the mirror-image rule and replaced it with the provisions of  



                       35 

                                                                                    

UCC  2-207.                UCC  2-207(1) permits contract formation whenever "[a] definite and  



                                                                    

seasonable expression of acceptance . . . is sent within a reasonable time . . . even though  



                                                                                                              

it  states  terms  additional  to  or  different  from  those  offered  or  agreed  upon,  unless  



                                                                                                                                              36  

                                                                          

acceptance is expressly made conditional on assent to the additional or different terms." 



The purpose of UCC  2-207(1) is to bring commercial practice and legal doctrine closer  



together:  "Under this Article . . . a proposed deal which in commercial understanding  



                                                                                      37  

has in fact been closed is recognized as a contract."                                       



                      When a contract is formed under UCC  2-207(1), the terms of that contract  

                                                                                                                              



generally  include  all  of  the  offeror's  terms  "which  are  not  contradicted  by  the  



           34         RESTATEMENT (SECOND) OF CONTRACTS  59 (1981); 1 WHITE ,   SUMMERS  



     

& HILLMAN , supra note 22,  2:9, at 79. 



           35  

                                                             

                      1 WHITE , SUMMERS & HILLMAN , supra  note 22,  2:9, at 79.                                         See also OHIO  

REV .   CODE ANN .  1302.10 cmt. 1 (replicating U.C.C.  2-207 cmt. 1) (indicating that                            

this section was "intended to deal with" a situation in which "the seller's form contains      

terms different from or additional to those set forth in the buyer's form");                                               Idaho Power  

Co. v. Westinghouse Elec. Corp., 596 F.2d 924, 926 (9th Cir. 1979) ("Section 207 . . .  

rejects  the  'mirror  image'  rule,  and  converts  a  common  law  counteroffer  into  an  

acceptance even though it states additional or different terms.").  



           36         OHIO REV .  CODE ANN .  1302.10(A) (West 2013).  



           37  

                      Id. cmt. 2 (replicating U.C.C.  2-207 cmt. 2).  



                                                                     -21-	                                                              6874
  


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

                    38  

acceptance."            The "additional terms" found in the acceptance "are to be construed as  

                                                           39   UCC  2-207(2) governs the conditions under  

                                                                        

proposals for addition to the contract."  



which  those  proposals  for  additional  terms  become  part  of  the  contract:    When  the  

            

contracting parties are merchants,40  "the terms become part of the contract unless one of  

                                                                        



the following applies:  (1) The offer expressly limits acceptance to the terms of the offer.  

                                                        



(2) They materially alter it.  (3) Notification of objection to them has already been given  

                                                                    

or is given within a reasonable time after notice of them is received."41  

                                                                                                              



                     The  superior  court  initially  granted  Williams's  motion  for  summary  



judgment on the grounds that ConocoPhillips's letter of October 29 was a "definite and  

                                                                                                               



seasonable  expression  of  acceptance"  of  the  offer  contained  in  Williams's  letter  of  



October 18, within the meaning of UCC  2-207(1), and that the contract that formed  



                                                     42  

                                                         On reconsideration, the superior court concluded  

included a term for FERC interest.                                                       



          38  

                     1 W   HITE ,   SUMMERS &  HILLMAN , supra  note 22,  2:11, at 89;                            see also  id.  

at 89 n.1 (collecting cases). 



          39         OHIO REV .  CODE ANN .  1302.10(B) (codifying U.C.C.  2-207(2)).  



          40  

                                       

                     OHIO  REV . CODE  ANN .  1302.01(A)(5) (codifying U.C.C.  2-104(1))  

("  'Merchant'  means  a  person  who  deals  in  goods  of  the  kind  or  otherwise  by  the  

person's occupation holds the person out as having knowledge or skill peculiar to the  

                                                                                 

practices or goods involved in the transaction . . . .").  



          41        Id.  1302.10(B) (codifying U.C.C.  2-207(2)).  

               



          42  

                                                                                                                                  

                     The  superior  court's  conclusion  depended  on  six  important  facts, as  

summarized in its order on motion for reconsideration:  



                               1.        Contrary         to    Conoco's          litigation       position,  

                     Conoco's October 29 letter failed to state it was a rejection of  

                                                                                    

                     and counteroffer to Williams's October 18 offer.  



                               2.	       Conoco   affirmatively   indicated   receipt   and  

                                                                                                                (continued...)  



                                                               -22-	                                                        6874
  


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

that "it should not have ruled summarily that Conoco's letter of October 29, 2002 was  

                             



a 'definite and seasonable expression of acceptance,' given Conoco's express rejection  

                                        



of Williams's joint-negotiating provision.  The court's characterization of Williams's  

                                                                                                            



term  as  non-material  constitutes  a  disputable  inference,  which  defeats  summary  

                                                     



judgment."  We conclude that the superior court correctly granted summary judgment  

                                                                                       



to Williams on the grounds that ConocoPhillips's letter of October 29 was a definite and  



          42(...continued)  



                    retention of the wire transfer, quoting Williams's specified  

                    means of acceptance.  



                              3.       Conoco stated that while it did not agree with all  

                                                                             

                    of  Williams's  proposed  terms,  no  further  negotiation  was  

                    necessary.           It   thereby       reasonably         communicated             its  

                                                                              

                    acceptance of all but the explicitly rejected joint-negotiation  

                                                    

                    provision in the Williams counteroffer.  



                              4.       Conoco explicitly stated that it "received and  

                    retained the payment as a preliminary partial settlement" of  

                                                         

                    Williams's contingent liability in the FERC proceeding.  By  

                                                                           

                    this rhetoric, Conoco suggested that the matter was settled.  

                    This  would  only  occur  if  Conoco  accepted  Williams's  

                                                               

                    counteroffer.  



                              5.       Conoco   stated   no   objection   to   Williams's  

                    interest provision.  Conoco had previously proposed that the  

                                                 

                    payment   would   accrue   interest   in   its   initial   offer   on  

                    October 17.  



                              6.       Conoco         closed       its     letter     by     indicating  

                    satisfaction with Williams's proffered assurance and agreeing  

                    to continue to honor the exchange agreement, thereby lifting  

                                                                       

                    its  threat  to  cease  deliveries  of  crude  oil  to  Williams's  

                    refinery.  This language is inconsistent with a call for further  

                                                                                              

                    negotiation.  



                                                             -23-                                                       6874
  


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

seasonable   expression   of   acceptance   under      2-207(1),   and   that   its   order   on  



reconsideration was an understandable error resulting from an overabundance of caution.  



                    1.	       Under   UCC      2-207(1),   ConocoPhillips's   reply   letter   of  

                                                                                                                  

                              October 29 was a definite and seasonable acceptance leading to  

                              contract formation.  



                    The superior court correctly held in its grant of summary judgment that  



                                                         43 

                                                                                                            

ConocoPhillips's letter of October 29                       was a "definite and seasonable expression of  



acceptance" of the offer made in Williams's letter of October 18, within the meaning of  



                                                                       

UCC  2-207(1).  In that letter, ConocoPhillips acknowledged that it had "received and  



                                                                     

retained the Payment as a preliminary partial settlement" of the disagreement over the  



                                                                                     

pricing provision of the oil exchange contract, mirroring the language Williams used in  



                                                                                                          

its    letter    of    October        18     specifying        the     mode       of    acceptance         of    its    offer:  



"ConocoPhillips'[s]   receipt   and   retention   of   the   [money]   .   .   .   shall   constitute  



ConocoPhillips'[s] agreement with the terms set forth in . . . this letter."   ConocoPhillips  



             

did not state that its letter was a rejection of and counteroffer to Williams's offer of  



                                                                                                       

October  18  but  rather  indicated  that  the  dispute  over  the  pricing  provision  of  the  



                                                           

Exchange Agreement was now settled and that no further negotiation was necessary to  



close the deal.  ConocoPhillips agreed to continue to honor the Exchange Agreement,  



          43  

                    We  note  that   ConocoPhillips  also   sent  a  reply  email  on  October 18   

following receipt of the wire transfer and Williams's letter specifying the terms of the  

offer, in which ConocoPhillips acknowledged receipt and concluded that it could "now  

                                               

focus [its] efforts on getting [the FERC rate-making case] settled."  We do not reach the  

                                                 

issue of which reply led to contract formation under  2-207(1): the email of October 18  

or  the  subsequent  letter  of  October  29.    We  follow  the  influential  and  persuasive  

authority of other jurisdictions in deciding that "[w]e see no need to parse the parties's  

                                                                                           

[sic]  various  actions  to  decide  exactly  when  the  parties  formed  a  contract"  under  

 2-207(1).  Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91, 98 (3d Cir. 1991).  

