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Martech Construction Co. v. Ogden Env. Svcs, Inc. (5/21/93), 852 P 2d 1146
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Notice: This is subject to formal correction
before publication in the Pacific Reporter.
Readers are requested to bring typographical
or other formal errors to the attention of
the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order
that corrections may be made prior to
permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
MARTECH CONSTRUCTION COMPANY, )
INC., a Texas corporation, ) Supreme Court File
) No. S-4484
Appellant, ) Superior Court File
) 3AN-89-7210 Civil
v. )
)
OGDEN ENVIRONMENTAL SERVICES, ) O P I N I O N
INC., a Delaware Corporation, )
)
Appellee. ) [No. 3957 - May 21, 1993]
)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
J. Justin Ripley, Judge.
Appearances: Marc G. Wilhelm, Richmond
& Quinn, Anchorage, for Appellant. Michael
E. Kreger, Perkins Coie, Anchorage, for
Appellee.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
COMPTON, Justice.
MATTHEWS, Justice, with whom RABINOWITZ,
Chief Justice, joins, dissenting.
This dispute arises from the failed contractor-
subcontractor relationship between Ogden Environmental
Services, Inc. (Ogden) and Martech Construction Co.
(Martech). After Ogden and Martech terminated their
relationship through a settlement, Martech was sued by
another subcontractor for breach of contract related to
the Ogden job. Martech joined Ogden as a party and
filed a third party complaint against it. The trial
court granted Ogden's motion for summary judgment
dismissing the third party complaint with prejudice and
directing entry of judgment pursuant to Civil Rule
54(b). Martech appeals. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Ogden contracted with ARCO Alaska, Inc. to perform the
PCB remediation project at the Swanson River Oil Field
Site. Ogden entered into a subcontract with Martech
under which one of Martech's tasks was to purchase,
deliver and install two 250 kilowatt gas fired
generators "including all connection requirements."
Martech brought Ogden together with Cummins Northwest,
Inc. (Cummins), a designer who could fabricate
switchgear which would automatically shed and transfer
electrical loads between the generators. However, a
dispute arose in July 1988 over whether "including all
connection requirements"required Martech to supply the
switchgear, as Ogden claimed, or whether the switchgear
was Ogden's responsibility. In October 1988 Martech
ordered the switchgear from Cummins at Ogden's request.
Both parties continued to deny liability for the
switchgear. Each party continued to claim the other
was responsible. It was never formally resolved who
would pay for or take ownership of the switchgear.
On November 4, 1988, Ogden terminated its subcontract
with Martech. On November 10, 1988, Ogden and Martech
entered into a Settlement Agreement, Mutual Release and
Waiver ending their relationship. The agreement
provided that Martech would sell Ogden the on-site
equipment and facilities purchased by Martech for the
project and listed in the agreement. The switchgear,
not yet being on-site, was not listed. Ogden promised
to make a payment of $1.5 million to Martech to cover
undisputed unpaid invoices.
The settlement recognized that "[t]he exact nature and
amounts of the parties' financial and contractual
obligations to each other [were] in dispute"and noted
that Martech and Ogden were "desirous of fully, finally
and forever effecting a mutual release of their
financial and contractual obligations to each other."
Paragraph 2 of the settlement provides:
2. The parties agree that all
claims, demands, rights, and causes of action
that each other has or may have against the
other with respect to the above-described
dispute or contract are hereby satisfied,
discharged, and settled. The parties also
agree to stipulate to the dissolution of the
TRO, to discharge the injunction bond, and to
seek, obtain and be bound by a dismissal with
prejudice in the above-described action.
Except as herein set forth, no party shall
have any further obligation to pay any sum
pursuant to the contract whether now or
hereafter due, whether contingent or
uncontingent, whether liquidated or
unliquidated.
Paragraph 18, a comprehensive mutual release, provides:
18. The parties agree that this
settlement is the compromise of their
disputed claims referred to above and hereby
agree and acknowledge that any other claims
against each other, known or unknown, which
arose on or prior to November 4, 1988, or
arose pursuant to the contract for past or
future losses, expenses or claims of any
nature whatsoever (including any liability
pursuant to the contract which might have
arisen in the future had the contract not
been terminated) are forever abandoned, and
any right to assert such additional claims
for any damages whatsoever are hereby forever
waived and barred. It is hereby declared and
acknowledged that the undersigned are
familiar with the decision of the Alaska
Supreme Court in the case of Witt v. Watkins,
579 P.2d 1065 (Alaska, 1978),1 and that it is
still the true intent and desire to fully
release all individuals, agents, firms or
corporations who could at any future date be
possible defendants in any action arising out
of the matters described herein. The parties
acknowledge and assume all risk, chance, or
hazard that the alleged damages arising out
of this dispute, if any, may be different,
greater, or more extensive than is now known
by any of the parties hereto. By this
agreement the parties intend to discharge any
liability which may be discovered now or
hereafter, and specifically understand and
agree that each has given the consideration
herein mentioned in order to be released
fully, finally, and completely from all
liability for whatever damage, known or
unknown, arising from or relating to the
subject contract. The parties specifically
release and renounce any right they may now
or hereafter have to reform, rescind, modify,
or set aside this Settlement Agreement,
Mutual Release and waiver because of mutual
or unilateral mistake. The risk of mistake
is hereby assumed by the parties in
consideration of the dismissal of the action
described above. It is declared and
acknowledged that no promise or inducement
which is not herein expressed is made to
secure this release. It is represented that
this settlement release was not secured in
haste by the instigation of the parties
released, the undersigned were not (in
agreeing to this settlement and to this
release) at a bargaining disadvantage because
of the nature of the action or the injuries
or damages or for any other reason, and that
all parties have been represented by legal
counsel throughout the course of negotiations
which have led to this release.
