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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Flint Hills Resources Alaska, LLC v. Williams Alaska Petroleum, Inc. (8/26/2016) sp-7124

Flint Hills Resources Alaska, LLC v. Williams Alaska Petroleum, Inc. (8/26/2016) sp-7124

           Notice:   This opinion is subject to correction before publication in the P                      ACIFIC  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@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                         



FLINT HILLS RESOURCES                                             )
  

ALASKA, LLC,                                                      )
                                           

                                                                             Supreme Court No. S-15654  

                                                                  )
  

                      Appellant,                                  )
                                                                          

                                                                             Superior Court No. 4FA-10-01123 CI  

                                                                  )
  

           v.                                                     )                               

                                                                             O P I N I O N  

                                                                  )  

                                                                                                                     

WILLIAMS ALASKA PETROLEUM,)                                                  No. 7124 - August 26, 2016  

                                                

INC. and THE WILLIAMS                                             )  

                                     

COMPANIES, INC.,                                                  )  

                                                                  )
  

                      Appellees.                                  )
  

                                                                   

_______________________________ )
  



                                                                                                            

                      Appeal  from  the  Superior  Court  of  the  State  of  Alaska,  

                                                                                                      

                      Fourth Judicial District, Fairbanks, Michael P. McConahy,  

                                    

                      Judge.  



                                                                                                           

                      Appearances: Leon T. Vance and Lael A. Harrison, Faulkner  

                                                                                                            

                      Banfield, P.C., Juneau, KathleenM.Sullivan,Quinn Emanuel  

                                                                                                              

                      Urquhart   &   Sullivan,   LLP,   New   York,   New   York,  

                                                                                                              

                      Christopher Tayback, Valerie Lozano, and Andrew March,  

                                                                                                           

                      Quinn Emanuel Urquhart  & Sullivan, LLP, Los Angeles,  

                                                                                                

                      California, and Charles F. Webber, Faegre Baker Daniels,  

                                                                                                                

                      Minneapolis, Minnesota, for Appellant.  Richard W. Maki,  

                                                                                              

                      Tindall, Bennett & Shoup, Anchorage, for Appellees.  



                                                                                                                    

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

                                    

                      Bolger, Justices.  



                                                      

                      STOWERS, Chief Justice.  


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

I.        INTRODUCTION
  



                                                                                                                                    

                    Williams Alaska Petroleum owned the North Pole refinery until 2004.  



                                                                                                

Williams knew that the then-unregulated chemical sulfolane, a solvent, was present in  



                                                                     

refinery property groundwater, but it did not know that the sulfolane had migrated off  



                                                                    

the refinery property via underground water flow.  



                                                                                                                     

                    Flint Hills Resources Alaska bought the North Pole refinery fromWilliams  



                                                                                                             

in 2004 pursuant to a contract that contained detailed terms regarding environmental  



                                                                                                                       

liabilities,  indemnification,  and  damages  caps.                            Almost  immediately  the  Alaska  



                                                                                                                         

Department of Environmental Conservation informed Flint Hills that sulfolane was to  



                                                                                                                                

be a regulated chemical and that Flint Hills needed to find the source of the sulfolane in  



                                                                                                                           

the groundwater.  The Department contacted Flint Hills again in 2006 with the same  



                                                                                                                           

message.  Meanwhile, Flint Hills's environmental contractor repeatedly warned Flint  



                                                                                                                            

Hills that sulfolane could be leaving the refinery property and that more work was  



                                                            

necessary to ascertain the extent of the problem.  



                                                                                                                             

                    In 2008Flint Hillsdrilledperimeter wellsand discovered thatsulfolanewas  



                                                                                                                                

migrating beyond its property and had contaminated drinking water in North Pole.  A  



                                                                                                                        

North Pole resident sued Flint Hills and Williams, and Flint Hills cross-claimed against  



                                                                                                                          

Williams  for  indemnification.                   After  extensive  motion  practice  the  superior  court  



                                                                                                          

dismissed all of Flint Hills's claims against Williams as time-barred.  



                                                                                                                  

                    Flint Hills appeals.  We hold that the superior court correctly applied the  



                                                                                                                           

contract's damages cap provision, but we conclude that it was error to find that Flint  



                                                                                                                          

Hills's  contractual  indemnification  claims  and  part  of  its  statutory  claims  were  



                                                                                                                  

time-barred.  We also affirm the court's dismissal of Flint Hills's equitable claims.  



                                                               -2-                                                        7124
  


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

                                 

II.       FACTS AND PROCEEDINGS  



          A.        Facts  



                                                                                                             

                    Williams owned and operated the North Pole refinery from approximately  



                                                                                                                   

1977  through  2004.                 In  2001  Williams  discovered  sulfolane  in  the  refinery's  



                                                                                                                              

groundwater. Sulfolane is a manufactured chemical developed as a solvent; refiners use  



                                                                                                                    

sulfolane  to  strip  out  parts  of  crude  oil  used  to  make  gasoline.                              When  Williams  



                                                                                                                     

discovered the presence of sulfolane in the groundwater, sulfolane was not a regulated  



chemical.  



                                                                                                                              

                    Shannon & Wilson, Williams's environmental contractor, identified the  



                                                                                                                   

sulfolane in 2001.  At that time no one recommended that Williams install additional  



                                                                                                                                

monitoring infrastructure for sulfolane.  Although the Department directed Williams to  



                                                                                                                 

continue sampling for sulfolane to determine its source, Williams stopped sampling in  



                                                                                                                

2002  and  instead  attempted  to  find  the  leak  by  performing  equipment  inspections.  



                                                                                                                                 

                    In April 2004 Flint Hills purchased the refinery from Williams through a  



                                                                                                               

detailed Asset Sale and Purchase Agreement. Flint Hills agreed to assume responsibility  



                                                                                                                    

for "all existing, known contamination at the [refinery] property specifically identified  



                                                                                                                     

in the referenced figures, tables and texts," which included a document listing sulfolane  



                                                                                                                       

concentrations at various wells on the property.  The Agreement also set out detailed  



                                                                                                                                

terms regarding indemnification and damages caps.  Flint Hills retained the majority of  



                                                                                                        

Williams's environmental staff and all of its refinery environmental files.  



                                                                                                                              

                    In subsequent litigation the superior court found that Flint Hills "knew and  



                                                                                                                             

understood that there was sulfolane on the refinery property as of 2004, and in fact  



                                                                                                                     

agreed to take responsibility for the sulfolane that was 'existing, known[,]' and disclosed  



                                                                                                                            

as of that date."  At the time of sale the parties believed that the sulfolane was only  



                                                               -3-                                                        7124
  


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

                                          1  

 onsite.    But the superior court found:                                                                                                                                                                                                              "As everyone is aware of now, the sulfolane                                                                                                                                                                                               



released prior to Flint Hills'[s] assumption of ownership of the refinery had migrated far                                                                                                                                                                                                                                                                                                                                                                                                                                                  



beyond  the   contours   of   the   sulfolane   identified   in   the   disclosure   schedule   to   the  



 [Agreement] and the plume had already extended off of the refinery property."                                                                                                                                                                                                                                                                                                                                                              



                                                                                    In June 2004 Flint Hills requested a study from Shannon & Wilson to "gain                                                                                                                                                                                                                                                                                                                                                               



 a comprehensive understanding of the distribution of subsurface contamination" on the                                                                                                                                                                                                                                                                                                                                                                                                                                                    



property.   Shannon & Wilson advised Flint Hills that sulfolane had been discovered in                                                                                                                                                                                                                                                                                                                                                                                                                                                          



 areas previously thought to be uncontaminated and proposed to "assess [the] distribution                                                                                                                                                                                                                                                                                                                                                                                            



 and concentration trends."                                                                                                                                             At the same time the Department advised Flint Hills that it                                                                                                                                                                                                                                                   



needed to locate the sulfolane's sources.                                                                                                                                                               



                                                                                    In September 2004 Shannon & Wilson discovered sulfolane in samples                                                                                                                                                                                                                                                                                                                                                   



 froma monitoring well in the northern part of the property; sulfolane was not found there                                                                                                                                                                                                                                                                                                                                                                                                                                    



 during a 2001 sampling. Shannon & Wilson suggested monthly sampling and told Flint                                                                                                                                                                                                                                                                                                                                                                                                                                            



Hills that "sulfolane was essentially non-degradable in the anaerobic conditions of the                                                                                                                                                                                                                                                                                                                                                                                                                                                  



 aquifer under the refinery and that sulfolane is miscible in (mixes with) water and is not                                                                                                                                                                                                                                                                                                                                                                                                                                             



retarded in its subsurface migration."                                                                                                                         



                                                                                    In   October   2004  the   Department   again   advised   Flint   Hills   that   "[t]he  



 source(s) of [s]ulfolane in the ground water at the refinery needs to be determined.                                                                                                                                                                                                                                                                                                                                                                                                                                            The  



 chemical [s]ulfolane will be considered a regulated contaminant." Flint Hills was unable                                                                                                                                                                                                                                                                                                                                                                                                                           



to find any release sources for sulfolane, so it concluded that the sulfolane must have                                                                                                                                                                                                                                                                                                                                                                                                                                       



been released by Williams prior to Flint Hills's assumption of ownership.                                                                                                                                                                                                                                                                                                                              



                                                                                    In early 2005 Shannon & Wilson proposed that Flint Hills install "three                                                                                                                                                                                                                                                                                                                                                          



 groundwater monitoring wells along the estimated northern boundary of the dissolved                                                                                                                                                                                                                                           



                                          1                                          The parties were more concerned about two other plumes of chemicals in                                                                                                                                                                                                                                                                                                                                                                                      



the groundwater:                                                                                              a combination of benzene, toluene, ethyl benzene, and xylenes, and                                                                                                                                                                                                                                                                                                                                                     

 a plume of light non-aqueous phase liquid.                                                                                                                                                                                       



                                                                                                                                                                                                                                                                       -4-                                                                                                                                                                                                                                                      7124
  


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

                                                                           

benzene groundwater plume[] to serve as sentry wells capable of detecting subsurface  



                                                                                                                      

contaminant migration off the facility."  It also informed Flint Hills that the sulfolane  



                                                                                                                           

concentration at one monitoring well was more than 11 times greater than it was in 2001.  



                                                                                                                        

The Department agreed with the installation of the new wells.   Shannon & Wilson  



                                                                                                                                 

installed three new groundwater monitoring wells in August and September 2005.  A  



                                                                                                                               

sample from one of the wells down-gradient in groundwater flow tested positive for  



sulfolane.  