                                                                                                

Rather, the content of both documents informs the analysis and drives our conclusion  

                                                                                                           

that a contract was formed under  2-207(1).  



                                                             -24-	                                                       6874
  


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

                                                                     

thus  lifting  the  threat  to  halt  crude  oil  deliveries  and  indicating  satisfaction  with  



                                                          

Williams's assurance.  Finally, ConocoPhillips closed the letter by indicating that the  



                                      

matter  was  settled  and  the  parties  could  move  on  with  their  regular  business:  



                                                                                       

"ConocoPhillips looks forward to continuing to work with Williams under the parties'  



                                      44  

various agreements."                       All of these facts indicate that ConocoPhillips gave Williams a  



definite and seasonable expression of acceptance of its offer of October 18.  



                                                                  

                        Our conclusion is not altered by the fact that ConocoPhillips's letter of  



                                                                                                               45  

                                                                                                                                 

October 29 seemed to object to the joint-negotiating provision,                                                    as well as vaguely hint  



                                                                                                                           

that "ConocoPhillips does not agree with all of the terms stated in your letter."  The  



            44  

                        That ConocoPhillips considered the matter settled as per the October 18                                        

letter  is  further  supported  by  an  email  sent  from   ConocoPhillips  to  Williams  on  

October 18:  "We received your letter and our treasury guys just confirmed receipt of the   

funds.   We can now focus our efforts on getting [the] Quality Bank [rate-making case]   

 settled."  



            45  

                                                                                                                                

                        For the purposes of this analysis, we assume arguendo that ConocoPhillips  

                                                                                                                                           

actually rejected Williams's joint-negotiating term.  However, on this record, that is far  

from  certain.    Williams  had  offered  as  a  term  in  its  letter  of  October  18  that  

"ConocoPhillips agrees that it will continue good faith efforts to resolve all Quality Bank  

issues  through  negotiated  settlement  and  vigorous  support  of  the  Eight-Party  Joint  

Defense  Position  before  FERC  and  the  RCA."    In  its  reply  letter  of  October  29,  

                                                                                                                                    

ConocoPhillips stated that it "is continuing 'good faith efforts to resolve all Quality Bank  

                                                         

issues  through  negotiated  settlement  and  vigorous  support  for  the  Eight-Party  Joint  

Defense Position before FERC and the RCA,' " but it insisted that this obligation was  

"[c]ompletely independent of the Payment" and that "[t]here is no linkage whatsoever"  

                                                                                               

between  ConocoPhillips  demanding  adequate  assurances  and  the  joint-negotiating  

position  in  the  rate-making  case.    We  note  that  the  superior  court  concluded  that  

ConocoPhillips "rejected" the joint-negotiating term and are mindful of the need to make  

                                                                                                                               

all reasonable inferences in favor of the non-moving party when considering a grant of  

                                                                         

 summary judgment.   Witt v. State, Dep't of Corr., 75 P.3d 1030, 1033 (Alaska 2003).  

But we note that if the best view of the facts were that ConocoPhillips did not reject the  

                               

joint-negotiating provision, our conclusion about contract formation under  2-207(1)  

would be even stronger.  



                                                                          -25-                                                                    6874
  


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

UCC makes clear that a "definite and seasonable expression of acceptance" results in  

                                                                                



contract formation "even though it states terms additional to or different from those  



              46  

                                                                                                    

offered."          Indeed, the entire purpose of UCC  2-207(1) was to abrogate the common  



law mirror-image rule and allow for non-mirroring acceptances to nonetheless result in  



                              47  

contract formation.                 



                     To be sure, there is an outer limit to how much a return letter may differ  



from an offer and still result in contract formation under  2-207(1), and the contours of  



                                                                                                                 

that limit are not entirely clear from the Code, the case law, or treatises. UCC  2-207(2)  



presupposes that a return document can be an acceptance under  2-207(1) even though  



                                                                                                 48  

                                                                                                            

it includes additional terms that "materially alter[]" the offer,                                   and a respected treatise  



                                                                                                                          

concludes that "it is clear that a document may be an acceptance . . . and  yet differ  



                                               49  

substantially from the offer."                     A Court of Appeals in Ohio has held in Alliance Wall  



                                                        

Corp. v. Ampat Midwest Corp. that a return letter does not constitute an acceptance under  



                                                                                                         50  

                                                                                                                               

 2-207(1) "where the parties disagree as to 'dickered for' terms."                                          The court did not  



           46        OHIO REV .  CODE ANN .  1302.10(A) (codifying U.C.C.  2-207(1)).  



           47  

                     Id.  1302.10 cmt. 1 (replicating U.C.C.  2-207 cmt. 1) .  



           48  

                                                                                                                     

                     UCC    2-207(2) governs when additional, non-mirroring terms  from a  

                                                                                                                        

return letter constituting an acceptance under  2-207(1) will become part of the contract  

                       

thus formed.  UCC  2-207(2)(b) indicates that, among merchants, non-mirroring terms  

automatically  become  part  of  the  contract  unless  those  terms  "materially  alter"  the  

contract formed under  2-207(1).  See also  1 WHITE ,   SUMMERS  &   HILLMAN , supra  

note 22,  2:10, at 83. 



           49  

                     1 WHITE , SUMMERS  & HILLMAN , supra  note 22,  2:10, at 83 (emphasis             

                                                           



added).  



           50        477 N.E.2d 1206, 1211 (Ohio App. 1984).  See also 1  WHITE ,   SUMMERS  

                             



     

& HILLMAN , supra note 22,  2:17, at 112 ("Not all return documents are 2-207(1)       

                                                                                                                    (continued...)  



                                                                 -26-                                                            6874
  


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

                                                                                                                              

define  "dickered-for  terms"  but cited  an  example  used  in  the  learned  treatise:    No  



                                                                                

contract forms when a purchase order requests a certain amount of a commodity at $0.10  



                                                                                                                51  

                                                                                                                      Another  example  

per  pound  and  the  acknowledgment  proposes  $0.15  per  pound.  



                                                

comes from Alliance Wall  itself, where the court concluded that no contract formed  



                                                                    

under  2-207(1) when time was of the essence, the parties did not reach agreement on  



                                                                     

a delivery date, the delivery date was of utmost importance to each party, and the return  



                                                                                                              52  

                                                                                                                   We conclude based  

document struck the offeror's delivery date and inserted its own. 



                                                                               

on these authorities that, whatever the precise boundaries of the dickered-for exception  



     

to  2-207(1) acceptance, the return document will qualify for that exception only if it  



                                                                                                                                                 53  

                                                                                             

differs significantly (not just materially) from the offer on a sufficiently important term. 



           50(...continued)  



'acceptances.'   If the return document diverges significantly as to a dickered term, it  

                            

cannot be a 2-207(1) acceptance.").  



           51          See  477  N.E.2d  at  1211  n.5;  1  WHITE ,   SUMMERS  &   HILLMAN , supra  

                               

note 22,  2:17, at 112-13.  



           52  

                       477 N.E.2d at 1210.                  In that particular case, the delivery date appears to                  

have  been  a  crucial  and  hotly  disputed  term  throughout  negotiations.     Indeed,  the  

delivery date "appears to have been more important to the buyer than was the exact                                                   

price" and "[t]he seller appeared to be just as adamant not to be bound to any particular   

date."  Id.  



           53  

                                                                                                                                

                       The parties offer competing interpretations of the scope of the dickered-for  

exception, both of which we reject.   



                                                                                                

                       Williams argues that a dickered-for term is one which is "both material and  

                                                                                  

. . . previously negotiated between the parties" and that the joint-negotiating provision  

                                                                                                                  

cannot qualify because it was not negotiated prior to the October 18 letter.  Not only does  

Williams  not  cite  any  authority  for  this  proposition,  but  it  also  conflicts  with  the  

                                                                                                                         

established example of a dickered-for term in the Alliance Wall  case, where the court  

cited as an example of a dickered-for term a price change that had not previously been  

disputed by the parties.  See 477 N.E.2d at 1211 n.5.   