The settlement agreement also provided for arbitration
of disputes regarding approval of daily worksheets for
work performed and payment of invoices. Martech filed
a demand for arbitration against Ogden on December 30,
1988 on a number of these claims, but not for the
switchgear. Martech was awarded $19,127.24 by the
arbitrator.
On November 17, 1988, Cummins informed Ogden by letter
that Ogden could purchase the switchgear for
$54,183.75. The letter noted that the switchgear would
be ready for delivery by December 15 if Ogden accepted
the bid by November 18. The letter also noted that
Martech was being assessed a cancellation charge of at
least $44,000 on the initial order. Ogden, however,
purchased an automatic switchgear from another
supplier.2
On August 24, 1989, Cummins filed suit against Martech
alleging numerous payments due, including that for the
switchgear. In response, Martech asserted that it was
acting as a disclosed agent and that Cummins had failed
to join necessary parties. Martech also filed a third
party complaint against Ogden. The superior court
denied Martech's motion to join Ogden as a third party
defendant.3 Martech then moved to join Ogden as a
necessary party under Civil Rule 19 and to reconsider
its denial of the motion to file the third party
complaint.4 See Alaska R. Civil P. 19(a) (1991-92).
The court joined Ogden under Civil Rule 19 and ordered
that Martech's complaint against Ogden be filed.
Ogden moved for summary judgment on the third party
complaint on the basis of the settlement agreement.
The trial court granted the motion. It also granted
Ogden's motion for attorney's fees.5 Martech sought
clarification whether Ogden was still a party to the
lawsuit. The trial court, finding that there were no
other claims against Ogden, noted that Ogden was no
longer a party to the lawsuit.
Martech appeals the grant of summary judgment on its
third party complaint, the removal of Ogden as a joined
party,6 and the award of attorney's fees.
II. DISCUSSION
A. SCOPE OF THE SETTLEMENT
1. Standard of Review.
This court will review de novo the trial court's grant
of summary judgment based on the interpretation of a
contract. Peterson v. Wirum, 625 P.2d 866, 871-72
(Alaska 1981). A release is interpreted in the same
manner as any other contract. Schmidt v. Lashley, 627
P.2d 201, 204 n.7 (Alaska 1981). Summary judgment is
inappropriate where the evidence before the trial court
establishes that a factual dispute exists as to the
parties' intent. Peterson, 625 P.2d at 870. This
court must draw all reasonable inferences of fact in
favor of the party opposing the summary judgment.
Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280
(Alaska 1985).7
2. Was the settlement
intended to address the switchgear?
The key inquiry regarding this issue is whether the
mutual release set forth in the settlement agreement
applies to the dispute concerning the switchgear.8
Martech contends that the release does not apply
because Ogden's refusal to purchase the switchgear
occurred after the settlement was executed, and
therefore was not anticipated at the time of execution.
Ogden contends that even if it had a duty to purchase
the switchgear, the dispute over the switchgear "arises
out of"the settled transaction and the duty was thus
discharged by the settlement.
Martech claims that the agreement between Ogden,
Cummins and itself was a separate agreement from the
principal subcontract and thus not encompassed by the
settlement agreement. It argues that the wrongful act
from which the claim arose, Ogden's refusal to take
delivery of the switchgear, occurred after the
settlement was executed and thus did not arise on or
prior to November 4, 1988.
Martech relies on Petroleum Sales, Ltd. v. Mapco
Alaska, Inc., 687 P.2d 923 (Alaska 1984), for the
proposition that a settlement agreement does not
release liability for post-settlement conduct. Mapco
was sued by two local fuel distributors for antitrust
violations. Id. at 925. The suit was settled and a
settlement and release was executed which covered "any
and all claims, equitable and legal, known or unknown,
which they presently have . . . and each covenant not
to sue [the other] based on any such claims existing as
of this date." Id. at 926 (alteration, omission in
original). Two years later, the distributors again
sued Mapco for antitrust violations. The suit claimed
that price increases instituted after the settlement
were unlawfully exploitive. Id.
The issue before the court was whether the distributors
"asserted a claim sufficiently distinct from those
which they voluntarily relinquished"in the settlement.
Id. at 927. This court held that the second suit,
although based on new conduct which triggered the
litigation, "substantially echoe[d]"the settled suit
because both required that Mapco be found to hold a
monopolistic position. Id. at 928. Since that finding
was covered by the settlement, it could not be
litigated again. Id. We also held that the behavior
addressed in the settlement, unlawful monopolistic
pricing, encompassed both the underpricing complained
of in the first suit and the overpricing complained of
in the second suit. Id.
We did not discount the possibility that in the future
the distributors could maintain an antitrust claim
against Mapco. "There is no dispute that a new cause
of action accrues for damages caused by post-settlement
antitrust conduct each time such new or renewed conduct
is engaged in." Id. at 929. However, the new cause of
action would have to be actionable independently of the
monopolistic position approved of in the settlement.9
Id. at 928-29. We rejected the blanket contention that
the settlement should not cover post-settlement damages
from post-settlement conduct, because the damages were
too uncertain at the time of the settlement. We held
that the release would cover "all claims reasonably
ascertainable at the date of its execution." Id. at
930.
The claim sought to be maintained in this case is not
the independent claim envisioned in Mapco. The
settlement declares that the parties intended to
resolve all of their "financial and contractual
obligations to each other." Even assuming that an
agreement for Ogden to purchase the switchgear existed,10
we are not persuaded that this agreement was wholly
independent from the principal subcontract discharged
by the settlement. Delivery of and payment for the
switchgear were not resolved at the time the settlement
was executed. Thus, the failure of Ogden to accept the
switchgear does not stand as a cause of action without
the background of the dispute addressed by the
settlement agreement. Therefore, existing questions of
fact regarding the possible agreement by Ogden to pay
for the switchgear will not defeat the summary
judgment.