                                                                                                                     

                    In January 2006 the Department sent another letter to Flint Hills reiterating  



                                                                                                                                

that "[t]he source(s) of the [s]ulfolane in the ground water at the refinery needs to be  



                                                                                                                                 

determined.  The chemical [s]ulfolane will be considered a regulated contaminant."  In  



                                                                                                                             

April, Shannon & Wilson proposed a groundwater monitoring program, reminding Flint  



                                                                                                               

Hills  that  sulfolane  was  highly  soluble  and  would  migrate  with  the  groundwater.  



                                                                                                                      

                    Samples from April through June 2006 indicated the continued presence  



                                                                                                                        

of sulfolane at levels near or exceeding the cleanup standard.                                      Shannon & Wilson  



                                                                                                                

informed Flint Hills that it believed sulfolane was constantly leaching into groundwater,  



                                                                                                           

in contrast to an acute surface release.  Shannon & Wilson noted that because it found  



                                                                                                                               

sulfolane in the northernmost monitoring wells, "it would be appropriate to identify the  



                                                                                                                                 

down gradient extent of the sulfolane plume"; it recommended installing sentry wells at  



                       

the property's boundary.  



                                                                                                                           

                    Shannon & Wilson presented its final results in October 2006.  It again  



                                                                                                                            

advised  Flint  Hills  that  sulfolane  is  highly  soluble  and  is  likely  to  travel  with  



                                                                                                                   

groundwater instead of biodegrading and that there was likely a source of continuous  



                                                                                                                                  

contamination that was causing the stable readings observed in the monitoring wells.  It  



                                                                                                                            

concluded that "[t]he extent of the subsurface sulfolane contamination has not been  



                                                                                                                           

determined, and the sources of this contamination remain poorly defined."   It again  



                                                                                                                              

recommended  installing  sentry  wells  at  the  property  boundary  to  determine  if  the  



                                                               -5-                                                         7124
  


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

                                                                                                                     

sulfolane had already migrated beyond the refinery property.  In November 2006 the  



                                                                                                                                    

Department sent a letter agreeing with all of Shannon & Wilson's recommendations.  



                                                                                                                              

The Flint Hills engineer responsible for the groundwater program believed, based on the  



                                                                                                                                

Department's letter, that the Department expected Flint Hills to implement Shannon &  



                                                                                                                    

Wilson's recommendations, and she thought that boundary wells were "a necessary  



                        

addition to the program."  



                                                                                                                               

                    In December 2006 and January 2007 Shannon & Wilson continued to  



                                                                                                                            

reference the need to install the monitoring wells.  In mid-2007 Flint Hills hired Barr  



                        

Engineering to conduct a "cold eye review" of Shannon & Wilson's work.  In August  



                                                                                                                      

2008 Barr Engineering concluded that the sulfolane had possibly migrated "beyond  



                                                                                                     

[Flint Hills Refinery] property" and that "[t]o date, it appears that little effort has been  



                                                            

made to characterize the actual release locations."  



                                                                                                                             

                    Thus in August 2008 Flint Hills began installing the monitoring wells; they  



                                                                                                                  

were completed in October. In September 2008 Flint Hills placed additional monitoring  



                                                                                                                             

wells at the property boundary.  These wells "promptly confirmed" that sulfolane had  



                                                                                                                           

migrated beyond the refinery's premises.  The superior court found that despite some  



                                                                                                                             

Flint Hills witnesses' assertions that "they did not know for certain at that time that  



                                                                                                                           

sulfolane was offsite, Flint Hills indisputably knewthat sulfolane was offsite at that point  



                                                                                                             

in time, and ha[d] so admitted to th[e] court."  The sulfolane plume was approximately  



                 

1,300 feet wide.  



                                                                                                                       

                    In an addendumtoits "coldeyereview,"Barr Engineeringstated in January  



                                                                                                                               

2009 that the plume possibly extended offsite but that it did not know for sure how far  



                                                               

offsite.  Wells drilled in 2009 confirmed this.  



          B.        Proceedings  



                         

                    In January 2010 a North Pole homeowner, James West, filed suit against  



                                                                                                                    

both  Flint  Hills  and  Williams,  alleging  that  he  suffered  damages  from  sulfolane  



                                                               -6-                                                        7124
  


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

                                                                                                                         

contamination in his drinking water. In May 2010 Flint Hills filed a cross-claim against  



                                                                                                                          

Williams for expenses incurred in remediation efforts.  The parties eventually settled  



                                                                                                                

West's  claims,  but  Flint  Hills  and  Williams  continued  litigating  the  cross-claim.  



                    In November 2011 Williams filed two summary judgment motions.  The  



                                                                                                                               

first argued that Williams had no obligation to indemnify Flint Hills because under the  



                                                                                                                      

Agreement Flint Hills assumed responsibility for all disclosed contamination, including  



                                                                                                                       

sulfolane. The second argued that Flint Hills had been on notice of sulfolane's presence  



                                                                                                                                

since 2004 but had failed to bring suit until 2010 and that the three-year statute of  



                                                                                                                          

limitations for contract claims had expired long before Flint Hills brought its claim.  



                                                                                                                     

                    Flint Hills filed a contemporaneous motion for partial summary judgment,  



                                                                                                                                 

seeking judgment in its favor on six main issues:  (1) the refinery was the sole source of  



                                                                                                                               

the sulfolane; (2) the sulfolane plume was an "Environmental Condition" under the  



                                                                                                                         

Agreement; (3) the sulfolane that had migrated off  the premises as of Flint Hills's  



                      

purchase was attributable to Williams; (4) Williams did not disclose in the Agreement  



                                                                                                                                

that sulfolane had migrated beyond refinery property; (5) Williams was required to  



                                                                                                                              

indemnify Flint Hills for any damages Flint Hills incurred remediating the sulfolane that  



                                                                                                                    

hadmigrated beyond propertyboundary beforeFlintHills'spurchase;and(6)Williams's  



                                                                                                                 

liability to Flint Hills was not subject to the Agreement's "Environmental Cap."  



                                                                                                                          

                    Flint Hills filed a second amended complaint in March 2012 adding claims  



                                                                                                                     

for statutory damages, breach of contract for retained liabilities, and claims under the  



                                                                                                               

Guaranty (an attendant document to the Agreement).  It also responded to Williams's  



                                                                                                                                  

motion for summary judgment based on the statute of limitations and argued that a  



                                                                                                                 

finding  that  Flint  Hills's  claims  were  time-barred  would  violate  the  Agreement.  



                                                                                                                               

                    In April 2012 the superior court ruled on three of Flint Hills's requests for  



                                                                                                                                 

summary judgment.  The court held that the North Pole refinery was the only source of  



                                                                                                                           

sulfolane in the area, that the offsite sulfolane was an "Environmental Condition" under  



                                                               -7-                                                         7124
  


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

                                                                                                                          

the Agreement, and that the sulfolane off the refinery premises at the time of Flint Hills's  



                                                                                                                             

purchase was attributable to Williams.   The court did not address which party was  



                                                                                                                     

responsible for the cleanup or Flint Hills's inaction.  And the court denied summary  



                                                                                                                             

judgment on Williams's argument that Williams had no obligation to indemnify Flint  



                                                                                                                               

Hills under the Agreement because it determined the Agreement was ambiguous on this  



                                                                                        

issue and subject to different interpretations regarding its scope.  



                                                                                                                      

                    The superior court also ruled on Williams's motion for summary judgment  



                                                                                                                            

on Flint Hills's contractual indemnity claimbased on the statute of limitations. The court  



                                                                                                                          

held that under Alaska law the statute of limitations on contractual indemnity claims  



                                                                                                                    

began  running  when  "Flint  Hills  first  incurred  liability  or  a  monetary  obligation  



                                                                                                                                

attributable to the offsite sulfolane contamination."   The court explained this was in  



                                                                                                                              

accord with Alaska's approach to tort indemnification claims.  But the court found that  



                                                                                                                       

there were unresolved issues of fact regarding "(1) when Flint Hills first paid damages  



                                                                                                                            

relating to the sulfolane contamination and (2) when Flint Hills first was placed upon  



inquiry notice that sulfolane contamination had moved beyond the refinery's property  



                                                                                                                               

(thereby  triggering  the  three-year  statute  of  limitations)."                              The  court  ordered  an  



                                                                           

evidentiary hearing to resolve these questions of fact.  



                                                                                                                           

                    Williams and Flint Hills both moved for reconsideration.  Williams asked  



                                                                                                                            

for clarification on whether payments for onsite damages and onsite diminution in value  



                                                                                                                       

would trigger the limitations period.  Flint Hills, on the other hand, completely changed  



                                                                                                                          

its legal position, asserting that "[f]urther research ha[d] persuaded [it] that it was wrong  



                                                                                                                                  

about the Supreme Court of Alaska not having  addressed  the time of accrual of a  



                                                                                                                              

contractual-indemnification claim."  Flint Hills cited to insurance cases and argued that  



                                                                                                                              

the statute did not begin to run until Flint Hills asked Williams for indemnification and  



                                                                                                      

Williams refused to indemnify Flint Hills.  And it argued that the diminution in value  



                                                                                                                   

claim was part and parcel of the indemnification claim, so the statute of limitations  



                                                                -8-                                                        7124
  


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

should   not   have   started   running   on   this   claim   until   Flint   Hills   had   demanded  



indemnification and Williams had refused to pay.                                                                                                             



                                               The   superior   court   denied   Flint  Hills's   motion   for   reconsideration,  



explaining that Flint Hills's new authority did "not support [the] proposition that a party                                                                                                                                                                                             



can    incur    damages,    sit    on    those    damages    for    as    long    as    they    want,    demand  



reimbursement of the damages, and then sue when they are refused without violating the                                                                                                                                                                                                            



statute of limitations."                                                          The court distinguished Flint Hills's new cases because they                                                                                                                                               



involved insurance and contracts of adhesion.                                                                                                                  The court agreed with Flint Hills that the                                                                                         



diminution   in   value   claim   was   an   indemnification   claim   and   subject   to   the   same  



limitations period as the other indemnification claims.                                                                                                                                            But the court held that "[t]he                                                       



statute of limitations began to run when Flint Hills had sufficient information to alert it                                                                                                                                                                                                             



of a potential cause of action [for] the refinery's value."                                                                                                              

                                               The parties also moved for summary judgment on the statutory claims.                                                                                                                                                                                       2  



Flint Hills argued that the statutory claims sounded in trespass and interference with  

                                                                                                                                                                                                                                                                                            



property and therefore should be subject to a six-year statute of limitations; Williams  

                                                                                                                                                                                                                                                                            



argued that the claims should be governed by the two-year statute of limitations for  

                                                                                                                                                                                                                                                                                                  



claims created by statute.  The superior court concluded that the two-year limitations  

                                                                                                                                                                                                                                                                       



period applied to the statutory claims because the "nature of the injury alleged arises  

                                                                                                                                                                                                                                                                                        



from the [Agreement], not a trespass on land or even a trespass on the case."  But the  

                                                                                                                                                                                                                                                                                 



court found that the actual accrual date was a question of fact.   Responding to Flint  

                                                                                                                                                                                                                                                                                           



Hills's earlier summary judgment motion arguing that the sulfolane damages were not  

                                                                                                                                                                                                                                             



subject to the damages cap, the court held that because the sulfolane contamination was  

                                                                                                                                                                                                                                                                                               



                       2                      Flint Hills claimed that Williams was strictly liable under AS 46.03.822(a)                                                                                                                                                                                       



for damages relating to the release of hazardous substances and that Flint Hills could                                                                                                                                                                                                   

seek contribution from Williams for those damages under AS 46.03.822(j).                                                                                                                                                



                                                                                                                                                  -9-                                                                                                                                       7124
  


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

                                                                                                                

an Environmental Damage under the Agreement, it was subject to the Agreement's  



               

damages cap.  