                                                                                                                             (continued...)  



                                                                      -27-                                                                 6874
  


----------------------- Page 28-----------------------

                                                                                                        

                    ConocoPhillips's letter of October 29 is clearly outside of those bounds and  



results in contract formation under  2-207(1).   First, the joint-negotiating provision was  



                                                                        

not sufficiently important in the context of the overall transaction to stymie  2-207(1)  



contract  formation.    Unlike  the  delivery  date  in Alliance  Wall ,  the  joint-negotiating  



provision  was  not  of  utmost  importance  to  the  parties  in  this  case,  subjectively  or  



objectively:  From an objective perspective, it would be difficult to conclude that a term  



                                                                                                         

merely  purporting  to  reaffirm  ConocoPhillips's  commitment  to  a  preexisting  joint- 



                                                                                                                    

negotiating agreement is important in the context of the overall settlement.  Indeed, the  



          53(...continued)  



                    ConocoPhillips argues that dickered-for terms are defined in opposition to  

                                                                                                 

"standard boiler-plate terms" and encompass all those terms "that are unique to each  

transaction such as price, quality, quantity, or delivery terms as compared to the usual  

                   

unbargained terms on the reverse side [of a form] concerning remedies, arbitration, and  

                                                                                                              

the like[.]"  (Alterations in original.)  ConocoPhillips argues that "[i]n this case, all of the  

                                                                                 

terms in the parties' correspondence were 'dickered for' terms."  (Emphasis in original.)  

                                                                                                   

But a distinction between front-side terms and reverse-side or boilerplate terms is not  

useful in this context, where the parties have negotiated every provision of the contract  

                                                                                                                   

rather than engaging in a traditional battle of the forms.  Under ConocoPhillips's theory,  

                                                                 

 2-207(1) has no application outside of the boilerplate context.  Yet nothing in the text  

                                                                                                          

of  2-207 would limit itself in such a way, and courts have often applied  2-207 in  

        

situations  not  involving  boilerplate  forms  but  rather  detailed  negotiation  among  

sophisticated parties, on the theory that  2-207 applies whenever an acceptance does not  

                                           

mirror an offer.  See, e.g., Energy Mktg. Servs., Inc. v. Homer Laughlin China Co. , 186  

                                                                                               

F.R.D.   369  (S.D.  Ohio  1999)  (stating  that,  as  a  matter  of  Ohio  contract  law,  

                                                                          

UCC  2-207(1) applies "when an acceptance differs in terms from an offer," id. at 374,  

          

including where the parties had negotiated a contract amendment over the course of  

                                                                                                        

years, id. at 371-73), aff'd, 229 F.3d 1151 (6th Cir. 2000).  We reject any interpretation  

                                                                                                          

of the dickered-for terms exception that would swallow the more general  2-207(1) rule  

                                                       

and bring common law rules in through the back door.  



                    Accordingly, we reject both parties' proffered definitions of the scope of  

the dickered-for terms exception in favor of our formulation here of the outer bounds of  

                                    

the exception, whatever its precise definition.  



                                                               -28-                                                         6874
  


----------------------- Page 29-----------------------

relative  unimportance  of  this  provision  may  explain  why  the  parties  indicate  little  



                                                                                       

subjective interest in the provision.  The joint-negotiating term was first introduced into  



                                                                                                          

negotiations  in  Williams's  letter  of  October  18.    That  the  parties  considered  this  



                                                                                 

provision to be relatively unimportant is confirmed by the parties' actions indicating that,  



                             

in their minds, the deal was done following acceptance of the payment notwithstanding  



                                            54  

                                                  Second,  the  degree  of  change  to  the  contested  term  

ConocoPhillips's  objections.                                                                         



proposed by the October 29 acceptance is also relatively small.  Unlike the 50% increase  



in price in the treatise hypothetical cited in Alliance Wall , there is relatively little distance  



between  the  offer  to  reinscribe  a  preexisting,  independent  agreement  and  the  return  



proposal  to  voluntarily  commit  to  continue  performing  a  preexisting,  independent  



agreement.  



                    Simply  put,  ConocoPhillips's  rejection  of  Williams's  joint-negotiating  



provision  was  a  relatively  unimportant  and  relatively  small  discrepancy  within  the  



context of the larger deal.  The course of negotiation and the parties' post-negotiation  



                                                                       

behavior indicate that neither party thought the term sufficiently important or the change  



                                                                            55  

sufficiently great to require additional negotiation.                           In short, the parties thought they  



          54  

                    The superior court concluded                    that "Conoco accepted the proffered $31   

million and behaved as if a contract had in fact been formed."  



          55        In addition to ConocoPhillips's purported rejection of the joint-negotiating  

                                                                                                          

provision, ConocoPhillips also stated in its letter of October 29 that it "d[id] not agree  

with all of the terms stated in [Williams's] letter" but that it "also d[id] not believe it  

would prove productive to conduct a letter writing campaign as to what the Payment  

represents or specific terms and conditions associated with the Payment."  In the words  

                                           

of the superior court in its order on motion for summary judgment, such "seemingly  

                                      

studied ambiguity" hinting at "undisclosed issues with at least one term of Williams'[s]  

counteroffer" cannot preclude the conclusion that there was a definite and seasonable  

                                                                             

expression of acceptance in this case.   As the superior court properly concluded, "If  

                                                             

Conoco perceived no need to further discuss the terms Williams proposed, but elected  

                                                                                                              (continued...)  



                                                              -29-                                                         6874
  


----------------------- Page 30-----------------------

were done negotiating, and the purpose of  2-207(1) is to step in to supply a contract  



in just such a situation.  



                                                                                                 

                    Finally,  ConocoPhillips  garners  no  help  from     2-207(1)'s  narrow  



                                                                                                      

exception for acceptances "expressly made conditional on assent to the additional or  

different terms."  That exception "has been construed narrowly" by courts56 to apply  



                                                                    

"only to an acceptance which clearly reveals that the offeree is unwilling to proceed with  



                                                                                         

the transaction unless he is assured of the offeror's assent to the additional or different  



                      57  

                                                                                

terms therein."           Here, ConocoPhillips failed to state explicitly in its letter of October 29  



          55(...continued)  



to  retain  the  $31  million,  the  reasonable  implication  is  that  Conoco  grudgingly  but  

definitively assented to the Williams terms, except those explicitly rejected."  Vague  

                                                                                         

hints of disagreement combined with acceptance of payment in the form prescribed by  

                                                                                                       

the  offer  and  explicit  disagreement  with  one  term  cannot  be  allowed  to  convert  an  

                                                                                

otherwise-definite expression of acceptance into an ineffective counteroffer.  To hold to  

                                                                                                                     

the  contrary  would  be  to  undermine  the  guiding  principle  of  interpretation  of  

UCC    2-207:  preventing  one  party  from  obtaining  an  "unearned  advantage."    See  

                                                          

1 W 

      HITE ,   SUMMERS &  HILLMAN , supra note 22,  2:9, at 81.  In order for objections in  

a return letter to foreclose contract formation under  2-207(1), those objections must be  

                                                                                                                         

sufficiently explicit as to which provisions they pertain to, or sufficiently clear as to the  

                                                                                                                            

respondent's intent to reject the offer in general.   See  id.  2:11, at 89 (arguing that  

                                                                                     

silence  in  a    2-207(1)  acceptance  as  to  a  term  in  the  offer  constitutes  grudging  

acceptance of that term); id. at 89 n.1 (collecting cases).  Here, ConocoPhillips never  

characterized its letter of October 29 as a rejection in general, and the only specific term  

                                                                                             

it registered disagreement with was the joint-negotiating provision.  Accordingly, its  

    

exercise in studied ambiguity cannot succeed where its more specific objections failed.  

                                                                                

As the superior court correctly concluded, "Conoco grudgingly but definitively assented  

                                 

to the Williams terms, except those explicitly rejected."  