The release executed by Ogden and Martech was not
limited to claims on the principal subcontract.
Rather, the liability was released against any "claims
of any nature whatsoever"between the parties. The
settlement thus sought to resolve the entire
transaction. The dispute over the switchgear existed
before the settlement, the responsibility for the
switchgear being debated back and forth between Ogden
and Martech. Certainly the dispute between Ogden and
Martech regarding the switchgear was a claim "arising
from or relating to the subject contract." We conclude
that this claim was abandoned in accordance with the
settlement.
Moreover, we conclude that the claim involving the
switchgear was encompassed in the settlement according
to the test for certainty employed in Mapco.11 The
claim regarding the switchgear was an issue which was
"reasonably ascertainable"at the time of executing the
settlement. See Mapco, 687 P.2d at 930. Even if
Martech justifiably believed that Ogden would pay for
and own the switchgear, Martech signed the purchase
order and was contractually bound to Cummins. Martech
should have anticipated that the switchgear issue would
be resolved by the settlement along with the entirety
of the contractual relationship.
It is not significant that the switchgear was never
actually discussed in the settlement negotiations.
First, the agreement indicates a complete washing of
the hands between the parties using as soap blatantly
broad language to cover all possible causes of action:
"All liability from whatever damage,""fully, finally
and forever;""any damages whatsoever;""claims of any
nature whatsoever;"and "all claims, demands, rights,
and causes of action that each has or may have against
the other with respect to the above-captioned dispute."
Second, although the switchgear was not specifically
discharged, neither was it specifically reserved as an
independent claim. The broad language used implies
that claims not specifically contemplated are settled.
Those deserving special attention were addressed
separately. There are no catch-all phrases to preserve
omitted claims as there are to abandon them.12 Third,
if an agreement did exist for Ogden to purchase the
switchgear, it arose pursuant to the contractual
relationship as it could have been one of the items for
which an invoice was to be submitted to arbitration.13
B. RULE 19 JOINDER
1. Standard of Review
This court has before reversed a trial court's order of
joinder under Civil Rule 19 when it found that the
trial court abused its discretion. See Farmer v.
State, 788 P.2d 43, 51 (Alaska 1990). Questions
regarding the interpretation of Rule 19 are subject to
de novo review by this court. Zsupnik v. State, 789
P.2d 357, 359 (Alaska 1990). In such cases, this court
will "adopt the rule of law which is most persuasive in
light of precedent, policy and reason." Id.
2. Finality of the Judgment
Ogden contends that this court is without jurisdiction
to consider the trial court's order that "other than as
a prevailing third-party defendant in its motion for
attorneys' fees, Ogden is not a party to the remaining
lawsuit." It argues that the joinder order was
interlocutory and not subject to review by this court.
This court has jurisdiction to consider appeals from
final judgments entered by the superior court. Alaska
R. App. P. 202(a) (emphasis added). "The basic thrust
of the finality requirement is that the judgment must
be one which disposes of the entire case, `. . . one
which ends litigation on the merits and leaves nothing
for the court to do but execute the judgment.'"
Greater Anchorage Area Borough v. City of Anchorage,
504 P.2d 1027, 1030 (Alaska 1972) (quoting Catlin v.
United States, 324 U.S. 229, 233 (1944)), overruled in
part by City and Borough of Juneau v. Thibodeau, 595
P.2d 626, 629 (Alaska 1979) (holding that Greater
Anchorage Area Borough did not apply to remand orders
from the superior court acting in its appellate
capacity). This court should look to the effect of the
judgment, rather than the form. Id. at 1030-31.
Generally, orders granting or denying motions to join
parties to an existing lawsuit are interlocutory.
Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir.
Unit A Oct. 1981); Prop-Jets, Inc. v. Chandler, 575
F.2d 1322, 1325 (10th Cir. 1978). However, in this
case the order declaring Ogden a non-party was a denial
of Martech's motion for clarification of the order
dismissing the third party claim. The order dismissing
the third party claim was certified by the superior
court as a final judgment under Civil Rule 54(b).14
Martech is appealing this first order. The second
order only serves to elucidate the effect of the first
order. Thus Martech is appealing a final judgment.15
3. Was the order joining
Ogden as a party ever vacated?
Martech contends that the August 1, 1990 order joining
Ogden as a party pursuant to Civil Rule 19 was never
vacated. It thus contends that to the extent that the
January 4, 1991 order ruled that Ogden was no longer a
party, the order was in error.16 It argues that whether
Ogden was properly joined as a party under Civil Rule
19(a) is not an issue in this appeal.
The trial court's May 25, 1991 order that Ogden was no
longer a party to the lawsuit was based on a lack of
existing claims against Ogden. Ogden's response to
Martech's motion for clarification claimed that the
August 1 order was not effective because Cummins
refused to file a claim against Ogden as a co-
defendant.17 Martech contends that the trial court's
adoption of Ogden's reasoning is evidenced by the fact
that the trial court signed Ogden's lodged order
without modification.
The January 4 order, as explained in the clarifying
order of May 25, implicitly vacated the August 1, 1990
order which joined Ogden as a co-defendant. It is not
necessary for either the trial court or the parties to
use the term "vacate"or any derivative thereof. We
conclude that Judge Ripley's intention was to supersede
the previous order.
3. Did the trial court abuse
its discretion in vacating the Rule
19(a) joinder?
Although it urges otherwise, Martech's appeal of the
propriety of the January 4 order is tantamount to an
appeal of an order vacating a Rule 19 joinder. We thus
examine the merits of the refusal to order joinder.