                                                                                                                 

                    The superior court held a five-day evidentiary hearing and subsequently  



                                                                                                                          

issued a 50-page order granting summary judgment to Williams on all of Flint Hills's  



                                                                                                                            

claims.  The court reiterated its prior rulings that the indemnification claim arose under  



                                                                                                                               

the Agreement and was thus governed by a three-year contract statute of limitations and  



                                                                                                                             

that the statutory claims were governed by a two-year statute of limitations.  The court  



                                                                                                                              

noted that under the "discovery rule" the statute of limitations begins to run on "the date  



                                                                                                                                

when a reasonable person has enough information to alert that person that he or she has  



                                                                                                                               

a potential cause of action or should begin an inquiry to protect his or her rights."  The  



                     

court found:  



                                                                                                          

                    Based on all the information available to it, including [the  

                                                                                                          

                    Department's]directives,theresultsfromthemonitoring well  

                                                                       

                    sampling,           and      Shannon           &     Wilson's          reports        and  

                                                                                                       

                    recommendations,   Flint   Hills   reasonably   should   have  

                                                                                                          

                    concluded  long  before  May  10,  2007,  that  sulfolane  had  

                                                                                                           

                    migrated  beyond  the  sampling  disclosed  as  part  of  the  

                                                                                               

                     [Agreement] and off the refinery property. Such information  

                                                                                                             

                    would have supported Flint Hills's claim for diminution of  

                                                                                

                    the refinery's value attributable to the sulfolane.  



                                                

It thus concluded Flint Hills's contractual claims were barred by the three-year statute  



     

of limitations.  



                                                                                                                  

                    Turning to the statutory claims, the superior court held that Flint Hills's  



                                                                                                                               

claim under AS 46.03.822(a) for damages from the release of hazardous substances was  



                                                                                                                           

also time-barred.  It found that the claim accrued along with the indemnification claims  



                                                                                                                                   

and that the two-year statute of limitations was triggered when sulfolane became a  



                                                                                                                      

regulated  chemical  in  October  2004.                        On  Flint  Hills's  AS  46.03.822(j)  statutory  



                                                                                                                       

contributions claim, the court held that the Department's 2004 and 2006 letters qualified  



                                                                                                                             

as  "potential  liability  determinations"  because  they  "gave  clear  notice  of  [the  



                                                               -10-                                                         7124
  


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

Department's] interest in the release of sulfolane, and both letters advised Flint Hills of                                                                                                                                                                                                                                                                                                                     



the need to clean up the sulfolane."                                                                                                                                               The court did not rule on Flint Hills's motion                                                                                                                                                     



regarding its equitable claims.                                                                              



                                                               Flint Hills filed a motion for reconsideration regarding the court's failure                                                                                                                                                                                                                                                



to   rule   on   its   equitable   claims,   including   its   claims   for   specific   performance   and  



declaratory judgment and that Williams was obligated to retain and discharge liabilities.                                                                                                                                                                                                                                                                                                                                   



In its responsive order the superior court held that because the "equity" that Flint Hills                                                                                                                                                                                                                                                                                                         



requested "was for Williams to pay the same monetary value as [it] would have under   



the contract claims," "the equitable claims [were] barred based on the legal principle that                                                                                                                                                                                                                                                                                                              



equitable relief is only available in the absence of an adequate legal remedy." The court                                                                                                                                                                                                                                                                                                         



explained that "Flint Hills had an adequate legal remedy, but lost it due to delay in                                                                                                                                                                                                                                                                                                                          



bringing its claims."                                                                             The court additionally found Williams had met its burden to show                                                                                                                                                                                                                               



that Flint Hills's equitable claims were barred by laches, "expressly finding that Flint                                                                                                                                                                                                                                                                                                           



Hills delayed asserting [its] equitable claims for an unconscionable period of time, and                                                                                                                                                                                                                                                                                                                 



that this delay prejudiced Williams."                                                                                     



                                                               Flint Hills appeals.                               



III.                            STANDARD OF REVIEW                                                                      



                                                               We review a grant of summary judgment de novo and may affirm on any                                                                                                                                                                                                                                                                      

                                                                                                                                                             3         "Contract interpretation is a question of law subject  

grounds supported by the record.                                                                                                                                                                                                                                                                                                                                                        

to de novo review."4   We also review de novo the question of which accrual standard to  

                                                                                                                                                                                                                                                                                                                                                                                                                 

use in determining when a claimaccrues.5  "When the superior court holds an evidentiary  

                                                                                                                                                                                                                                                                                                                                                                     



                                3                                Windel v. Mat-Su Title Ins. Agency, Inc.                                                                                                                                                , 305 P.3d 264, 270 (Alaska 2013).                                                                                                 



                                4                               ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc.                                                                                                                                                                                                                                              , 322 P.3d               



 114, 122 (Alaska 2014).  

                                                                                    



                                5                               Gefre v. Davis Wright Tremaine, LLP, 306 P.3d 1264, 1271 (Alaska 2013).  

                                                                                                                                                                                                                                                                                                                                                                                            



                                                                                                                                                                                                    -11-                                                                                                                                                                                            7124
  


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

hearing to resolve factual disputes about when a statute of limitations began to run, we                                                       

review the resulting findings of fact for clear error."6                                                         

                                                                                            We review the decision to grant  

                                                                    7 because equitable relief is "a matter addressed  

                                                                                                                                    

                                                     

equitable relief for an abuse of discretion 

to the sound discretion of the trial court."8  

                                                            



IV.	       DISCUSSION  



                       On appealFlint Hills argues that (1) thestatuteof limitations on the contract  

                                                                                                                                       



claims did not begin to run until its request for indemnification was rejected; (2) the  

                                                                                                                                               



statutory claims were not triggered until Flint Hills received a liability decision from the  

                                                                                                                                               



Department after the statute was amended in 2006; (3) the Agreement's damages cap  

                                                                                                                                              



does not apply to its claims; and (4) the doctrine of laches did not bar its equitable  

                                                                                                                                    



claims. We hold that it was error to conclude that the contractual indemnification claims  

                                                                                                                                          



were time-barred; we conclude a six-year statute of limitations applies for statutory  

                                                                                                                                     



claims arising from sulfolane leakage off-property but we also conclude that a two-year  

                                                                                                                                      



statute of limitations applies for sulfolane remaining on Flint Hills's property.  We also  

                                                                                                                                              



hold  that  the  superior  court  properly  dismissed  Flint  Hills's  equitable  claims  and  

                                                                                                                                             



correctly determined that the Agreement's damages cap applied to Flint Hills's claims.  

                                                                                                                                        



           A.	         It Was Error To Conclude That The Statute Of Limitations Barred  

                                                                                                                                       

                       The Contractual Indemnity Claim.  

                                                                           



                       Flint Hills argues that the superior court erred when it concluded that the  

                                                                                                                                               



three-year contract statute of limitations barred its contractual indemnity claim. It asserts  

                                                                                                                                         



that "the statute of limitations for indemnification claims does not begin to run until the  

                                                                                                                                               



party with the duty to indemnify refuses to pay or otherwise breaches its obligation."  

                                                                                                                                



           6           Christianson v. Conrad-Houston Ins.                             , 318 P.3d 390, 396 (Alaska 2014).               



           7  

                                                                                                                

                       See Wagner v. Wagner, 205 P.3d 306, 309 (Alaska 2009).  



           8  

                                                                                                       

                       Moran v. Holman, 501 P.2d 769, 771 (Alaska 1972).  



                                                                      -12-	                                                                7124
  


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

Thus, it contends that the statute of limitations began to run on March 5, 2010, when                                                                                                                           



Williams allegedly refused Flint Hills's requests for indemnification; if this is correct                                                                                                                   



Flint Hills's claim would fall well within the statute of limitations because it filed its                                                                                                                

complaint on May 10, 2010.                                               9  



                                  The superior court disagreed with Flint Hills's proposed claim accrual  

                                                                                                                                                                                                           



standard and explained in its order that Flint Hills's claim for contractual indemnity  

                                                                                                                                                                     



accrued when Flint Hills first sustained damages or a loss for which indemnification  

                                                                                                                                                                   



could have been claimed. The court found that all of the elements of the indemnity claim  

                                                                                                                                                                                                                 



existed on April 1, 2004 - when Flint Hills purchased the refinery - because sulfolane  

                                                                                                                                                                                                       



contamination was much greater than disclosed in the Agreement. But it also found that  

                                                                                                                                                                                                                     



Flint Hills had no reason to know the extent of the contamination until the July 2004  

                                                                                                                                                                                                                 



meeting with the Department, Shannon & Wilson's September 2004 report, and the  

                                                                                                                                                                                                                      



Department's October 2004 letter.  The court therefore determined that the three-year  

                                                                                                                                                                                                    



contract statute of limitations had expired long before Flint Hills filed its complaint.  

                                                                                                                                                                                             



                                  We have not previously determined when the statute of limitations accrues  

                                                                                                                                                                                                            



on a pure contractual indemnity claim.  The two options presented in this appeal are the  

                                                                                                                                                                                                                       



date that an indemnifiable loss occurs or the date that a demand for indemnification is  

                                                                     



rejected.  We begin by analyzing the contractual indemnification claims on which the  

                                                                                                                                                                                                     



parties agreed.  