          56  

                                          

                    Idaho Power Co. v. Westinghouse Elec. Corp. , 596 F.2d 924, 926 (9th Cir.  

1979).  



          57  

                    Dorton v. Collins & Aikman Corp. , 453 F.2d 1161, 1168 (6th Cir. 1972).
  

Indeed, such a narrow interpretation is required by the nature of UCC  2-207(1) as
  

                                                                                                               (continued...)
  



                                                              -30-                                                         6874
  


----------------------- Page 31-----------------------

that its acceptance was conditioned on Williams's assent to the omission of the joint- 

                                     



negotiating  provision  from  the  contract.    ConocoPhillips  instead  appeared  eager  to  

                                                  



proceed with the transaction as concluded and move on to address other issues.  As  



                                                                                       

ConocoPhillips told Williams in an email after receiving the $31 million transfer, "We  



can now focus our efforts on getting [the Quality Bank rate-making case] settled."  



                    Accordingly, we conclude that the superior court's initial grant of summary  



judgment in favor of Williams under UCC  2-207(1) was proper.   



                                                                            

                    2.	       The  terms  of  the  resulting  contract  included  a  provision  to  

                                                                   

                              credit the $31 million prepayment with interest at the FERC  

                              rate.  



                                              

                    When a contract is formed under UCC  2-207(1), the terms of that contract  



generally  include  all  of  the  offeror's  terms  "which  are  not  contradicted  by  the  



                   58  

acceptance."              We  have  previously  held  that  an  offeree's  failure  to  "manifest  any  



objection to the terms" of an offer or to "mak[e] its acceptance of the offer conditional  



                                                      

on [the offeror's] assent to different terms" results in the offeror's terms "be[coming] part  



                         59  

                                                                                       

of the contract."             This position is amply supported by persuasive authority in other  



                    60  

jurisdictions.          It is true that in response to  an entire offer, mere silence or inaction  



          57(...continued)  



abrogating the mirror-image rule of the common law:  If non-mirroring acceptances were  

                                                                                

construed too liberally as being conditioned on the assent of the offeror, the rigidity of  

the mirror-image rule would re-enter the Code through the back door of an exception to  

                                                                                                         

  2-207(1). 



          58  

                    1  WHITE ,   SUMMERS &  HILLMAN , supra  note 22,  2:11, at 89;                             see also  id.  

at 89 n.1 (collecting cases).  



          59        Armco Steel Corp. v. Isaacson Structural Steel Co. , 611 P.2d 507, 518  

                                                                                                                             

(Alaska 1980).  



          60        See, e.g., Constr. Aggregates Corp. v. Hewitt-Robins, Inc., 404 F.2d 505,  

                                                                                                              

                                                                                                              (continued...)  



                                                              -31-	                                                        6874
  


----------------------- Page 32-----------------------

                                                 61  

                                                                                              

generally do not indicate assent.                    But silence as to one term, coupled with assent to the  



         

offer as a whole, cannot defeat inclusion of that term in the resulting contract.  



                    The superior court's order on summary judgment correctly concluded that,  



                                                                                                          

on the facts of this case, ConocoPhillips's acceptance of October 29 formed a contract  



              

under    2-207(1),  the  terms  of  which  included  a  provision  to  credit  Williams  with  



                                                          

interest on the $31 million principal prepayment at the rate prescribed by the FERC.  



                                                                                                               

ConocoPhillips's  letter  of  October  29  was  a  definite  and  seasonable  expression  of  



acceptance resulting in contract formation.  ConocoPhillips indicated that no further  



                          

negotiation was necessary, thereby communicating acceptance of all but the explicitly  



                                                                                           

rejected terms.  ConocoPhillips did not object to Williams's provision specifying that the  



principal would accrue interest at the FERC rate but rather objected only to the joint- 



negotiating  provision.    Moreover,  ConocoPhillips  had  already  proposed  that  the  



prepayment would accrue interest (at the LIBOR rate) on October 17, so as a matter of  



                                                                                                         

law its silence as to Williams's counteroffer of October 18 for FERC interest constitutes  



assent  to  Williams's  proposal.    Finally,  as  the  superior  court  correctly  noted,  "[t]he  



                                                                            

demand for FERC interest was not an implausible overreach" but rather was a reasonable  



                                                                                                                                  62  

                                                                                                       

proposal in light of the deal, such that its inclusion in the resulting contract is proper. 



          60(...continued)  



510  (7th  Cir.  1968)  (concluding  that  offeror  "could  reasonably  have  assumed  that  

[offeree's] single objection was an acquiescence in the remaining terms of the counter- 

                                                                                                                   

offer"); Earl M. Jorgensen Co. v. Mark Const., Inc. , 540 P.2d 978, 983 (Haw. 1975)  

(holding that "silence was not an effective rejection or a counteroffer" when an offer  

                                                                                      

included a specific provision and the response otherwise indicated assent but omitted  

reference to the provision).  



          61  

                            

                    See supra note 28.  



          62  

                                                                                                                            

                    ConocoPhillips  disagrees  and  argues  that  it  would  be  unfair  to credit  

                                                                                                                (continued...)  



                                                               -32-                                                         6874
  


----------------------- Page 33-----------------------

                                                                                         

We conclude that the contract formed by ConocoPhillips's acceptance includes a term  



for FERC interest.  



                    3.	       The superior court was correct  in its first entry of summary  

                              judgment, and thus it should not have rescinded its initial order  

                              as improvidently granted.  



                                                                                                          

                    After granting Williams's motion for summary judgment and concluding  



                                                                           

that a contract for FERC interest was formed under  2-207(1), the superior court granted  



ConocoPhillips's  motion  for  reconsideration  and  ordered  additional  briefing  on  the  



                                             

UCC  2-207 issues because the parties had not briefed them before.  ConocoPhillips  



          62(...continued)  



interest at the administratively prescribed FERC rate rather than the "market rate" of  

LIBOR.  ConocoPhillips argues that LIBOR is inherently fair because "[h]ad the parties  

                                                       

proceeded  on  this  basis,  neither  party  would  have  gained  or  lost  value"  because  

                                                                                 

"Williams would have lost the time value of its $31 million, but it would have received  

                                                                   

interest  at  a  market  rate  from  ConocoPhillips  to  make  up  for  that  time  value  loss."  

                                                                       

ConocoPhillips confuses the issue by hypothesizing a single market rate of interest and  

thus attempts to make Williams's demand for FERC interest seem unreasonable.  But it  

                                                                                                   

is axiomatic that there is no single "market rate" of interest; rather, market rates of return  

                                                                

depend on  which  market the  investor chooses to enter and the concomitant risk the  

                                        

investor chooses to assume.   See, e.g., Edwin J. Elton & Martin J. Gruber, Modern  

Portfolio Theory, 1950 to Date , 21 J. B 

                                                          ANKING  &  FIN . 1743, 1744 (1997).  If Williams  

knew it would be responsible for the higher FERC interest rate on retroactively assessed  

                                                                                                 

Quality Bank degradation charges, then it would be reasonable for Williams to attempt  

to earn FERC rates of interest on the principal it set aside for such charges by purchasing  

                                 

assets in a market with correspondingly high levels of risk and return.  Accordingly, it  

                                                                                         

might be reasonable for Williams to insist when it transferred ownership of the principal  

                                                                                                               

corpus to ConocoPhillips that ConocoPhillips agree to credit Williams with the FERC  

rate of interest Williams would have otherwise attempted to earn for itself.  Indeed, in  

                                                                        

oral argument, counsel for Williams stated that this was precisely the rationale behind  

                                                                                                   

Williams's proposal for FERC interest.  Thus, LIBOR interest is not the only " 'break  

                                                                                                        

even'      point"      in    the     transaction,        ConocoPhillips's            assertions        to   the     contrary  

notwithstanding.  Rather, the prospective time-value of money is an endogenous variable  

                                                                                            

susceptible to influence by the actions of the person making investment decisions.  



                                                             -33-	                                                       6874
  


----------------------- Page 34-----------------------

                                                        

argued:  (1) its letter of October 29 was not a definite and seasonable expression of  



                                                                   

acceptance within the meaning of  2-207(1); (2) a contract under  2-207(3) was formed  



in the course of performance but only for retention of the transferred money; (3) no  



agreement  was  reached  for  interest;  and  (4)  the  gap-filling  interest  provision  of  



                                                                                              

UCC  9-207(3), which does not mandate accrual of interest on cash collateral obtained  



in a security transaction, governs this case.  Williams supported the original grant of  



summary judgment.  