Civil Rule 19(a) provides that a party should be joined
if "complete relief cannot be accorded among those
already parties." Alaska R. Civ. P. 19(a) (1991-92).18
"[I]t must be noted that complete relief refers to
relief as between the parties already parties, and not
as between a party and the absent person whose joinder
is sought." 3A Moore's Federal Practice 19.07-1[1],
at 19-93 - 96 (2d ed. 1991).
Cummins seeks to recover from Martech for breach of
contract. Martech defends that it was acting as an
agent of a disclosed principal and thus not a party to
the contract. See Restatement (Second) of Agency 320
(1958). The lawsuit between Cummins and Martech will
necessarily make an adjudication about the relationship
between Martech and Ogden.
However, Martech, the party seeking joinder, can be
found not liable to Cummins without Ogden joined as a
party. Cummins will be afforded complete relief if
Martech is found to be liable. Cummins would be
afforded incomplete relief only if there is a finding
that Martech and Ogden are jointly liable.19 But see
Japan Petroleum Co. v. Ashland Oil, Inc., 456 F. Supp.
831, 836-37 (D. Del. 1978) (assuming that an absent
party which could alone be liable for plaintiff's
damages was a necessary party). Because the settlement
agreement settles all liability between Ogden and
Martech, there cannot be the situation where those two
parties share liability for the switchgear. Thus,
contrary to Martech's arguments, Martech and Ogden
cannot be joint obligors.20
Ogden's presence as a party is not necessary for a just
adjudication of the Cummins-Martech dispute. The
evidence needed to make the determination that Martech
was the disclosed agent of Ogden can be obtained from
Ogden as a witness. It is not necessary that Ogden be
a party.
If Martech prevails, Cummins may have to sue Ogden to
recover payment for the switchgear. Further, Ogden may
be bound by a prior finding of agency. However, later
litigation will not affect Martech. Ogden strongly
resists its inclusion in this suit while being fully
aware of this possibility. Cummins is free to amend
its complaint again and include Ogden as a defendant.21
III. CONCLUSION
The settlement agreement contemplated all present and
future claims arising out of the Martech-Ogden
contracting relationship. The third party complaint
was properly dismissed. The trial court's order
dismissing the third party claim also effectively
vacated the prior order of joinder. The trial court
did not abuse its discretion in vacating the joinder.
In view of our holding, we do not address the issue of
attorney's fees.
AFFIRMED.
MATTHEWS, Justice, with whom, RABINOWITZ, Chief
Justice, joins, dissenting.
On appeal from the grant of a summary judgment we
accept as true that version of the facts advanced by
the losing party. Frantz v. First Nat'l Bank of
Anchorage, 584 P.2d 1125, 1126 (Alaska 1978). If,
viewing the case from that perspective, the movant is
not entitled to judgment as a matter of law, the case
must be reversed. In the discussion that follows I set
forth Martech's version of the facts. If these facts
are accepted as true, Ogden is not entitled to judgment
on the grounds that the settlement agreement of
November 10, 1988, released Ogden's obligation to pay
Cummins for the automatic switchgear.
According to Martech's president, Ben Tisdale, there
was a dispute between Martech and Ogden concerning
whether Martech was obliged to supply the automatic
switchgear. This dispute arose in July of 1988.
Martech consistently took the position that the auto
matic switchgear was not necessary to the project, that
Martech was not obligated to supply the automatic
switchgear, and that Martech would not pay for the
automatic switchgear. This dispute continued through
August and into September of 1988. Meanwhile Ogden's
engineers were working directly with Cummins to design
automatic switchgear. After the design was finalized,
the parties resolved the dispute. Ogden agreed to pay
for the automatic switchgear and directed Martech to
place an order for it.22
By a letter dated November 3, 1988, Ogden terminated
its contract with Martech, claiming six material
breaches on the part of Martech and, alternatively,
claiming the right to terminate the contract for
Ogden's convenience. None of the claimed breaches
entailed the previous switchgear controversy. The
parties then negotiated a settlement agreement entitled
Settlement Agreement Mutual Release and Waiver which
was signed on November 10, 1988. Neither the
switchgear nor Ogden's obligation to pay for the
switchgear -- which had not yet been delivered -- was
mentioned in the settlement agreement or in the
discussions leading up to the settlement agreement. At
some point after the settlement agreement was signed,
Ogden declined to accept delivery of the automatic
switchgear and refused to pay for it. Cummins sued
Martech for the switchgear; Martech filed a third-party
claim for indemnity against Ogden. The trial court
granted Ogden's motion for summary judgment concerning
Martech's third-party claim, presumably on the basis
that the claim is barred by the settlement agreement.23
An important aspect of the settlement agreement is that
it contemplates certain ongoing contractual obligations
for both parties. The settlement agreement is,
therefore, much more than merely a release of all
claims. An agreement which both creates or confirms
ongoing obligations and purports to release all past
and future claims would, without more, be a
contradiction in terms, because the parties would be
left without any remedy for future breaches. The
settlement agreement addresses this problem in two
ways.
First, in the release clause, section 18 of the 22
section agreement, care is taken to limit application
of the clause to listed claims and claims which are
described in the past tense, that is, claims which
"arose" on or prior to November 4, 1988. The key
sentence of the release clause reads as follows:
The parties agree that this
settlement is the compromise of their
disputed claims referred to above and hereby
agree and acknowledge that any other claims
against each other, known or unknown, which
arose on or prior to November 4, 1988, or
which arose pursuant to the contract for past
or future losses, expenses or claims of any
nature whatsoever (including any liability
pursuant to the contract which might have
arisen in the future had the contract not
been terminated) are forever abandoned, and
any right to assert such additional claims
for any damages whatsoever are hereby forever
waived and barred. (Emphasis added.)24
Second, as to past work or services which have not been
billed and as to future services arbitration remedies
are provided in case of a dispute.