                                        



                 9                In its complaint Flint Hills also alleged that Williams had breached the                                                                                                            



retained liabilities clause in the Agreement and asserted a claim for diminution of value.                                                                                                                                       

But at oral argument counsel for Flint Hills clarified that the indemnification clause of                                                                                                              

theAgreement                          required Williams to indemnify Flint Hillsfordamages                                                                                      including retained  

liabilities and diminution of value. We accept counsel's clarification of the issues; Flint                                                                                                                        

Hills's   retained   liability   claim   is  not  a   separate   claim   but   instead   falls   within   the  

indemnification claims.                                        



                                                                                                          -13-                                                                                                    7124
  


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

                                           Section 10.3 of the Agreement sets out the Indemnification Procedures.                                                                                                                                                                  



 Section   10.3(a)(I),   entitled   "Notice   of   Claims,"   identifies   the   process   by   which   an  



 Indemnified   Party   must   notify   the   Indemnifying   Party   of   a   claim.     Where   an  



 Indemnifying Party could be liable to an Indemnified Party under the Agreement, the                                                                                                                                          



 Indemnified Party shall                                   



                                          with reasonable promptness send to the Indemnifying Party  

                                           a written [Claim Notice] . . . , provided that a delay or defect                                                                                                        

                                           in   notifying   the   Indemnifying   Party  shall   not   relieve   the  

                                           Indemnifying Party of its obligations under this Agreement                                                                                              

                                           except to the extent that (and only to the extent that) the                                                                                                                     

                                           Indemnifying   Party   demonstrates   such   failure   shall  have  

                                           caused the Damages for which the Indemnifying Party is                                                                                                                              

                                           obligated to be greater than such Damages would have been                                                                                                                   

                                          had   the   Indemnified   Party   given   the   Indemnifying   Party  

                                          timely notice.   



 Flint Hills urges us to adopt the rule we have established in insurance litigation holding                                                                                                                                                            



 that "[a]n insurance company . . . breaches the duty to defend when it refuses to defend                                                                                                                                                                 

                                                                                                                                                                            10  and that an insurer's duty to  

 the insured and the insured is notified of the refusal"                                                                                                                                                                                                                

 compensate an insured is breached when the insurer refuses to compensate the insured.11  

                                                                                                                                                                                                                                                                                   



                                          Williams argues that we should affirm the superior court's approach and  

                                                                                                                                                                                                                                                                                   



 adopt the accrual standard that we have applied in tort liability indemnity cases; in those  

                                                                                                                                                                                                                                                               



 cases  the  statute  of  limitations  generally  begins  to  run  once  the  indemnified  party  

                                                                                                                                                                                                                                                              



 actually becomes liable for damages, typically either through a settlement or a court  

                                                                                                                                                                                                                                                           

judgment. 12                             But that rule seems inapt here because there has been no determination of  

                                                                                                                                                                                                                                                                         



                      10                  See Brannon v. Cont'l Cas. Co.                                                                      , 137 P.3d 280, 285 (Alaska 2006).                                                       



                      11                  Howarth v. First Nat'l Bank of Anchorage                                                                                                  , 540 P.2d 486, 491 (Alaska                                       



  1975).  



                      12                   This is because tort liability cannot be established without a settlement or  

                                                                                                                                                                                                                                                                         

                                                                                                                                                                                                                                      (continued...)  



                                                                                                                                  -14-                                                                                                                          7124
  


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

 liability; Flint Hills did settle the lawsuit with West, but the value of that suit was very                                                                                     



 small  compared   to   the   indemnity   amount   Flint   Hills   seeks,   and   there   has   been   no  



 determination on Flint Hills's liability for that amount.  Adopting the accrual standard  



used in tort cases for contractual indemnity cases would require Flint Hills to bring an   



 indemnity action only after being found liable for the damages from which it seeks                                                                                            



 indemnification.    In environmental indemnity cases like this, this is not a workable                                                                                



 solution.   



                             Williams   alternatively   argues   that   the   facts  in  this   case   are   similar   to  



Johnson v. Columbia Properties Anchorage, LP                                                            , where a subcontractor waited several                              



years after performance to send an invoice to a general contractor, who then refused to                                                                                                

                                                13   The Ninth Circuit held that under Alaska law "a cause of action  

pay the subcontractor.                                                                                                                                                        



 for breach of contract accrues, thereby triggering [the statute of limitations] when the  

                                                                                                                                                                                     

breaching party becomes obligated to perform."14                                                               Although the subcontractor argued  

                                                                                                                                                                            



that there was no obligation to pay until he sent the invoice, the court held that "an  

                                                                                                                                                                                   



Alaska court would likely refuse to excuse this delay in starting the clock for the statute  

                                                                                                                                                                             



               12(...continued)  



                                                                                                                                                                                       

judicial  determination.                               See  Hoffman  Constr.  Co.  of  Alaska  v.  U.S.  Fabrication  &  

                                                                                                                                                                     

Erection, Inc., 32 P.3d 346, 352, 356 (Alaska 2001) (holding that the duty to indemnify  

                                                                                                     

 "is not triggered until the indemnitee is liable for damages" and finding that one party  

                                                                                                                                                                                 

had no liability only because the claims were settled without payment); Alaska Gen.  

                                                                                                                                                                                

Alarm, Inc. v. Grinnell , 1 P.3d 98, 105 (Alaska 2000) (noting a general rule in tort cases  

                                                                                                                                                                                        

that the statute of limitations begins to run when a judgment is filed or a settlement is  

                                                                                                                                                                          

reached on the underlying tort action that establishes liability for the party seeking  

 indemnification).  



               13            437 F.3d 894, 897-98 (9th Cir. 2006).  

                                                                                                                 



               14            Id. at 900.  

                                                     



                                                                                         -15-                                                                                   7124
  


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

                                                                                                                                                                      15  

of limitations" because allowing the plaintiff to do so would frustrate such statutes.                                                                                     But  



importantly, the Ninth Circuit concluded that the contract at issue "obligated Johnson to                                                                                      



send an invoice to Columbia 'at the conclusion of the project' " and that "the invoice or                                                                                     

                                                                                                                            16  The Agreement between  

invoices would be due and payable promptly after submittal."                                                                                                      



Flint Hills and Williams contains no such clause; rather, it specifies that "a delay or  

                                                                                                                                                                              



defect in notifying the Indemnifying Party shall not relieve the Indemnifying Party of its  

                                                                                                                                                                              



obligations under this Agreement." (Emphasis added.)  

                                                                                                  



                            On facts similar to those in Johnson the Nebraska Supreme Court found  

                                                                                                                                                                      

that the statute of limitations began to run when a party could have demanded payment.17  

                                                                                                                                                                                    



But like in Johnson, no contractual provision explicitly stated that the indemnified party  

                                                                                                                                                                        

would not waive its rights under the contract by waiting to request payment.18  In another  

                                                                                                                                                                   



late-invoice case a federal district court held that a party's cause of action arose when a  

                                                                                                                                                                                



demand for payment was made and refused, but it clarified that the demand for payment  

                                                                                                                                                                 



must have been made within a reasonable time after the demand lawfully could have  

                                                                                                                                                                         

                         19      As  the  Alabama  Supreme  Court  explained,  "[i]f  the  time  for  such  

been  made.                                                                                                                                                             

            



              15           Id .   



              16           Id .   



              17            Stock   v.  Meissner,   309  N.W.2d   86,   88   (Neb.   1981)   (quoting  Luikart   v.  



Hoganson,  281  N.W.  27,  28  (Neb.   1938)).  



              18            See  id.  at  87  ("The  grain  was  to  be  paid  for  .  .  .  on  demand  [pursuant  to  an  



oral  contract].").  



              19            Cont'l Cas. Co. v. Dr Pepper Bottling Co. of Tex., 416 F. Supp. 2d 497, 507  

                                                                                                                                                                           

(N.D. Tex. 2006).   That  court  found that  a reasonable period  of time will  typically  

                                                                                                                                                                

coincide with the statute of limitations period.  Id .  

                                                                                                         



                                                                                     -16-                                                                               7124
  


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

performance is not definitely fixed, a reasonable time, but that only, will be allowed                                             

therefor."20  



                      Case law from other jurisdictions offers conflicting accrual standards for  

                                                                                                              



the statute of limitations in pure contractual indemnity cases. Some courts have held that  

                                                                                                                                           



the statute of limitations begins to run once the indemnified party incurs costs or suffers  

                                                                                                                                     

the damages for which it seeks indemnity.21                               But other courts have applied the opposite  

                                                                                                                                  



rule, holding that a cause of action for breaching an indemnity claim does not accrue  

                                                                                                                                     



           20         Seybold v. Magnolia Land Co.                       , 376 So. 2d 1083, 1086-87 (Ala. 1979).                  



           21         See State v. Next Millenium Realty, LLC, No. CV-03-5985(SJF)(MLO),  

                                                                                                     

2007 WL 2362144, at *18 (E.D.N.Y. Aug. 14, 2007) ("[T]he statute of limitations  

                                                                                                                              

accrues when the loss is suffered by the party seeking indemnity." (quoting McDermott  

                                                                                                                             

v.  City of New York, 406  N.E.2d 460, 461 (N.Y. 1980))); Sherwin-Williams Co. v.  

                                                                                                                                             

ARTRA Grp., Inc. , 125 F. Supp. 2d 739, 757 (D. Md. 2001) (holding that "the claim  

                                                                                                                                       

accrues at the time payment [is] made by the party seeking indemnification"); FMC  

                                                                                                                                       

Corp. v. Northern Pump Co., No. 4-84-1365, 1985 WL 1555, at *3 (D. Minn. Apr. 29,  

                                                                                                                                           

 1985) ("[A] claim for contribution or indemnity does not accrue until the person entitled  

                                                                                                                                    

to the . . . indemnity has sustained damage by paying a loss or discharging a liability that  

                                                                                                                                          

should properly be the responsibility of another." (quoting Leisure Dynamics v. Falstaff  

                                                                                                                                    

Brewing Corp., 298 N.W.2d 33, 38 (Minn. 1980))); Amoco Oil Co. v. Liberty Auto &  

                                                                                                                                             

Elec.  Co.,  810  A.2d  259,  264  (Conn.  2002)  (holding  that  "[w]hen  an  agreement  

                                                                                                                              

indemnifies against both loss and liability . . . the statute of limitations begins to run as  

                                                                                                                                             

soon as liability is incurred"); Pflanz v. Foster, 888 N.E.2d 756, 759 (Ind. 2008) (holding  

                                                                                                                                   

that the statute of limitations began to run when the purchasers of property were required  

                                                                                                                                   

to pay for environmental cleanup where the purchasers were unaware that fuel tanks on  

                                                                                                                                            

the  property  were  leaking);  Lyhane  v.  Durtschi,  13  N.W.2d  130,  135  (Neb.  1944)  

                                                                                                                                      

(holding that "[i]t is the rule in the case of indemnity contracts that a cause of action to  

                                                                                                                                             

recover  indemnity does not accrue until a loss occurs, and it follows the statute of  

                                                                                                                                            

limitation does not commence to run until that time"); Ingersoll-Rand Co. v. Valero  

                                                                                                                                     

Energy Corp., 997 S.W.2d 203, 210 (Tex. 1999) (holding that an indemnification claim  

                                                                                                                                       

does not accrue until the damages are "fixed and certain by judgment").  