                                                                

                    On reconsideration, the court concluded that it had improvidently granted  



                                                                                                      

summary judgment because "it should not have ruled summarily that Conoco's letter of  



                                                                                                   

October  29,  2002  was  a  'definite  and  seasonable  expression  of  acceptance,'  given  



                                            

Conoco's  express  rejection  of  Williams's  joint-negotiating  provision.    The  court's  



characterization of Williams's term as non-material constitutes a disputable inference,  



                                                    63  

which defeats summary judgment."                         



                                                                          

                    We conclude that the superior court correctly granted Williams summary  



judgment the first time around and erred in concluding on reconsideration that it had  



          63  

                    As  an  additional  reason   favoring   its   reconsideration   of   the  grant of   

summary  judgment,   the  superior  court  stated  that  its  "characterization  of  Conoco's  

rejection of the joint-negotiating term . . . fits awkwardly within the actual wording of  

UCC  section  2-207(B)  [sic],  which  speaks  of  additional  terms  being  construed  as  

 'proposals for addition to the contract.' " (Emphasis in original.)  The superior court's  

concerns were inapposite to the question before the court.   UCC  2-207(1) and (2)  

                                                                                                       

address  two  distinct  issues:               (1)  addresses  the  issue  of  contract  formation,  while  

                                                     

(2) addresses the issue of which additional terms from the non-mirroring acceptance  

come  into  the  new  contract.                  The    2-207(2)  question  in  this  case  -  whether  

                                                                                                     

ConocoPhillips's apparent rejection of the joint-negotiating provision would cause that  

provision  to  fall  out  of  the  contract  formed  under    2-207(1)  or  whether,  in  the  

                                                                                    

alternative, the rejection of a term in the offer cannot be effective under  2-207(2)  

because  that  section  addresses  only  "additional"  terms  -  has  no  bearing  on  the  

                                                                                                   

  2-207(1) question in this case - whether the October 29 letter constitutes a definite  

                                                 

expression of acceptance of Williams's October 18 offer.  



                                                             -34-                                                       6874
  


----------------------- Page 35-----------------------

                                                                    64  

improvidently granted summary judgment.                                  As we have already noted, the superior  



court's error was understandable, resulting from an abundance of caution.  This is a  



                                        

complex case. But as we concluded in section IV.B.1 above, ConocoPhillips's rejection  



                                                                  

of Williams's joint-negotiating provision was neither a sufficiently large change in that  



provision  nor  a  sufficiently  important  part  of  the  overall  bargain  to  vitiate  contract  



                                                                                            

formation under  2-207(1).  That conclusion of law is not a disputable inference of fact  



                                                              65  

                                                                               

that could foreclose summary judgment.                            Indeed, the parties do not dispute any material  



           

issues of fact, as the superior court correctly noted in its initial order granting Williams  



                                         

summary judgment.  The only remaining disputes were about the legal conclusions to be  



                                                                                      

drawn from those facts.  Accordingly, we hold that the superior court's order rescinding  



                                                                                                                

summary judgment as improvidently granted was error. We reverse that order and affirm  



                                                                                                                          66  

the initial order granting summary judgment on the basis of UCC  2-207(1).                                                   



           64  

                     Because   we   conclude  that  a  contract  for  FERC  interest  was  created in   

October 2002 under UCC  2-207(1), we decline to reach other issues raised on appeal,                

including  whether  a  contract  for  FERC  interest  was  reached  under    2-207(3)  and  

whether or at what rate Williams is owed interest on a theory of quantum meruit.  



           65  

                                                                                                                       

                     To the extent that the superior court was under the impression that a reply  

letter  containing  a  mere  "material"  change  to  the  contract  could  prevent  contract  

formation under  2-207(1),  the court erred.  UCC  2-207(2)'s provisions governing  

                                              

which non-mirroring terms enter a contract formed under  2-207(1) make clear that a  

                                                                                                              

materially different term in the reply letter can nonetheless result in contract formation.  

                                

See   OHIO         REV .     CODE        ANN .      1302.10(B)(2)   (West   2013)   (codifying   U.C.C.  

 2-207(2)(b)) (stating that, when the parties to a contract formed by acceptance under  

                                                                                            

 2-207(1) are merchants, non-mirroring terms in an acceptance do not automatically  

                                                                                      

become part of the resulting contract where those terms "materially alter" the offer).  



           66  

                                                                                                                                  

                     We ordinarily do not review denials of motions for summary judgment after  

a trial on the merits, "at least when the 'motions are denied on the basis that there are  

genuine issues of material fact.' " Larson v. Benediktsson , 152 P.3d 1159, 1169 (Alaska  

                                                                                            

2007) (quoting Ondrusek v. Murphy, 120 P.3d 1053, 1056 n.2 (Alaska 2005)).  We have  

                                                                                                              

                                                                                                                   (continued...)  



                                                                 -35-                                                           6874
  


----------------------- Page 36-----------------------

          C.	       The  Superior  Court  Did  Not  Abuse  Its  Discretion  By  Granting  

                    Attorney's Fees And Court Costs To Williams.  



                    ConocoPhillips and Williams agreed in a Dispute Resolution Agreement  



                                                                                                  

at the outset of litigation in 2007 that the "prevailing Party . . . shall be entitled to recover  



                                                   

reasonable attorney fees and court costs" to be "paid within twenty (20) days after receipt  



of  an  invoice  for  such  costs  containing  documentation  reasonably  supporting  the  



                                                      

amounts."  Both parties agree  that Williams is the prevailing party in this litigation  



because Williams "obtained the relief it sought."  But ConocoPhillips argues that the  



                                      

superior court abused its discretion by granting Williams's motion for leave to enlarge  



                                                                                              

time to file a motion for attorney's fees, extending the time to file a cost bill with the  



                

Clerk   of  Court,  and  awarding  full  attorney's  fees  to  Williams  while  rejecting  



ConocoPhillips's suggested reductions.  We affirm the superior court's actions with  



regard to attorney's fees and court costs in all respects.  



          66(...continued)  



reviewed denials of summary judgment after a trial on the merits when the order was  

entered  on  a  legal  ground  that  affected  the  subsequent  trial.   Id.  at  1169  (citing  W.  

Pioneer,  Inc.  v.  Harbor  Enters.,  Inc. ,  818  P.2d  654,  658  (Alaska  1991)).    But  the  

situation before the court today is entirely different. Rather than seeking to roll back the  

                                                                                        

tape to summary judgment after having proceeded through trial to resolve disputed facts,  

                                                                                      

Williams seeks merely to roll back the tape to the initial grant of summary judgment  

                                                                       

under  2-207(1) after we find that the order on reconsideration was error as a matter of  

law.  Neither Larson nor any other precedent of this court prevents us from reviewing  

                                                                                                         

a prior motion for summary judgment in this procedural context.  Indeed, Larson and  

                             

 Western Pioneer support the proposition that review in this context is proper because the  

                                           

error in the order on reconsideration was a legal error.  



                                                             -36-	                                                      6874
  


----------------------- Page 37-----------------------

                     1.	       The  superior  court  did  not  abuse  its  discretion  by  granting  

                               Williams additional time to file its motion for attorney's fees.  



                     Under Alaska Civil Rule 82, in order to recover an "award of attorney's  



                                                                                         

fees . . . pursuant to contract," the prevailing party must file a motion "within 10 days  



                                                                                             

after the date shown in the clerk's certificate of distribution on the judgment" or within  

"such additional time as the court may allow."67  Failure to file a timely motion "shall be  



                                                                                                              68  

                                                                                                                  Alaska Civil  

construed as a waiver of the party's right to recover attorney's fees." 



                                                                                                                      

Rule 6(b) further specifies that, where the Alaska Civil Rules require an act "be done at  



                

or within a specified time, the court for cause shown may at any time in its discretion . . .  