Ogden was not called upon to perform its promise to pay
for the automatic switching equipment until after the
date of the settlement agreement. Thus, Ogden did not
breach its promise to make payment for the switchgear
until after the date of the agreement. Consequently,
Martech's claim for indemnity did not arise on or prior
to November 4, 1988, and therefore the claim was not
released.25 Instead, under paragraph 5 of the
agreement, payment for the automatic switchgear was
uninvoiced work for which Ogden was required to pay or,
in the event of a dispute, to submit to arbitration.
In footnote 10, Slip Op. at 12 n.10, the court acknow
ledges that this conclusion is correct: "Indeed, an
agreement by Ogden to purchase the switchgear would
have made the switchgear an item subject to invoice and
thus arbitrable under paragraph 5(d) of the
settlement." Since, under the view of the transaction
most favorable to Martech, Ogden did agree to purchase
the switchgear, we must, for summary judgment purposes,
treat the switchgear as subject to resolution under
paragraph 5 of the settlement agreement. This
necessarily means that the claim has not been released.
On remand there are various courses of action which
might be taken to resolve the critical question of
whether there was an agreement by Ogden to purchase the
switchgear. The trial court could order the parties to
arbitrate this question.26 Alternatively, since neither
party has asked for arbitration, the question might be
resolved after a trial by the court, either with or
without a jury. As these options have not been
briefed, I express no opinion on them. It seems plain,
however, that the release provisions of the settlement
agreement do not cover Ogden's alleged agreement to pay
for the automatic switchgear and that summary judgment
on this basis was erroneously entered.
What remains is the court's suggestion that Martech may
be barred -- by some variant of the doctrine of res
judicata -- from litigating its claim because the claim
was not arbitrated. Slip Op. at 14-15 n.13. A
sufficient answer to this contention is that Martech's
claim for indemnity is not a mandatory subject for
arbitration until it ripens, that is until and unless
Martech is required to pay Cummins. This view is
supported by much authority in the litigation context.27
For the above reasons, the judgment of the superior
court should be reversed and this case should be
remanded for further proceedings.
_______________________________
1. In Witt v. Watkins, Witt, an automobile accident
victim, agreed to a settlement on the assumption that
he had sustained only broken and bruised ribs as a
result of the accident. 579 P.2d at 1066-67. The
settlement released the driver from any and all claims
"on account of all injuries, known and unknown, both to
person and property, which have resulted or may in the
future develop." Id. at 1067. Witt later learned that
he had also broken two vertebrae in the accident. He
filed suit for additional damages, notwithstanding the
settlement. Id. This court allowed the suit,
rejecting the distinction between unilateral and mutual
mistake as a basis for reforming the settlement. Id.
at 1068, 1070. In its place, this court held that the
decisive inquiry was "whether, at the time of signing
the release, the releasor intended to discharge the
disability which was subsequently discovered." Id. at
1068-69. This court also specifically limited its
holding to releases for personal injuries and held that
it had "no application to issues of mistake in
commercial transactions." Id. at 1071 n.18.
2. The parties characterize these events differently.
Martech contends that Ogden "refused to accept delivery
of or pay for the switchgear." Ogden contends that
Cummins offered the switchgear to Ogden "in an effort
to mitigate its losses as a result of Martech's refusal
to accept delivery of the switchgear." Cummins'
complaint supports Ogden's characterization of the
transaction.
3. This denial is not part of the record. However, the
existence of the denial is evidenced by Martech's
motion to reconsider.
4. Cummins opposed these motions on the grounds that it
had no claims against Ogden and that it had only
contracted with Martech.
5. The trial court awarded Ogden 50 percent partial actual
fees plus a 15 percent augmentation attributable to
Martech's conduct during the litigation:
3. This court finds that Martech's joinder of
Ogden and the tenacity with which it opposed their
dismissal are accurately characterized as by Ogden
as an implacable emeshing [sic] of the third-party
defendant in Martech's defensive posturing. In
the court's view this conduct falls short of being
vexatious, but beyond mere vigorous advocacy,
perhaps in the range of hardball.
4. The court further finds that the claim
against Ogden, while colorable, was a light pastel
in hue inasmuch as the broad language of the
agreement clearly released such claims.
5. This court accordingly finds and concludes
that Ogden is entitled to recover an augmentation
beyond "partial compensation of its attorneys'
fees."
6. During this appeal, the trial court granted a motion by
Martech requesting that Cummins be ordered to file an amended
complaint naming Ogden as a defendant. Martech then
submitted a motion to dismiss its appeal of the joinder
issue as moot. Later, however, the trial court
reconsidered its order and vacated Cummins' complaint
against Martech.
7. Contrary to the dissent's suggestion, we do not accept
Ogden's view of the facts. We simply note that an
unresolved dispute existed over responsibility for
payment for the switchgear, and that there was
insufficient evidence to create a genuine issue of
material fact to the contrary.
Martech's president, Ben Tisdale, supplied an affidavit
in support of Martech's opposition to Ogden's motion
for summary judgment. Attached to the affidavit are
letters and memoranda evidencing that each party
continued to deny liability for the switchgear and to
insist that the other was responsible. Mr. Tisdale
then states, "After the design was finalized, Ogden
directed Martech to place an order for the switchgear.