                                                                                                    



                                                                     -17-                                                              7124
  


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

                                                                                                        22  

until a demand has been made and rejected.                                                                    A third approach maintains that if a party's                                       



right is dependent on a preliminary act "he cannot suspend indefinitely the running of the                                                                                                                    



statute of limitations by delaying the performance of the preliminary act, for it is not the                                                                                                                 

policy of the law to put it within the power of a party to toll the statute of limitations."                                                                                                                     23  



                                 Because we have never squarely decided the accrual standard for a pure  

                                                                                                                                                                                                        



contractual indemnity clause and because the case law from other jurisdictions conflicts  

                                                                                                                                                                                                



on this issue, we look to principles of contract interpretation.  "Generally, a cause of  

                                                                                                                                                                                                               



action for breach of contract accrues, and the statute of limitations begins to run, 'at "the  

                                                                                                                                                                                                           



time  of  the  breach  of  the  agreement,  rather  than  the  time  that  actual  damages  are  

                                                                                                                                                                                    

sustained as a consequence of the breach." ' "24                                                                          Intuitively, a breach of a contractual  

                                                                                                                                                                                       



indemnity clause occurs when the indemnifying party refuses to honor a request for  

                                                                                                                                                                                                             



indemnity and that breach would then start the statute of limitations.  But we note the  

                                                                                                                                                                                                             



superior  court's  concern  with  this  approach  -  the  indemnified  party  may  "incur  

                                                                                                                                                                                                    



damages, sit on those damages for as long as [it wants], demand reimbursement of the  

                                                                                                                                                                                                             



damages, and then sue when [it is] refused."  

                                                                                       



                                 Although we understand this concern, we find it to be misplaced in light of  

                                                                                                                                                                                                                



the Agreement's language and the parties' evident intent. First, the Agreement provides  

                                                                                                                                                                                                



                 22              Seaboard Coast LineR.R. v. Tenn. Corp.                                                           , 421 F.2d 970, 975 (5th Cir. 1970)                                  



(holding that in a claim for indemnification stemming from a train collision, "the cause                                                                                                               

of action accrued only after a demand for indemnification had been made and this had                                                            

been refused," although citing no authority for that proposition);                                                                                                  Oakview Treatment   

 Ctrs. of Kan., Inc. v. Garrett                                      , 53 F. Supp. 2d 1196, 1202 (D. Kan. 1999) (holding that a                                                                                   

claim did not accrue until the indemnitee informed the other party within a reasonable  

                                                                                                                                                                                                   

time of specific costs and expenses and sought performance and the defendant refused  

                                                                                         

a particular payment that had come due).  



                 23              Seybold, 376 So. 2d at 1086.  

                                                                                          



                 24              Brannon v. Cont'l Cas. Co., 137 P.3d 280, 284 (Alaska 2006) (quoting  

                                                                                                                                                                                               

K & K Recycling, Inc. v. Alaska Gold Co., 80 P.3d 702, 725 (Alaska 2003)).  

                                                                                                                                                                                             



                                                                                                     -18-                                                                                               7124
  


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

an incentive for the indemnified party to bring its claim for indemnity as soon as possible                                                                                                                           



because waiting to pursue its indemnity action would not entitle it to any additional                                                                                                                           



damages.   Under Section 10.3(a), the parties agreed that                                                                                                  



                                     a delay or defect in notifying the Indemnifying Party shall not                                                                                            

                                    relieve the Indemnifying Party of its obligations . . . except to                                                                                              

                                    the extent that (and only to the extent that) the Indemnifying                                                                 

                                    Party   demonstrates   such   failure   shall   have   caused   the  

                                    Damages for which the Indemnifying Party is obligated to be                                                                                                   

                                     greater   than   such   Damages   would   have   been   had   the  

                                     Indemnified   Party  given   the   Indemnifying   Party   timely  

                                    notice.  



                                                                                                                                                                                                                              

Based on the express language of the Agreement, Flint Hills would not benefit from  



                       

waiting to seek indemnity if Williams demonstrated that the delay caused Flint Hills's  



                                                                                                                                                                                                                           

damages to increase beyond what they would have been had it given Williams timely  



notice.  



                                                                                                                                                                                                                                  

                                    And second, "[w]hen interpreting a contract, our duty is to 'ascertain and  

                                                                                                                                                                                            25      Flint Hills and  

                                                                                                                                                                                                                                  

give effect to the reasonable intentions of the contracting parties.' " 



Williams are two sophisticated parties and were represented by attorneys when they  

                                                                                                                                                                                                                                

negotiated and drafted the Agreement.26  The Agreement explicitly states that "a delay  

                                                                                                                                                                                                                             



or defect in notifying the Indemnifying Party shall not relieve the Indemnifying Party of  

                                                                                                                                                                                                                                       



its obligations under this Agreement."  Holding that Flint Hills's claims were barred by  

                                                                                                                                                                                                                                     



the statute of limitations would directly contradict the parties' clearly expressed intent.  

                                                                                                                                                                                                                                               



                  25                Estate of Polushkin ex rel. Polushkin v. Maw                                                                                , 170 P.3d 162, 167 (Alaska       



2007) (quoting                            Western Pioneer, Inc. v. Harbor Enters., Inc.                                                                           , 818 P.2d 654, 656 (Alaska                          

 1991)).  



                  26                 Cf. Renaissance Alaska, LLC v. Rutter & Wilbanks Corp., 263 P.3d 35, 41  

                                                                                                                                                                                                                                      

(Alaska 2011) (finding parties' status as sophisticated actors weighed in favor of reading  

                                                                                                                                                                                                                        

their agreement strictly).  

                                                                     



                                                                                                                 -19-                                                                                                          7124
  


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

                              We therefore hold, in the context of a pure claim for breach of a contractual                                                            



term   of   indemnification,   that   the   statute   of   limitations   begins   to   run   when   the  



                                                                                                                                                                                            27  

indemnifying   party   refuses   the   indemnified   party's   request   for   indemnification.                                                                                                   



                                                                                                                                                                                           

Because  the  claim  is  contractual  in  nature,  it  is  subject  to  a  three-year  statute  of  



limitations under AS 09.10.053.  Accordingly, we reverse the superior court's finding  



                                                                                                                                                                                             

regarding the statute of limitations' accrual date for the contractual indemnity claim.  



                                                                                                                                                                                  

               B.	            It  Was  Error  To  Conclude  That  Some  Statutory  Claims  Were  

                              Time-Barred.  



                                                                                                                                                                                          

                              Flint Hills seeks to hold Williams strictly liable under AS 46.03.822(a) for  



                                                                                                                                                                       

damages both from sulfolane discharged on the refinery property during Williams's  



                                                                                                                                                            28  

                                                                                                                                                                              

ownership and for the sulfolane that migrated onto nearby properties.                                                                                              The superior  



                                                                                                                                                                                            29  

                                                                                                                                                                             

court dismissed this claim as barred by the two-year limitation for statutory claims, 



               27             We note that, although a claim for indemnification may be made after an   



unreasonable period of time, we are not presented with this question in this appeal, and                                                                                                

we therefore do not address it.                                      Our holding also does not address the question of serial                                                       

demands - whether the statute of limitations restarts each time a demand for payment                                                                                         

is made - because Flint Hills's complaint requested the damages "that Flint Hills has                                                                            

incurred or will incur in the future in connection with the [c]ontamination."                                                    



               28	            Alaska Statute 46.03.822(a) provides that "the owner and the operator of  

                                                                                                                                                                                            

a . . . facility, from which there is a release . . . of a hazardous substance" are "strictly  

                                                                                                                                                                              

liable,  jointly  and  severally,  for  damages,  for  the  costs  of  response,  containment,  

                                                                                                                                                                  

removal, or remedial action incurred by the state, a municipality, or a village."  "The  

                                                                                                                                                                                    

statute creates a private cause of action."  Maddox v. Hardy, 187 P.3d 486, 491 n.7  

                                                                                                                                                                                         

(Alaska 2008) (citing Fed. Deposit Ins. Corp. v. Laidlaw Transit, Inc., 21 P.3d 344, 356  

                                                                                                                                                                                        

(Alaska 2001)). "The statute applies when two elements are met. First, there must have  

                                                                                                                                                                                      

been an 'unpermitted release of a hazardous substance' that caused damages.  Second,  

                                                                                                                                                                             

the party being sued must own the hazardous substance at the time of the release."  Id .  

                                                                                                                                                                                          

at 491 (quoting AS 46.03.822(a)).  

                                             



               29             Alaska  Statute  09.10.070(a)  provides  in  part:                                                              "Except  as  otherwise  

                                                                                                                                                                         

provided by law, a person may not bring an action . . . (5) upon a liability created by  

                                                                                                                                                                                          

                                                                                                                                                                  (continued...)  



                                                                                            -20-	                                                                                    7124
  


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

holding that "the nature of the injury alleged arises from the [Agreement], not a trespass                                                                                        



on land or even a trespass on the case, and therefore a two[-]year[] statute of limitations                                                                                  



applies to Flint Hills'[s] strict liability claims."                                                       Flint Hills argues that the superior court                                    



erred in dismissing its strict liability statutory claim and maintains that the six-year                                                                                          



limitations period for trespass is more appropriate than the two-year limitations period                                                                                               

for statutory claims.                         30  



                              We agree with the superior court that Flint Hills's strict liability statutory  

                                                                                                                                                                                 



claim is time-barred by the two-year statute of limitations under AS 09.10.070(a) with  

                                                                                                                                                                                           



respect to sulfolane contamination on the refinery property.   But we hold that Flint  

                                                                                                                                                                                          



Hills's potential liability to owners of properties beyond the refinery's boundaries is  

                                                                                                                                                                                                 



subject to the six-year statute of limitations for trespass claims under AS 09.10.050.  