                                                                       

upon motion made after the expiration of the specified period permit the act to be done  



                                                                                                69  

where the failure to act was the result of excusable neglect."      Finally, Alaska Civil  



Rule 94 provides that the Civil Rules "are designed to facilitate business and advance  



                                                                                                        

justice" and they "may be relaxed or dispensed with by the court in any case where it  

shall be manifest to the court that a strict adherence to them will work injustice."70  



                                                                                                         

                     In this case, the clerk's certificate of distribution on the final judgment  



                                           

shows the date February 9, 2012, and the ten-day period for Williams to file a motion for  



                                                                                                71  

costs and attorney's fees ended on February 20 or 22, 2012.                                         Williams did not file  



           67	  

                     Alaska R. Civ. P. 82(c).  



           68	  

                     Id.  



           69	  

                     Alaska R. Civ. P. 6(b).  



           70	  

                     Alaska R. Civ. P. 94.  



           71        The parties disagree as to when the ten-day clock ran in this case.  Williams  



                                               

argues that it filed its motion to enlarge time to file a motion for attorney's fees "eight  

                                                                                            

days  after  it  was  due"  on  March  1,  implying  that  the  clock  would  have  run  on  

                       

February 22. (2012 was a leap year.)  ConocoPhillips argues that Williams's motion was  

                                                                                                                 (continued...)  



                                                                -37-	                                                         6874
  


----------------------- Page 38-----------------------

                                                                                                         

within that period.  On March 1 Williams filed a motion for leave to enlarge time to file  



a  motion  for  attorney's  fees,  asking  the  court  to  accept  an  attached  motion  for  



                                                       

$469,331.68 in attorney's fees and several exhibits.  Williams argued that its failure to  



                                                                                                

meet the ten-day deadline was the result of excusable neglect under Rule 6(b) because  



                                              

it did not know that Rule 82's requirements would apply to its motion for attorney's fees  



                                                                                                              

under the Dispute Resolution Agreement.  Williams further argued that the delay "does  



                                                                                                             

not   impact   the          judicial   proceedings   in              this   case   and         it   does   not        prejudice  



                                                                                            

ConocoPhillips."  ConocoPhillips argued that an attorney's mistake as to the applicable  



rules in this context cannot constitute excusable neglect.  



                                                                 

                    The  superior  court  granted  Williams's  motion  to  enlarge  time  to  file  a  



motion for attorney's fees, finding "excusable neglect and no prejudice."  The superior  



                                

court explained that "[t]he court was inartful" in its Final Judgment, in which the court  



                                                                       

stated  that  "Williams  may  move  the  Court  for  an  award  of  attorney  fees"  as  the  



                                                               

"prevailing party . . . pursuant to . . . the parties' Dispute Resolution Agreement."  The  



superior court explained that it "should also have struck the 'pursuant to' . . . clause,  



because the attorney fee entitlement is pursuant to ARCP 82."   



                                        

                    On  appeal,  ConocoPhillips  argues  that  the  superior  court  abused  its  



discretion when it "took the blame for Williams'[s] failure to timely file its motion."  



                                                                                             

ConocoPhillips reasoned that there was no excusable neglect for the late motion because  



                                                                                     

Rule 82(c)'s applicability to contract-based fee motions was clear on the face of the Rule  



and that nothing in the superior court's final judgment created ambiguity on that issue.  



          71(...continued)  



due by Monday, February 20, 2012 and that its motion was ten days late.  Neither party  

                                                                                                         

adequately explains the legal theory underlying these assertions.  But we conclude that  

                                                                                                           

the two-day difference between being late by eight days (Williams's theory) and being  

                                                                  

late by ten days (ConocoPhillips's theory) would not change the outcome of our holding  

                         

in this case.  



                                                               -38-                                                         6874
  


----------------------- Page 39-----------------------

                                                                                 

ConocoPhillips also reasoned that the mere lack of prejudice to ConocoPhillips alone  



cannot sustain a finding of excusable neglect.  We review a trial court's disposition of  



                                                                          72  

a motion to enlarge time for abuse of discretion.                             



                                                                                                            

                     We affirm the superior court's order granting Williams's motion to enlarge  



                                                       

time to file a motion for attorney's fees.  The superior court certainly did not abuse its  



                                                                  

discretion in this case.  The delay of ten days in this case is well within the zone of  



                                                                                                                                   73  

                                                                                                

permissible discretion suggested by our precedent.  In T & G Aviation, Inc. v. Footh,  



                                                                                                               

we held that the superior court did not abuse its discretion by allowing a party to file a  



                                          

motion for attorney's fees 70 days late, even in the absence of a persuasive explanation  



                     74  

for the delay.            Indeed, when there is no showing of prejudice, it may be an abuse of  



discretion not to allow an untimely motion for attorney's fees on facts such as those  



                                     75  

                                                                                               

presented  in  this  case.                 In  short,  Williams's  neglect  in  failing  to  recognize  the  



applicability of Rule 82(c)'s deadlines is "that type of excusable inadvertence or neglect  



          72         State v. 1.163 Acres, More or Less, Chuckwm, Inc., 449 P.2d 776, 779  



(Alaska 1968); see also  Worland v. Worland, 193 P.3d 735, 742 (Alaska 2008) (quoting  

                                      

Estate of Lampert Through Thurston v. Estate of Lampert Through Stauffer , 896 P.2d  

                                                           

214, 218 (Alaska 1995)) (holding that the "authority to enlarge the time allowable for an  

                                                           

act pursuant to Rule 6(b) is a function addressed to the sound discretion of the trial  

                                                               

court").  



          73  

                     792 P.2d 671 (Alaska 1990) (per curiam).  



          74  

                                                                                                                                

                    Id. at 672; see also Alderman v. Iditarod Props., Inc. , 32 P.3d 373, 397  

(Alaska 2001) (holding it was not an abuse of discretion to allow a motion for attorney's  

fees filed 70 days late where there was no showing of prejudice).  



          75  

                                                                                                                       

                     See  Conger v. Conger, 950 P.2d 119, 122-23  (Alaska  1997) (directing  

superior court to accept late-filed opposition to custody modification where delay was  

caused by a miscalculation of the due date).  



                                                               -39-                                                          6874
  


----------------------- Page 40-----------------------

common to all who share the ordinary frailties of [hu]mankind,"76 and the superior court  



                                                                                                                         

did  not abuse its discretion by granting Williams's motion to enlarge time to  file  a  



motion for attorney's fees.   



                                                                        

                     2.	       The  superior  court  did  not  abuse  its  discretion  by  granting  

                               Williams additional time to file its motion for court costs.  

                    Alaska Civil Rule 79(b) requires77 a prevailing party seeking to recover  



                                                                                          

costs to "file and serve an itemized and verified cost bill, showing the date costs were  



                                                                                

incurred, within 10 days after the date shown in the clerk's certificate of distribution on  



the judgment . . . or such additional time as the court may allow."  The rule further  



                                                                                         

specifies that "[f]ailure of a party to file and serve a cost bill . . . will be construed as a  



                                                                   78  

                                                                                    

waiver of the party's right to recover costs."                          Just as discussed previously with regard  



                                                                                           

to Rule 82(c) motions for attorney's fees, Rules 6(b) and 94 provide further discretionary  



          76	  

                    Id. at 122 (quoting Jenkins v. Arnold , 573 P.2d 1013, 1016 (Kan. 1978)).  



          77  

                                                                                                                               

                     We assume without deciding that Civil Rule 79(b) applies in this case, even  

                                                                                                        

though court costs were sought pursuant to contractual entitlement rather than Rule 79  

itself.    ConocoPhillips  and  Williams  both  couch  their  arguments  as  if  Rule  79(b)  

provided  the  relevant  deadlines  for  filing  a  cost  bill.    But  we  note  sua  sponte  that  

Rule 79(b), unlike Rule 82(c), does not purport to require a cost bill filing for an award  

                                                                                                    

of court costs "under this rule or pursuant to contract."  Alaska R. Civ. P. 82(c).  Rather  

                                                                 

than purporting to apply specifically to contract-based awards of court costs, Rule 79(b)  

                                                                                                            

states flatly that "[t]o recover costs, the prevailing party must file and serve an itemized  

                                                                              

and verified cost bill . . . within 10 days."  Alaska R. Civ. P. 79(b).  Whether Rule 79  

applies  to  contractual  court-cost  awards,  or  whether  its  rules  should  apply  only  by  

analogy or by the adoption and stipulation of the parties, we leave for another day when  

                                                                      

that issue is presented to the court squarely.  We hold today that, even if Rule 79's  

requirements  apply  in  full  force  in  this  case,  the  superior  court  did  not  abuse  its  

                                                                                                                       

discretion in granting leave to Williams to file its cost bill late.  