Martech did so, but only after Ogden agreed to pay for
the switchgear." There is evidence that Ogden
requested Martech to order the switchgear. However,
aside from Tisdale's assertion, there is no evidence
that Ogden "agreed"to pay for the switchgear, thereby
abandoning its position that Martech was responsible
for paying for the switchgear. Tisdale offers no facts
to support his assertion. There is no reference to
letters, memoranda, or other writings in which Ogden
agreed to pay for the switchgear. There is no
reference to any conversations during which Ogden
agreed to pay for the switchgear. There is no evidence
who, by whatever means, agreed on Ogden's behalf to pay
for the switchgear. There is no evidence to whom at
Martech the agreement was conveyed. There is nothing
in the record except Mr. Tisdale's naked assertion that
before Martech placed the order, Ogden "agreed"to pay
for the switchgear.
To defeat a motion of summary judgment an adverse party
may not rest upon mere allegations, but must set forth
specific facts showing that there is a genuine issue of
material fact. Alaska Civil Rule 56(e). To create a
genuine issue of material fact there must be more than
a scintilla of contrary evidence. Yurioff v. American
Honda Motor Co., 803 P.2d 386, 389 (Alaska 1990).
Because we conclude that the settlement release applies
to the switchgear regardless of any alleged agreement,
even had Martech alleged sufficient facts to establish
a dispute whether an agreement existed, this question
would not be material to our resolution or defeat
summary judgment.
8. Martech's contentions that questions of fact exist
whether the true intent of the parties was not to
release liability for the switchgear are addressed
directly by the release. Martech relies on Witt v.
Watkins, 579 P.2d 1065 (Alaska 1978), and explains that
the switchgear was never discussed during the
settlement negotiations. However, paragraph 18
specifically accounted for a defense based on Witt v.
Watkins. Paragraph 18 states that the true intent of
the settlement is to release all parties "who could at
any future date be possible defendants in any action
arising out of the matters described herein." Thus the
relevant inquiry is whether the switchgear dispute
arose out of the dispute covered by the settlement or
whether it is a separate dispute which arose out of
independent facts after the settlement was executed.
Moreover, the fact that the switchgear was not
discussed cannot be interpreted as a positive inference
that the release was not intended to address it. This
court has before held that "Differences of opinion
among the parties as to their subjective intent,
expressed during litigation, do not establish an issue
of fact regarding the parties' reasonable expectations
at the time they entered into the contract. . . .
Rather, the court must look to express manifestations
of each party's understanding of the contract."
Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981).
Similarly, Martech's contentions that it was at least
mistaken and that a question of fact exists as to its
liability regarding the switchgear are addressed
explicitly by the release: "The parties specifically
release and renounce any right they may now or
hereafter have to reform, rescind, modify, or set aside
this [settlement] because of mutual or unilateral
mistake."
9. "[A]ppellants themselves are not barred from bringing a
future claim on the basis of actionable conduct
occurring subsequent to the release date. . . .
[A]ppellants are minimally required to base their
claims on new factors or additional circumstances which
are evocative of anticompetitive conduct." Mapco, 687
P.2d at 930.
10. Indeed, an agreement by Ogden to purchase the
switchgear would have made the switchgear an item
subject to invoice and thus arbitrable under paragraph
5(d) of the settlement.
11. Arguably the release in this case is broader in scope
than the one at issue in Mapco. The Mapco release does
not include the language that abandons claims "known or
unknown, arising from or relating to the subject
contract."
12. As the dissent points out, the release does use the word
"arose." Yet while quoting the language of the
release, the dissent fails to give meaning to the
second half of the release clause. The use of the past
tense in one part of the clause does not negate the
fact that the release also applies to future claims
which might arise out of the contract. The release
uses the disjunctive or applying to claims which arose
prior to November 4, or which arose pursuant to the
contract for past or future losses. The release then
specifically encompasses "claims of any nature
whatsoever (including any liability pursuant to the
contract which might have arisen in the future had the
contract not been terminated)."(Emphasis added). Care
was not taken to limit the application of this release.
On the contrary, care was taken to include any and all
liability which arose, or might arise, pursuant to the
parties' contractual relationship.
13. Ability to address the switchgear conflict through
arbitration forms the basis for Ogden's assertion of
res judicata. Ogden argues that Martech could have
submitted the claim to arbitration, as provided for in
the settlement, but did not.
Under the doctrine of res judicata,
a judgment on the merits of the controversy
bars subsequent actions between the same
parties upon the same claim. . . . It is
settled that res judicata precludes
relitigation by the same parties, not only of
claims raised in the first proceeding, but
also of those relevant claims that could have
been raised.
DeNardo v. State, 740 P.2d 453, 455-56 (Alaska 1987), cert.
denied, 484 U.S. 919 (1987).
Martech and Ogden were involved in arbitration which
was intended to resolve "a dispute aris[ing] among the
parties regarding approval of any daily worksheet or
payment of any invoice." Martech contended below that
the switchgear was not subject to arbitration because
the settlement agreement "only requires that disputes
arising out of the settlement agreement itself be
addressed by arbitration." However, questions
concerning the scope of the release, such as whether it
encompasses the switchgear agreement, are arbitrable.
The settlement agreement provides for arbitration of
"[a]ll claims, disputes and matters in question arising
out of or relating to this agreement or the breach
thereof."
Martech submitted a number of invoices to arbitration.
Eight months later Cummins filed suit against Martech
over the switchgear. Eight months later still, the
arbitrator awarded Martech $19,127.24. The claim for
the switchgear was not submitted to the arbitrator.
Martech did not challenge the award.
The problem with res judicata in this case is that the
award apparently was never confirmed, nor was a final
judgment entered pursuant to AS 09.43.110 and
09.43.140. Ogden argues that since the award was not
challenged, it became, "for all practical purposes, a
final judgment." Since the statutory period of 90 days
to correct, modify or vacate an arbitration award has
passed, it is arguable that the entering of the
judgment would be a formality. See AS 09.43.120, AS
09.43.130. However, because we conclude that the
release encompassed the switchgear claim we need not
reach this issue.