                                                                                                                                                                       



                              In  determining  the  applicable  statutes  of  limitations,  we  look  to  the  

                                                                                                                                                                                             



language of the statutes.  Alaska Statute 09.10.070(a) provides that a "liability created  



by statute" is timely if claimed within two years, and AS 09.10.050   provides that  

                                                                                                                                                                                            



"[u]nless the action is commenced within six years, a person may not bring an action for  

                                                                                                                                                                                               



waste or trespass upon real property."   The six-year  statute of limitations typically  

                                                                                                                                                                                

applies in tort trespass and nuisance cases.31  

                                                                                                      



               29(...continued)  



                                                                                                                                                                                         

statute, . . . unless the action is commenced within two years of the accrual of the cause  

                          

of action."  



               30             Alaska Statute 09.10.050 provides:   "Unless  the action is commenced  

                                                                                                                                                                         

within six years, a person may  not bring an action for waste or trespass upon real  

                                                                                                                                                                                            

property."  



               31             See Fernandes v. Portwine, 56 P.3d 1, 5-6 (Alaska 2002) (holding that  

                                                                                                                                                                                            

nuisance claims were encompassed by AS 09.10.050 due to the broad definition of  

                                                                                                                                                                                                

trespass in the statute of limitations context as any "unlawful interference with one's  

                                                                                                                                                                                         

person, property, or rights").  

                                                                   



                                                                                              -21-                                                                                       7124
  


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

                            Flint Hills argues that the statute of limitations for this claim should be                                                                           



governed   by   Federal   Deposit  Insurance   Corp.   v.   Laidlaw   Transit,   Inc.,   where   we  



accepted a certified question from the federal district court regarding private parties'                                                                               



rights to bring claims under AS 46.03.822(a) and whether timeliness could serve as a                                                                                                 

                 32     In Laidlaw the FDIC acquired a parcel of contaminated property through  

defense.                                                                                                                                                              



receivership   and   brought   a   strict   liability   hazardous                                                                 substance   claim   under  

                                                                                                                                                                        

AS 46.03.822(a).33                        We held that the statute created a private right of action.34                                                               We also  

                                                                                                                                                                               



noted:  



                            The defendants assert, without elaboration, that this case is  

                                                                                                                                                        

                            governed by AS 09.10.070(a), which establishes a two-year  

                                                                                                                                        

                            limit for "an action . . . upon a liability created by statute."  

                                                                                                                                         

                            But it seems that this case might alternatively be governed by  

                                                                                                                                                      

                            AS 09.10.050, which specifies a six-year limit for "an action  

                                                                                                                                               

                            for waste or trespass upon real property."[35]  

                                                                                               



But we declined to decide the issue because "the federal court's certification order only  

                                                                                                                                                                              



ask[ed] us to address FDIC's claim that no statute of limitations defense [was] available  

                                                                                                                                                                    

for a direct cause of action under AS 46.03.822(a)."36                                                                    Flint Hills suggests that our  

                                                                                                                                                                                



comment in Laidlaw "reflected [our] approach of looking to 'the nature of the injury  

                                                                                                                                                                          



              32            21 P.3d at 345-46.
       



              33            Id.
  



              34            Id.
  



              35  

                                                  

                            Id. at 350 n.23.  



              36            Id.  



                                                                                       -22-                                                                                  7124
  


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

alleged, rather than to the technical cause of action' in determining which limitations                                           



                                                       37  

period applies to a given claim."                                                                                        

                                                            In this regard Flint Hills is correct.  



                                                                                                                                           

                       Looking to the nature of the injury alleged here, we observe that the claim  



                                                                                                                                   

Flint Hills asserted against Williams for contaminating the refinery property it purchased  



                                                                                                                                            

is not trespassory.   Williams had contaminated its own   property.   Flint Hills then  



                                                                                                                                              

purchased the property and continued contaminating it. There is nothing to suggest that  



                                                                                                                                             

the contamination by Williams, then by Flint Hills, was at any time trespassory.  The  



                                                                                                                

claim for contamination on refinery property is therefore subject to AS 09.10.070(a)'s  



                                                                                                                                        

two-year statute of limitations.  On the other hand, Flint Hills's claim asserted against  



                                                                                                                                   

Williams for contamination beyond the refinery property - on neighboring properties  



                                                                                                                                                 

not owned by Flint Hills - is trespassory and therefore subject to a six-year statute of  



                                                       38  

                                      

limitations under AS 09.10.050. 



                       Based on this distinction, we conclude that Flint Hills's AS 46.03.822(a)  

                                                                                                  



claim for contamination on its refinery property is barred by the applicable two-year  

                                                                                                                                     



statute of limitations.  A claim under AS 46.03.822(a) accrues where a party causes an  

                                                                                                                                                

unpermitted release of a hazardous substance that causes damage.39  Under the discovery  

                                                                                                                                    



rule, the statute of limitations will not begin to run until a reasonable person has enough  

                                                                                                                                        



information to be on notice for a potential cause of action or to inquire into the extent of  

                                                                                                                                                 

the injury.40  

                       



           37          McDowell v. State              , 957 P.2d 965, 968 (Alaska 1998).                



           38  

                                                                                                                                                 

                       See id. ("[N]egligent contamination of real property is an injury to land in  

                                            

the nature of trespass.").  



           39          Maddox v. Hardy, 187 P.3d 486, 491 (Alaska 2008).  

                                                                                                       



           40          John's Heating Serv. v. Lamb, 129 P.3d 919, 923-24 (Alaska 2006); Sopko  

                                                                                                                                          

v. DowellSchlumberger, Inc., 21P.3d 1265,1272(Alaska2001) ("[U]nder thediscovery  

                                                                                                                                    

                                                                                                                             (continued...)  



                                                                      -23-                                                                 7124
  


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

                                                                               Flint Hills sued Williams on May 10, 2010.  To be timely under the two-                                                                                                                                    



year statute of limitations, this claim must have accrued no earlier than May 10, 2008.                                                                                                                                                                                                      



The superior                                                                          court made several findings regarding                                                                                                                                                                                                        Flint Hills's knowledge of the                                                                                                                                            



 sulfolane contamination on its property: (1) Flint Hills should have been on notice of the                                                                                                                                                                                                                                                                                                                                                                                                                     



 scope of the contamination since Shannon & Wilson's 2004 data review; (2) "Flint Hills                                                                                                                                                                                                                                                                                                                                                                                                              



actually   incurred   costs   regarding   Shannon   &   Wilson's   work   after   [July   2004],  



 specifically   after   the   20   July   2004   proposal";   (3)   after  Shannon   &   Wilson   found  



 sulfolane in a new well on the northern end of the property in September 2004, "Flint                                                                                                                                                                                                                                                                                                                                                                                                        



Hills should have drawn the conclusion that the sulfolane extended beyond the sampling                                                                                                                                                                                                                                                                                                                                                                                      



disclosed as part of the [Agreement] and that it had the basis for an indemnification claim                                                                                                                                                                                                                                                                                                                                                                                                      



arising from the diminution of the refinery's value"; (4) the Department contacted Flint                                                                                                                                                                                                                                                                                                                                                                                                              



Hills in 2004, and that "[i]f it was not already apparent, the meeting and the letter should                                                                                                                                                                                                                                                                                                                                                                                              



have put Flint Hills on notice that sulfolane was an issue and that further investigation                             



was needed"; and (5) "[o]ver the course of the next two years, Shannon & Wilson                                                                                                                                                                                                                                                                                                                                                                                                     



repeatedly provided Flint Hills with information sufficient to inform it that the refinery                                                                                                                                                                                                                                                                                                                                                                                        



had . . . sulfolane contamination and that it should conduct an investigation into the scope                                                                                                                                                                                                                                                                                                                                                                                                    



of that contamination."                 



                                                                                The superior court found that Flint Hills reasonably should have concluded                                                                                                                                                                                                                                                                                                           



"long beforeMay                                                                                         10, 200[8]" that sulfolane had migrated beyond the sampling disclosed                                                                                                                                                                                                                                                                                              



in the Agreement. We conclude these findings are not clearly erroneous, that Flint Hills                                                                                                                                                                                                                                                                                                                                                                                                             



had sufficient knowledge of contamination on its own property, and that it should have                                                                                                                                                                                                                                                                                                                                                                                                               



 filed   its   strict   liability   statutory  claim   under   AS   46.03.822(a)   within   two   years   of  



                                        40(...continued)  



                                                                                                                                                                                                                                                                                                                                                                                                                                                           

rule it is irrelevant if the full scope of injury is not known immediately.");  Wettanen v.  

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

 Cowper,  749  P.2d  362,  365  (Alaska  1988)  ("[C]ommencement  of  the  statute  [of  

                                                                                                                                                                                                                                                                                                                                                                                                                 

limitations] will not be put off until one learns the full extent of his damages.")  



                                                                                                                                                                                                                                                      -24-                                                                                                                                                                                                                                            7124
  


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

                                                                          41  

receiving this knowledge.                                                        Because this claim accrued well before May 10, 2008, it is                                                                                                          



barred by the two-year statute of limitations.                                                  



                                       But as explained above Flint Hills's statutory claim for contamination on                                                                                                                                   



neighboring properties is subject to the six-year statute of limitations. Flint Hills's claim                                                                                                                                             



was timely because it was filed within the six-year period commencing in July 2004.                                                                                                                                                                    



                                       Flint Hills also seeks contribution from Williams under AS 46.03.822(j),                                                                       



which was amended in 2006 to allow a party to seek "contribution from any other                                                                                                                                                           



person   .   .   .   liable   under   [AS   46.03.822(a)]   during   or   after   a   civil  action   under  



 [AS 46.03.822(a)] or after the issuance of a potential liability determination by the                                                                                                                                                          

                                            42      The superior court found that the Department's 2004 and 2006 letters  

 [D]epartment."                                                                                                                                                                                                                         



qualified as "potential liability determinations" because they "gave clear notice of [the  

                                                                                                                                                                                                                                               



Department's] interest in the release of sulfolane, and both letters advised Flint Hills of  

                                                                                                                                                                                                                                                    



the  need  to  clean  up  the  sulfolane."                                                                            Because  "potential  liability  determinations"  

                                                                                                                                                                                                          



preceded  the  amendment,  the  court  concluded  that  passage  of  the  amendment  on  

                                                                                                                                                                                                                                                 

April 27, 2006 triggered the statute of limitations.43  

                                                                                                                



                                       We conclude these findings are not clearly erroneous and the superior  

                                                                                                                                                                                                                                 



court's   legal   analysis   is   sound.                                                                          Because   we   determined   that   Flint   Hills's  

                                                                                                                                                                                                                                   



AS 46.03.822(a) claimfor contamination on therefinery propertyis subject to a two-year  

                                                                                                                                                                                                                              



statute of limitations, we conclude that Flint Hills's AS 46.04.822(j) claim is also subject  

                                                                                                                                                                                                                                      



                   41                  See Christianson v. Conrad-Houston Ins., 318 P.3d 390, 396-97 (Alaska   



2014) ("Under the discovery rule, a cause of action accrues when the plaintiff has                                                                                                                                                             

 'information sufficient to alert a reasonable person to the fact that he has a potential                                                                                                                                    

cause of action.' " (quoting                                                    Preblich v. Zorea                                   , 996 P.2d 730, 734 (Alaska 2000))).                                               



                   42                  Ch. 15,  1, SLA 2006.  This amendment provides that AS 46.03.822(j)  

                                                                                                                                                                                                                      

"appl[ies] to liability for the release . . . of a hazardous substance that occurred . . . before  

                                                                                                                                                                                                                                    

the effective date of this Act." Id .  3.  