          78  

                    Alaska R. Civ. P. 79(b).  



                                                               -40-	                                                         6874
  


----------------------- Page 41-----------------------

                                                                                                                           

flexibility on a showing of excusable neglect or when a strict adherence to the ten-day  

limit would "work injustice."79  



                      Eight to ten days after it would have been due under Rule 79(b)'s ten-day  

period,80 Williams filed a motion for leave to enlarge the time to file its motion for  



attorney's fees on March 1, 2012.  Although this motion did not mention Civil Rule 79  



                 

by name, it clearly indicated that Williams was seeking compensation for court costs.  



                                           

Specifically, that motion mentioned the difficulty Williams experienced assessing fees  



                                                                    

and costs; included a costs calculation of $10,489.05 as an exhibit attached to the motion;  



                                                                          

included  a  section  for  the  clerk's  ruling  on  the  cost  bill  and  a  separate  line  for  



"recoverable  costs"  of  $10,489.05  in  the  attached  motion  for  attorney's  fees;  and  it  



                                                                                                                          

concluded  the  motion  for  attorney's  fees  by  asking  for  "$479,819.73  as  reasonable  



                               

attorney fees and court costs."  ConocoPhillips argued that Williams had waived any  



right to costs because "[c]ost bills are considered by the clerk pursuant to a separate  



                                                                                                                        

procedure, . . . and Williams may not 'piggyback' an untimely cost bill onto its attempt  



                                                                                      

to file an untimely fee motion."  The superior court granted Williams's motion for leave  



to enlarge time to file a motion for attorney's fees and also "deemed filed" the motion  



for attorney's fees as well as "exhibits supporting [Williams's motion for attorney's  



fees]," which included the cost bill.    



           79  

                      Rule 6(b) provides that, where the Alaska Civil Rules require an act "be                                  

done at or within a specified time, the court for cause shown may at any time in its  

discretion . . . upon motion made after the expiration of the specified period permit the  

                                                                        

act to be done where the failure to act was the result of excusable neglect." Alaska R.  

           

Civ. P. 6(b).  Rule 94 provides that  the Civil Rules "are designed to facilitate business  

                                                              

and advance justice" and they "may be relaxed or dispensed with by the court in any case  

where it shall be manifest to the court that a strict adherence to them will work injustice."  

                                                                                                                

Alaska R. Civ. P. 94.  



           80  

                              

                      See supra note 71.  



                                                                     -41-                                                               6874
  


----------------------- Page 42-----------------------

                                                                                       

                    Six months later, and eight months following the expiration of the ten-day  



period under Rule 79, the superior court ruled on Williams's motion for attorney's fees  



and  awarded  Williams  full  attorney's  fees.    In  that  order,  the  court  also  noted  that  



                                                                

"Williams should submit its cost bill to the Clerk of Court for a reasonableness review."  



                                                                                                      

ConocoPhillips objected that "[t]his sua sponte grant of an 8-month extension of time  



was improper" because Williams had never requested it and because Williams did not  



show  excusable  neglect.    The  Clerk  of  Court  granted  $6,441.70  in  court  costs  to  



                            

Williams, and the superior court rejected ConocoPhillips's motion for review of cost  



                                                                           

award.       The  superior  court's  final  judgment  on  attorney's  fees  and  costs  included  



$6,441.70 of court costs.  



                                                       

                    ConocoPhillips argues that the superior court abused its discretion when it  



                                                                                       

granted Williams an extension of time to file its cost bill.  ConocoPhillips reasons that  



                                                                                         

Rule 6(b) allows extension after the time period lapses only " 'upon motion' establishing  



                                                                                                        

that 'the failure to act was the result of excusable neglect.' "  Under its view, neither  



condition was met here because the court awarded an extension sua sponte and because  



there was no showing of excusable neglect for such a long delay.  Williams argues that  



it sought an extension of the Rule 79 deadline by including costs in its motion for leave  



to enlarge time to file a motion for attorney's fees and that this same motion showed  



excusable neglect.  It argues that the superior court "deemed filed" its cost bill, as an  



                                                                                                           

attached exhibit, when it granted its motion for leave to enlarge time for filing a motion  



                                                          

for attorney's fees, and that the court's subsequent invitation to file its cost bill with the  



Clerk of Court was within the court's discretionary authority.  



                                                             -42-                                                       6874
  


----------------------- Page 43-----------------------

                                                                                                         

                     We conclude that the superior court did not abuse its discretion in granting  



                                                                                                                                       81  

                                                          

Williams leave to file a late cost bill with the Clerk of Court.  In  Vazquez v. Campbell,  



we confronted a situation in which the prevailing plaintiff timely filed a sufficiently  



                                                            

detailed  cost  bill,  not  as  a  cost  bill  presented  to  the  Clerk  of  Court  as  required  by  



                                                                                         82  

                                                                                                             

Rule 79(b), but rather as a motion to the superior court.                                    We held that the prevailing  



                 

party had "substantially complied with the requirements of rule 79" because "[i]f the  



                                                                                                      

superior court had wished, it could have referred the question of costs to the clerk for an  



                          83  

                                                              

initial decision."             Unlike in  Vazquez, Williams did not timely file its motion for court  



                                                                                              

costs under Rule 79(b) (instead, it filed its cost bill with the Clerk of Court eight months  



late), and it is unclear on this record whether its cost accounting associated with its  



                                                                     

motion for leave to enlarge time to  file a motion for attorney's fees was sufficiently  



detailed  to  meet  the  requirements  of  Rule  79.    Nevertheless,  we  conclude  that  the  



superior court did not abuse its discretion in granting an extension to Williams to file its  



                                                                                                                  

cost bill with the Clerk of Court.  ConocoPhillips does not argue that it was prejudiced  



                     84  

                                                                                  

by the delay.            It had a chance to object when the final cost bill was submitted, and it  



                                                                                                                        

even succeeded in reducing the bill significantly.  In this case, because of the lack of  



prejudice and because the motion for leave to enlarge time to file a motion for attorney's  



           81  

                      146 P.3d 1 (Alaska 2006).  



           82  

                     Id. at 2.  



           83  

                     Id. at 2-3.  



           84  

                                                                                                                               

                     This  distinguishes  this  case  from Pruitt  v.  State,  Department  of Public  

Safety, Division of Motor Vehicles, 825 P.2d 887 (Alaska 1992), in which we held that  

                                                                                                             

"the state's motion for attorney's fees, filed seven months after final judgment has been  

                                                                                                                        

entered, was not filed within a 'reasonable time.' "  Id. at 896.  Our holding in that case  

                                                                                    

was influenced by the finding that the non-prevailing party "was prejudiced by the state's  

delay."  Id.  



                                                                 -43-                                                            6874
  


----------------------- Page 44-----------------------

fees had objective indications on its face that Williams was also seeking an extension of  

                                                                      



time to seek court costs, we conclude that the superior court did not abuse its discretion  

                                                                  



in granting Williams an extension of the Rule 79(b) deadline.  



                     3.	       The superior court did not abuse its discretion by refusing to  

                                                                                                               

                               reduce the award of attorney's fees.  

                     This court reviews an award of attorney's fees for an abuse of discretion.85  

                                                                                                  



Under this standard, "[t]he trial court has broad discretion in awarding attorney's fees;  

                                                                                                



this court will not find an abuse of discretion absent a showing  that  the award was  

                                                                                                        

arbitrary, capricious, manifestly unreasonable, or stemmed from improper motive."86  

                                                                                                       



When evaluating a motion for attorney's fees, "a court should carefully consider all  



                                                       87  

factors relevant to reasonableness."                       There is no exhaustive list of factors a court may  



consider to determine whether the attorney's fees claimed are objectively reasonable, but  



                                                                                       88  

the  factors  listed  in  Rule  82(b)(3)  may  be  instructive.                              Those  factors  include  "the  

                                 



reasonableness of the claims and defenses pursued by each side" and "vexatious or bad  



           85  

                     See  Ware v. Ware, 161 P.3d 1188, 1192 (Alaska 2007) (citing                                 United Servs.   