14. This court has jurisdiction to consider appeals from
judgments certified as final pursuant to Civil Rule
54(b). Johnson v. State, 577 P.2d 706, 710 (Alaska
1978).
15. Martech contends that even if its appeal is directed at
the second order, that order should be considered final
because it relates back to the first order. This is
also a sound rationale for exercising jurisdiction over
the appeal.
16. Martech's argument is basically that Rule 19(a) is self-
effectuating. That is, once an entity is joined under
Rule 19(a) it is a "party"and must comply with
discovery requests even though a complaint has not been
filed against it. Martech contends that the civil
rules do not require a complaint for joinder of a party
under Rule 19(a).
It is true that a defendant is not required to file a
claim against one it has joined as a co-defendant in
order to effect the joined party status. As an
alternative, courts have ordered that the plaintiffs
file an amended complaint naming the joined party as a
defendant. See, e.g., Parkview Corp. v. United States,
85 F.R.D. 145, 148 (E.D. Wis. 1980) (directing sua
sponte that plaintiff serve new co-defendant with
pleadings); Kodiak-Aleutian Chapter of the Alaska
Conservation Society v. Kleppe, 423 F. Supp. 544, 546
(D. Alaska 1976) (using Federal Rule of Civil Procedure
19(a)).
However, we do not believe that Rule 19(a) is self-
effectuating. There must be some form of claim filed
against the joined party in order for it to be a
"party"to the lawsuit. The cases cited by Martech do
not support the proposition that a complaint need not
necessarily be filed against the joined party.
The referencing of a third party in the defensive
posture is not sufficient to effectuate a joinder.
Even if the order compelling Cummins to file a
complaint against Ogden had not been vacated, Martech
still would have had to seek a Rule 19(a) joinder anew.
17. Additionally, Ogden argued in its motion for summary
judgment that the August 1 order joining Ogden as a
defendant was not effective absent a voluntary claim
made by Cummins against Ogden pursuant to Civil Rule
14. See Alaska R. Civ. P. 14 (1991-92). Ogden
asserted that "Martech's reliance upon Rule 19 was
redundancy."
18. Civil Rule 19(a) also contains the qualifications that a
person will be joined as a party if "he claims an
interest relating to the subject of the action and is
so situated that the disposition of the action in his
absence may (i) as a practical matter impair or impede
his ability to protect the interest or (ii) leave any
of the persons already parties subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of his claimed
interest." Alaska R. Civ. P. 19(a). However, these
factors are not relevant when the party to be joined is
resisting the joinder. Padgett v. Theus, 484 P.2d 697,
704 (Alaska 1971) (holding that appellants "should be
enjoined from asserting that [the party to be joined]'s
interest in the present case requires that the judgment
be set aside on grounds of failure to join an
indispensable party"). Moreover, the factors are not
applicable when, as here, there is no chance of an
obligation arising between the defendant and the absent
party. See 3A Moore's Federal Practice 19.07-1[2.-
2], at 19-111 (2d ed. 1991) (discussing that factor (i)
is to protect the absent party and that factor (ii) is
to protect the defendant which might be subject to a
similar obligation to the absent party).
The interests relevant in Rule 19(a) joinder questions
have also been described as follows: "(1) the
plaintiff's interest in having a forum; (2) the
defendant's wish to avoid multiple litigation or sole
responsibility for a liability [it] shares with
another; (3) the interest of the outsider; and (4) the
interest of the courts and the public in complete,
consistent, and efficient settlement of controversies."
R. J. Williams Co. v. Fort Belknap Housing Authority,
92 F.R.D. 17, 21 (D. Mont. 1981). According to this
list it is difficult to identify an interest which is
implicated in this case since the "outsider" disclaims
any interest.
19. Cf. Provident Tradesmens Bank & Trust Co. v. Patterson,
390 U.S. 102, 110 (1968) (describing the situation
where one cannot be afforded complete relief as one
where the defendant will bear shared liability solely
or have to seek indemnification). Similarly, H. H.
Robertson Co. v. Lumbermen's Mutual Casualty Co., 94
F.R.D. 578, 579-80 (W.D. Pa. 1982), cited by Martech,
is distinguishable. In that case, the absent party was
considered necessary because the defendant, if ruled
against, could seek indemnification from the absent
party. Id.
20. The cases cited by Martech supporting the proposition
that persons jointly liable with the named defendant
are necessary parties are inapposite. See H & H Int'l
Corp. v. J. Pellechia Trucking, Inc., 119 F.R.D. 352,
354 (S.D.N.Y. 1988); Brackin Tie, Lumber & Chip Co. v.
McLarty Farms, Inc., 704 F.2d 585, 587 (11th Cir.
1983); See also 3A Moore's Federal Practice 19.11, at
19-213 (2d ed. 1991) (discussing that joint obligors
are commonly considered necessary although not
indispensable parties).
21. Cummins has expressed a desire to add Ogden as a party.
No issue that affects Cummins' ability to amend its
complaint to sue Ogden is before this court.
Martech also alleged that Ogden would not be entitled
to attorney's fees if we ordered that Ogden remained
joined in the cause of action. Because of our holding,
we need not address that issue.
22. The majority opinion states: "It was never formally
resolved who would pay for or take ownership of the
switchgear." Slip Op. at 2. Whether this question was
resolved is a fact in dispute. By asserting that the
question was not resolved, the majority is taking
Ogden's view of the facts rather than Martech's.