                                                                                                      



                   43                 Id .  4.  

                                                   



                                                                                                                       -25-                                                                                                                 7124
  


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

to a two-year statute of limitations under AS 09.10.070(a).                                                                                                                 We similarly conclude that                                           



Flint Hills's AS 46.03.822(j) contribution claim for contamination beyond the refinery                                                                                                                                               



property is subject to a six-year statute of limitations under AS 09.10.050.                                                                                                                                                   Based on   



these conclusions and the statutory contribution right created by the 2006 amendment                                                                                                                                      



to AS 46.03.822(j), Flint Hills's May 10, 2010 claim for contribution for contamination                                                                                                                            



                                                                                                                                                                                                                                                       44  

off of the refinery property was timely filed within the six-year statute of limitations.                                                                                                                                                                      



                                       To summarize, we hold that Flint Hills's contribution claim for damages  

                                                                                                                                                                                                                                  



beyond its premises is not time-barred, but its contribution claim for damages on its own  

                                                                                                                                                                                                                                                



property is barred by a two-year statute of limitations.  

                                                                                                                             



                    C.	                The Superior Court Did Not Err In Dismissing Flint Hills's Equitable  

                                                                                                                                                                                                                              

                                       Claims.  

                                                                



                                       In addition to its contractual indemnity and statutory claims, Flint Hills  

                                                                                                                                                                                                                                             



sought declaratory judgment and specific performance.  Flint Hills requested an order  

                                                                                                                                                                                                                                            



declaring its rights under the Agreement and its statutory rights, and it sought to compel  

                                                                                                                                                                                                                                       



Williams to perform the contract.  

                                                                        



                                       The superior court denied Flint Hills's equitable claims on two grounds.  

                                                                                                                                                                                                                                                               



First, it held that equitable claims were not available because Flint Hills had an adequate  

                                                                                                                                                                                                                                  



legal remedy, notwithstanding that its legal claims were time-barred; "equitable relief is  

                                                                                                                                                                                                                                                       

only  available  in  the  absence  of  an  adequate  legal  remedy."45  

                                                                                                                                                                                                                                           

                                                                                                                                                                                                      Second,  the  court  



                                                                                                                                                                                                                                 

concluded that even if Flint Hills were entitled to assert equitable claims, the equitable  



                    44                 Because Flint Hills's AS 46.03.822(a)                                                                                 claim for                     contamination   on   the  



refinery property is time-barred, we do not need to determine whether Flint Hills's                                                                                                                                                    

AS 46.03.822(j) claim is timely because the claims that would have been subject to                                                                                                                                            

contribution are barred.                        



                    45                 See Knaebel v. Heiner, 663 P.2d 551, 553 (Alaska 1983) ("One who seeks  

                                                                                                                                                                                                                                                               

the interposition of equity must generally show that he either has no remedy at law or  

                                                                                                                                                                                                                                                     

that no legal remedy is adequate.").  

                                                                    



                                                                                                                        -26-	                                                                                                                7124
  


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

                                                                                                                          

doctrine of laches barred these claims because Flint Hills waited an unreasonable period  



                                                                                                                                

of time and that "this delay prejudiced Williams."  The court found "the memories of  



                                                                                                                            

witnesses have faded, and as evidenced by their testimony at the hearing, they were  



                                                                                   

unable in numerous instances to remember important information."  



                                                                                                                                

                    Flint Hills does not address on appeal the superior court's holding that its  



                                                                                                                              

equitable claims are barred because it had an adequate remedy at law.  But it argues that  



                                                                                                                              

the  superior  court  erred  in  applying  the  doctrine  of  laches  because  it  did  not  



                                                                                                                

unreasonably delay seeking relief; Flint Hills also argues that even if it did unreasonably  



                                                                     

delay in seeking relief, Williams suffered no prejudice.  



                                                                                                                               

                    We agree with the superior court that Flint Hills's equitable claims are  



                                                                                                                        

coextensive with its legal claims and that Flint Hills therefore had (and given our reversal  



                                                                                                                      

on the contractual indemnification and off-site statutory claims, still has) an adequate  



                                                                                                                             

legal remedy. Flint Hills sought a judgment from the court declaring that Williams must  



                                                                                                                     

indemnify Flint Hills under the Agreement and that Williams "is obligated to contribute  



                                                                                                         

to Flint Hills all [s]tatutory [d]amages that have resulted . . . from the [c]ontamination."  



                                                                                                                               

Flint Hills also sought an order requiring Williams to perform under the terms of the  



Agreement.  



                                                                                                                            

                    These equitable remedies are identical to the legal remedies Flint Hills  



                                                                                                                            

sought in its statutory and contractual claims.  As discussed above, Flint Hills's legal  



                                                                                                                                 

claims sought to compel Williams to indemnify Flint Hills under the contract and to  



                                                                                                                      

contribute to Flint Hills's damages under AS 46.03.822. Because Flint Hills's equitable  



                                                                                                                          

claims seek identical relief, the superior court did not err when it dismissed Flint Hills's  



                                                              -27-                                                         7124
  


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

                                                                                                        46  

 equitable claims.                                                                                                 And because equitable remedies are not available, we do not need to                                                                                                                                                                                                                                                                                                                                                 



 determine whether the superior court properly applied the doctrine of laches.                                                                                                                                                                                                                                                                                                                                                               



                                         D.	                                       The Superior Court Did Not Err In Holding That The Damages Cap                                                                                                                                                                                                                                                                                                                                                                      

                                                                                  Applied.  



                                                                                   The Agreement between the parties sets out adamagescap -the minimum                                                                                                                                                                                                                                                                                                                                  



 and maximum amounts eligible for indemnification.                                                                                                                                                                                                                                                                                Flint Hills asks us to hold that the                                                                                                                                                         



 damages cap does not apply to the damages it seeks from Williams; it argues that at a                                                                                                                                                                                                                                                                                                                                                                                                                                                     



minimum the Agreement's provisions are ambiguous and cannot be resolved as a matter                                                                                                                                                                                                                                                                                                                                                                                                                 



 of law. Williams agrees with the superior court, which determined that the Agreement's                                                                                                                                                                                                                                                                                                                                                                            



 damages cap unambiguously applies to the environmental claims for which Flint Hills                                                                                                                                                                                                                                                                                                                                                     



 seeks indemnity.   



                                                                                   Section 10.4 of the Agreement sets out the damages cap:                                                                                                                                                                                                                                                                         



                                                                                  Notwithstanding anything to the contrary contained in this                                                                                                                                                                                                                                                                                             

                                                                                  Agreement, and except with respect to claims for breaches of                                                                                                                                                                                                                                                                                                       

                                                                                  the covenants and obligations stated in Articles II, III, VI, or                                                                                                                                                                                                                                                                                                 

                                                                                  XI, the maximum amount of indemnifiable Damages which                                                          

                                                                                  may be recovered by any Buyer . . . arising out of, resulting                                                                                                                                                                                                                                       

                                                                                   from or incident to the matters enumerated in Section 10.2(a)                                                                                                                                                                                                                                                                     

                                                                                   or   Section  10.2(b)   shall   be   the   Environmental   Cap   with  

                                                                                  respect to any and all Environmental Claims and the General                                                                                                                                                                                                                                                                   

                                                                                   Cap with respect to any and all claims for indemnity other                                                                                                                                                                                                                                                                                   

                                                                                  than Environmental Claims, but in no event shall the amount                                                                                                                                                                                                                                                                      

                                                                                   of all indemnifiable Damages of any type . . . pursuant to this                                                                                                                                                                                                                                                                                         

                                                                                   Section 10.4(b) exceed the Aggregate Cap.                                                                                                                                                                                                 



                                          46                                      We conclude                                                                      that Flint Hills's on-site contamination contractual indemnity                                                                                                                                                                                                                                                    



 and statutory contribution claims, though time-barred, remain adequate legal remedies                                                                                                                                                                                                                                                                                                                                                                                                     

 for purposes of this analysis.                                                                                                                                                              McIntyre v. Plummer Assocs.                                                                                                                                                                          , 375 A.2d 1083, 1084                                                                                          

 (Me.   1977)   ("[A]n   equitable   remedy   such   as   specific   performance   will  not   be  

 granted . . . where an adequate legal remedy, once available, has been lost by the failure                                                                                                                                                                                                                                                                                                                                                                                                               

 of the party seeking equitable relief to pursue that remedy in a timely manner.");                                                                                                                                                                                                                                                                                                                                                                                                               see also   

Baldwin Cty. Welcome Ctr. v. Brown                                                                                                                                                                                                  , 466 U.S. 147, 151 (1984) ("One who fails to act                                                                                                                                                                                                                                           

 diligently cannot invoke equitable principles to excuse that lack of diligence.").                                                                                                                                                                                                                                                                                                                                         



                                                                                                                                                                                                                                                              -28-	                                                                                                                                                                                                                                                   7124
  


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

                                                                 This Section references the "Disclosure Schedule," Schedule 10.2(a)(iv),                                                                                                                            



which provides: "Buyer has agreed to assume full responsibility for all existing, known                                                                                                                                                                                                                                                                                                              



contamination at the Real Property specifically identified in the referenced figures,                                                                                                                                                                                                                                                                                                          



tables[,] and text described below."                                                                                                                                                    Flint Hills "acknowledge[d]                                                                                                                           that the levels of                                                          