Auto. Ass'n v. Pruitt , 38 P.3d 528, 531 (Alaska 2001)).  



           86        Id. (quoting Power Constructors, Inc. v. Taylor & Hintze , 960 P.2d 20, 44  

                                                                                                               

(Alaska 1998)).  



           87        Krone v. State, Dep't of Health & Soc. Servs. , 222 P.3d 250, 258 (Alaska  

                                                                                             

2009).  



           88        See  Valdez Fisheries Dev. Ass'n  v. Froines, 217 P.3d 830, 833 & n.17  

                                                                                                                                

(Alaska 2009).  



                                                                -44-	                                                         6874
  


----------------------- Page 45-----------------------

                       89  

                            

                                                                     

faith conduct."            This court reviews "a trial court's fact-based determinations regarding  

whether attorney's fees are reasonable for an abuse of discretion."90  



                                                                                                    

                     After granting Williams's motion for enlargement of time to file a motion  



                                                                                           

for attorney's fees, the superior court granted Williams's motion for attorney's fees in  



the full amount of $465,451.  As relevant here, ConocoPhillips had argued that the  



                                                                                                 

superior court should reduce the attorney's fee award by 50% because Williams's legal  



                                                                                                        

arguments  had  been  rejected  by  the  superior  court  at  every  stage  of  litigation.  



                                                                                 

ConocoPhillips also sought an additional reduction for fees spent relative to Williams's  



                                                                           

(unsuccessful) claim for $30 million in damages resulting from ConocoPhillips's alleged  



                                                                          

tortious conduct during litigation. The superior court rejected ConocoPhillips's requests  



                                                                                                        

for reductions in the award of attorney's fees.  The superior court "decline[d] to adjust  



                                                                                                                          

the fee merely because arguments were ultimately rejected," reasoning that it would be  



                                                                                                                             

"unfair to reduce the Williams fee by 50 percent, given that it prevailed on the relief it  



sought"  because  "the  case  was  very  difficult"  and  "[t]he  parties'  briefing  was  high  



quality and helpful."  The superior court noted that "if Williams strayed in its initial  



                                                                            

briefing, so too did Conoco."  The superior court also rejected the request for a reduction  



in fees relative to the tort claim, reasoning that "[b]oth [parties] adopted aggressive  



positions," that "[n]either party spent great time or energy on these positions," and that  



                                                                                                        

it  had  already  concluded  that  it  would  "decline[]  to  adjust  the  fee  merely  because  



                                                                                    

arguments were ultimately rejected." ConocoPhillips raises three primary arguments on  



appeal.  



                                                                                                    

                     First, ConocoPhillips argues that the superior court abused its discretion by  



                                       

not reducing the award  of attorney's fees in light of the fact that the superior court  



          89  

                     Alaska R. Civ. P. 82(b)(3)(F) & (G).  



          90  

                     Valdez, 217 P.3d at 832 (citations omitted).  



                                                                -45-                                                               6874  


----------------------- Page 46-----------------------

                                                       

resolved the dispute on different legal grounds than those advanced by the prevailing  



                                             

party.  But ConocoPhillips cites no authority for the proposition that such a reduction  



                                                                    

should be forthcoming simply because the prevailing party advocates a legal position not  



adopted  by  the  court.    Indeed,  ConocoPhillips  states  that  this  is  an  issue  of  first  



impression in this court.  Whether or not this is truly an issue of first impression, we  



                                                       

reject ConocoPhillips's proposed rule.  Although the superior court ultimately rested its  



                                                                                        91 

                                                                                           the superior court necessarily  

orders on grounds not directly advanced by Williams, 

considered the issues raised in Williams's briefs in making its determinations.                                            92  And the  



superior court found that Williams's briefing was of "high quality and helpful."  We  

                                                                                        



conclude that the superior court did not abuse its discretion by refusing to reduce an  



                                                                 

award of attorney's fees when the court rested its orders on legal grounds not advanced  



by  the  prevailing  party.    Fee-shifting  contracts  and  Rule  82  already  create  ex  ante  



uncertainty  about  who  will  bear  the  ultimate  burden  of  litigation  expenses;  we  are  



                                                                                                              

unwilling to create  additional uncertainty as to the ultimate size of litigation expenses  



by telling litigants that they must accurately predict the exact legal basis of the court's  



holding in order to receive a full award as the prevailing party.  



                                                                                                                                

                      Second, ConocoPhillips argues that the superior court, in stating that "if  



Williams strayed in its initial briefing, so too did Conoco," abused its discretion by  



           91  

                     The   superior   court   rested   its    first    grant    of    summary   judgment on   

UCC  2-207(1), an issue which Williams had not briefed, and the superior court rested   

its order on reconsideration on UCC  2-207(3), even though Williams had supported  

the original grant of summary judgment under  2-207(1).  



           92  

                                                                                                                             

                     The superior court must have been informed by Williams's initial argument  

that a contract had been formed under the common law in reaching its conclusion that  

UCC  2-207(1) governed the case and displaced the common law, and the superior  

court  necessarily  considered  Williams's  argument  on  reconsideration  that  UCC  

 2-207(1) governed the case before it held that summary judgment was improvidently  

                                   

granted under  2-207(1) and instead granted summary judgment under  2-207(3).  



                                                                  -46-                                                             6874
  


----------------------- Page 47-----------------------

"obligat[ing] the losing party to identify the prevailing party's winning argument."                                             But  



ConocoPhillips misinterprets the superior court's statement.                                  The superior court did not     



give ConocoPhillips the burden of identifying the correct legal theory in order to prevail   



on its motion to reduce the award of attorney's fees for Williams's failure to identify the  



correct legal theory.  Rather, the superior court merely used ConocoPhillips's parallel  



failure  to  do  so  as  evidence  that  the  theories  advanced  by  Williams  were  not  



                                                                            

unreasonable such that no reduction in attorney's fees would be warranted.  Accordingly,  



                

we reject ConocoPhillips's argument and conclude that the superior court did not abuse  



its  discretion  by  relying  on  such  a  parallel  failure  as  evidence  supporting  the  



reasonableness of the arguments advanced by the prevailing party.  



                     Finally, ConocoPhillips argues that the superior court abused its discretion  



                                                                            

by refusing to reduce the award of attorney's fees by the amount Williams spent pursuing  



its unsuccessful tort claim: $14,888.96.  ConocoPhillips reasons that its own litigation  



position (that no contract was formed and no interest credit was due) was reasonable and  



                                                         

"the central issue in the case" while Williams's tort claim was "utterly unsupportable,"  



                                                                                                                         

such  that  the  superior  court  made  a  clearly  erroneous  factual  finding   when  it  



                                                                               

characterized both as "aggressive positions" that nonetheless were reasonable in the  



context of the litigation.  (Emphasis in original.)  But beyond its bare assertion that  



                                                                                                

"Williams'[s]  attempt  to   recover   $30   million   .  .  .  was   utterly   unsupportable,"  



                          

ConocoPhillips does not offer any reason to believe that the tort claim was frivolous or  

                                                                                                 93     We   conclude   that  

was   "not   reasonably   intended   to   advance   the   litigation."        



ConocoPhillips  has  not  met  its  burden  of  showing  that  the  superior  court's  factual  



finding on this issue was clearly erroneous or that its order refusing to reduce attorney's  

                                                                                           



fees was an abuse of discretion.  



          93         Valdez, 217 P.3d at 833.  



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----------------------- Page 48-----------------------

V.      CONCLUSION  



                Because the superior court's decision on summary judgment was correct  



and should not have been rescinded on reconsideration, the initial grant of summary  



                                                          

judgment is REINSTATED and AFFIRMED.  Because we conclude that the superior  



court  was  right  in  its  initial  grant  of  summary  judgment,  we  do  not  reach  the  



UCC  2-207(3) or quantum meruit holdings from its order on reconsideration.  The  



superior court's rulings on attorney's fees and costs are AFFIRMED.  



                                                 -48-                                            6874
  

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