Similarly, the majority rejects Tisdale's affidavit
which states that "Ogden agreed to pay for the
switchgear" on the grounds that it is uncorroborated
and insufficiently detailed. Id. at 8 n.7. The
majority states regarding Tisdale's affidavit "[t]o
create a genuine issue of material fact there must be
more than a scintilla of contrary evidence." Id. I
agree that sometimes testimony may be so internally
inconsistent and in conflict with the apparently
reliable evidence offered by the proponent of a summary
judgment motion that it may not serve to create a
genuine issue of material fact and thus defeat summary
judgment. Yurioff v. American Honda Motor Co., 803
P.2d 386, 389 (Alaska 1990), was such a case. There
the key issue was whether plaintiff's injury occurred
on March 19 or March 20. The defendant moved for
summary judgment on the ground that it took place on
the 19th, offering clinic records, testimony that the
records were accurate, and plaintiff's deposition
testimony that the injury probably was suffered on the
date indicated on the clinic records. In opposition,
plaintiff cited another portion of his deposition where
he had stated that he thought he was injured on March
20. We held that this self-contradictory statement was
not evidence reasonably tending to dispute or
contradict the "authentic documentation of the injury."
Id.
This case is unlike Yurioff for a number of reasons.
First, Tisdale's affidavit is not self-contradictory.
Second, the affidavit is not contradicted by
documentary evidence. Third, the movant in this case,
Ogden, did not attempt an evidentiary showing that
there was no agreement that Ogden would pay for the
switchgear. Instead, Ogden moved on the sole ground
that regardless of any agreement the release clause of
the settlement agreement barred Martech from litigating
the switchgear dispute:
But for the Settlement Agreement, Mutual
Release and Waiver, Ogden would be obliged to
dispute the admissibility and credibility of
Mr. Tisdale's undocumented assertion at the
end of paragraph 12 that Ogden agreed to pay
for the switch gear.
Ogden's Reply to Martech's Opposition to Ogden's Motion for
Summary Judgment at 6 (emphasis added).
Ogden admittedly failed to address the factual issue
concerning whether it had agreed to pay for the
switchgear. Indeed, Ogden indicated how it would
respond to the question if required to do so:
Ogden would contend, for example, that a
directive, under the subcontract, was only
that. It was not a promise to pay for work
directed. A change order was a promise to
pay. There was no change order.
Id. at 6 n.1. Ogden, however, offered no evidence to this effect
in support of its motion. The proponent of a summary
judgment motion has the initial burden of establishing
the absence of genuine issues of material fact.
Ratcliff v. Security Nat'l Bank, 670 P.2d 1139, 1142
(Alaska 1983). Thus, since Ogden -- the movant -- did
not carry its initial burden of showing by admissible
evidence that no agreement existed, the court errs by
requiring Martech -- the nonmovant -- to produce
evidence, a "scintilla"or otherwise, on the issue.
23. That was the sole ground presented in Ogden's
memorandum filed in support of its summary judgment
motion.
24. The majority opinion quotes language from the release
as follows:
1. "All liability from whatever damage"
2. "any damages whatsoever"
3. "claims of any nature whatsoever"
4. "arising from or relating to the subject contract"
5. "known or unknown, arising from or relating to the
subject contract."
Slip Op. at 12-13 & n.11. However, use of the verb "arose"
places these seemingly broad phrases in the past tense
with November 4, 1988, as the reference date. The
court acknowledges the parties' use of the past tense,
Slip. Op. at 14 n.12, but fails to give effect to the
verb "arose"in construing the release language. The
court points out that the two clauses in which "arose"
appears are joined by the disjunctive "or." Since both
clauses are framed in the past tense, however, severing
the clauses does not alter the tense of the release
sentence. Yet, use of the disjunctive leads the court
to conclude that "[t]he release then specifically
encompasses `claims of any nature whatsoever (including
any liability pursuant to the contract which might have
arisen in the future had the contract not been
terminated).' (Emphasis added.)" Id. From its use of
emphasis, I take the court to rely in part on the
highlighted parenthetical language in support of its
reading of the release. Even the parenthetical clause,
however, only further specifies the claims that are
released, which claims are already limited by the use
of the past tense.
25. As a claim for indemnification, Martech's claim does
not actually arise until Martech is made to pay
Cummins. See Providence Washington Ins. Co. v. McGee,
764 P.2d 712, 715 (Alaska 1988) (claim for contribution
does not arise until claimant is made to pay more than
his or her proportional share).
26. As the majority opinion notes, Martech contended before
the trial court that its claim was not subject to
arbitration. However, Martech did not burn its bridges
on this issue, as it also stated: "If this court . . .
decides the indemnification issue should be submitted
to arbitration, the court can sever the indemnity
action from the underlying action . . . ."
27. It is generally accepted that the doctrine of res
judicata bars only those claims that could have been
brought at the time of prior litigation (i.e., only
those claims that had arisen), DeNardo v. State, 740
P.2d 453, 455-56 (Alaska), cert. denied, 484 U.S. 919
(1987), and that a claim for indemnification does not
arise until the party seeking indemnification becomes
liable on the underlying obligation. See, e.g.,
Borchard v. Wefco, Inc., 733 P.2d 776, 780 (Idaho
1987); EBI/Orion Group v. State Compensation Ins. Fund,
782 P.2d 1276, 1279 (Mont. 1989); Aetna Casualty & Sur.
Co. v. Aztec Plumbing Corp., 796 P.2d 227, 229 (Nev.
1990); Travelers Ins. Co. v. L.V. French Truck Serv.,
770 P.2d 551, 555 (Okla. 1988); Perry v. Pioneer
Wholesale Supply Co., 681 P.2d 214, 218 (Utah 1984). A
Michigan court and a Georgia court have applied these
accepted rules together in concluding that litigation
prior to the accrual of an indemnification claim does
not bar litigation of the indemnification claim.
Ranger Constr. Co. v. Robertshaw Controls Co., 279
S.E.2d 477, 480 (Ga. App. 1981); Beck v. Westphal, 366
N.W.2d 217, 221 (Mich. App. 1984).
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