Hazardous Materials measured in monitoring wells and contained in the figures, tables[,]                                                                                                                                                                                                                                                                                                       



and text described below will vary over time, and that Buyer is responsible for such                                                                                                                                                                                                                                                                                                                          



normal variations, as well as any changes in such contamination resulting from Buyer's                                                                                                                                                                                                                                                                                                         



actions or omissions after the Effective Time."                                                                                                                                                                                      The Schedule also states that data from                                                                                                                                  



the wells "can be used to support reasonable conclusions about present contaminant                                                                                                                                                                                                                                                                                      



concentrations   at   the   locations   sampled   and   contaminant   contours  outside   these  



locations." TheSchedulelists                                                                                                                    reports prepared by Shannon &Wilson                                                                                                                                                         detailing sulfolane  



levels on the refinery property.                                                                          



                                                                 The superior court concluded that Flint Hills's claims for indemnification                                                                                                                                                                                                             



were subject to the damages cap.                                                                                                                                             The court noted that the "crux of Flint Hills'[s]                                                                                                                                                             



argument is that Section 2.3 encompasses environmental liabilities relating to the offsite                                                                                                                                                                                                                                                                                                             

                                                      47                      But  the  court  observed  that  Section  10.4  -  the  damages  cap  

 sulfolane."                                                                                                                                                                                                                                                                                                                                                                                                    



                                 47                               Section   2.3(e)  states:     "Except   as   otherwise   expressly   stated   in   this  



Agreement, Seller shall retain, and shall pay and discharge, all Liabilities to the extent                                                                                                                                                                                                                                                                                                              

relating to or arising out of the use, ownership, or operation of the Assets prior to the                                                                                                                                                                                                                                                

Effective   Time."     Section  2.3   goes   on   to   describe   Williams's   retained   liabilities,  

including:  



                                                                                                  (e)   .   .   .   any   Liabilities   arising   from,   relating   to  or  

                                                                 incident   to   the   possession,   use,   ownership,   operation   or  

                                                                 existence of the Assets, . . . including all of the Liabilities                                                                                                                                                                                  

                                                                 associated with, resulting from or incident to:                                                                                                                                                                                  

                                                                                                  . . . .   



                                                                                                  (xvii) Environmental  Liabilitiestotheextentarising in,                                                                                                                                                                                                

                                                                                                                                                                                                                                                                                                                                                                      (continued...)  



                                                                                                                                                                                                          -29-                                                                                                                                                                                                 7124
  


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

section - "unambiguously states that any environmental claims for damages arising out                                                                                                                                                                                                     



of matters" in Section 10.2(a) - the indemnification section - are covered by the                                                                                                                                                                                                       



damages cap.                                    The court noted Flint Hills's argument "that the                                                                                                                        procedure   set forth in                                             



 [Section 10.2(a)(iv)] applies but that the                                                                                              result  set forth in Section 2.3 should govern."                                                                             



(Emphasis in original.)                                                        The court disagreed, explaining that "[t]he parties negotiated a                                                                                                                                                 



procedure by which indemnification claims would be handled and the parties negotiated                                                                                                                                                                            



a maximum amount of indemnifiable damages." The court concluded that sulfolane fell                                                                                                                                                                                                      



under the framework set out in Section 10.2, the indemnification section, and that even                                                                                                                                                                                             



if sulfolane could fall under Section 2.3, Flint Hills's argument would still fail because                                                                                                                                                                               



 Section 2.3 "                            defers  to other sections of the [Agreement]," excepting specifically "the                                                                                                                                                                 



 [environmental] liabilities set forth in Section 10(a)(iv)." (Emphasis in original.)                                                                                                                                                           



                                             "When interpreting a contract, [the court's] duty is to 'ascertain and give  

                                                                                                                                                                                                             48  The court ascertains the  

effect to the reasonable intentions of the contracting parties.' "                                                                                                                                                                                                                        



parties' reasonable intentions by looking "to the language of the disputed provision and  

                                                                                                                                                                                                                                                                                        



other  provisions,  relevant  extrinsic  evidence,  and  case  law  interpreting  similar  

                                                                                                                                                                                                                                                                         

provisions."49  "It is not necessary to find that an agreement is ambiguous before looking  

                                                                                                                                                                                                                                                                          

to extrinsic evidence as an aid in determining what it means."50                                                                                                                                                                "The rules in aid of  

                                                                                                                                                                                                                                                                                            



                       47(...continued)  



                                                                                                                                                                                                        

                                             relating to or accruing in periods up to and including the  

                                                                                                                       

                                             Effective Time, other than the Environmental Liabilities set  

                                                                                                                                                                                                        

                                             forth on Section 10.2(a)(iv) of the Disclosure Schedule.  



                       48                    Estate of Polushkin ex rel. Polushkin v. Maw, 170 P.3d 162, 167 (Alaska  

                                                                                                                                                                                                                                         

2007) (quoting Western Pioneer, Inc. v. Harbor Enters., Inc., 818 P.2d 654, 656 (Alaska  

                                                                                                                                                                                                                                                                          

 1991)).  



                       49                     Western Pioneer, Inc., 818 P.2d at 656.  

                                                                                                                                                                   



                       50                    Estate of Polushkin, 170 P.3d at 167.  

                                                                                                                                                           



                                                                                                                                           -30-                                                                                                                                    7124
  


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

contract   interpretation   are   set   out   in   section   202   of   the   Restatement   (Second)   of  



Contracts. The first and generally most important rule is that '[w]ords and other conduct                                                                       



are interpreted in the light of all the circumstances, and if the principal purpose of the                                                                               

                                                                                                         51     "Moreover, interpretation of a  

parties is ascertainable it is given great weight.' "                                                                                                                        



contract term does not take place in a vacuum, but rather requires consideration of the  

                                                                                                                                                                         

provision and agreement as a whole."52  

                                                             



                           Flint Hills agrees that its claims are "Environmental Claims," but it argues  

                                                                                                                                                                  



that they are environmental claims that are not subject to the damages cap.  Flint Hills  

                                                                                                                                                          



argues that because the claims were brought as "retained liabilities" under Section 2.3,  

                                                                                                                                                                        



which does not mention a damages cap, these claims do not have a damages cap.  It  

                                                                                                                                                                            



contends that this position does not conflict with Section 10's sweeping damages cap  

                                                                                                                                                                        



language because Section 10 excepts claims made under Section 2 and Flint Hills's  

                                                                                                                                                                  



claims are retained liabilities under Section 2.  Alternatively, Flint Hills argues that the  

                                                                                                                                                                          



Agreement is ambiguous. Williams argues that the superior court was correct: sulfolane  

                                                                                                                                                              



is an environmental condition that neatly falls within the Agreement's damages cap for  

                                                                                                                                                                          



environmental claims.   Williams argues that even though Section 10 excepts claims  

                                                                                                                                                                  



arising under Section 2, Section 2 itself creates an exception for environmental claims,  

                                                                                                                                                                 



referring them back to Section 10 and to the damages cap.  

                                                                                                              



                           The superior court did not err in its analysis.  First, reading the Agreement  

                                                                                                                                                         



as a whole convinces us that the parties bargained for all environmental liabilities to be  

                                                                                                                                                                           



subject to a damages cap.  Section 10.4(b) unambiguously states that "the maximum  

                                                                                                                                                           



amount of indemnifiable Damages which may be recovered . . . arising out of [claims for  

                                                                                                                                                                          



              51           Id.   at 168 (alteration in original) (quoting R                                             ESTATEMENT   (SECOND)   OF  



CONTRACTS  202(1) (1981)).                  

                           



              52           Mahan v. Mahan                     , 347 P.3d 91, 95 (Alaska 2015).                      



                                                                                    -31-                                                                             7124
  


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

                                                                                                                         

indemnification brought under Section 10.2]shallbetheEnvironmentalCap with respect  



                                                                                                                             

to any and all Environmental Claims."  (Emphasis added.)  At oral argument Flint Hills  



                                                                                                                               

was unable to cite an example of an environmental liability that would be subject to the  



                                                                                                                                

damages  cap  but  that  would  not  also  be  considered  a  retained  liability  subject  to  



                                                                                                                         

Section 2.3. The damages cap would lose all effect if all environmental damages subject  



                                                                                                                                 

to the cap under Section 10.4 were also exempt from the cap under Section 2.3.  It is  



                                                                                                                                 

clear to us that the parties intended contractual indemnification claims, such as those in  



                                                                                                                               

this case, to be subject to the damages cap.   Flint Hills is bound to the terms of the  



Agreement.  



                                                                                                                      

                    Second, from the structure and interplay of the two provisions, Williams  



                                                                                                                                 

is correct that environmental claims are "the exception to the exception" for Section 2.  



                                                                                                                              

Even if Flint Hills's claims are retained liabilities under Section 2.3, the wording of that  



                                                                                                                     

section expressly refers back to Section 10. Section 2 covers "Environmental Liabilities  



                                                                                                                               

to  the  extent  arising  in,  relating  to  or  accruing  in  periods  up  to  and  including  the  



                                                                                                                    

Effective Time, other than the Environmental Liabilities set forth on Section 10.2(a)(iv)  



                                                                            

of the Disclosure Schedule."  (Emphasis added.)  Sulfolane on the property is covered  



                                                                                                                                

by Section 10.2(a)(iv) of the Disclosure Schedule.  And the environmental portion of  



                                                                                                                

Section 2 covers claims "[e]xcept as otherwise expressly stated in this Agreement,"  



                                                                                                                                

which  refers  back  to  Section  10's  more  detailed  and  specific  language  relating  to  



                        

environmental liabilities.  



                                                                                                                              

                    The superior court did not err when it concluded that the damages cap  



                                                    

applies to Flint Hills's indemnity claims.  



IV.       CONCLUSION  



                                                                                                                        

                    We  REVERSE  the  superior   court's  conclusions  that  Flint  Hills's  



                                                                                                                            

contractual indemnity clause claim and its statutory claim for off-site damages are time- 



                                                                                                                            

barred.   We AFFIRM the court's conclusion that the statute of limitations bars Flint  



                                                              -32-                                                         7124
  


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

Hills's statutory claims for sulfolane contamination on its property, AFFIRM the court's                                                                                                                                                                                                                                                                       



dismissal of Flint Hills's equitable claims, and AFFIRM the court's conclusion that the                                                                                                                                                                                                                                                                                         



damages   cap   applies   to   Flint   Hills's  indemnity   claim.     We   REMAND   for   further  



proceedings consistent with this opinion.                                                                                                        



                                                                                                                                                                                                    -33-                                                                                                                                                               7124
  

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