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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Angleton v. Cox (9/3/2010) sp-6508
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| FRED V. ANGLETON, ROBERT | ) |
| FULTON, AND ROBERT | ) |
| SUMMERS, INDIVIDUALLY AND | ) |
| FOR THE USE AND BENEFIT OF | ) |
| THE MOST WORSHIPFUL GRAND | ) |
| LODGE OF ALASKA, F.&A.M., | ) |
| INC., | ) |
| ) Supreme Court No. S- 12896 | |
| Appellants, | ) |
| ) Superior Court No. | |
| v. | ) 3SW-04-85 CI |
| ) | |
| STEPHEN L. COX AND | ) |
| LESLIE R. LITTLE, | ) O P I N I O N |
| ) | |
| Appellees. | ) No. 6508 - September 3, 2010 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Seward,
Sharon Gleason, Judge.
Appearances: Joseph L. Kashi, Soldotna, for
Appellants. Phil N. Nash, Law Offices of
Phil N. Nash, Kenai, for Appellees.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, and Winfree, Justices. [Matthews,
Justice, not participating.]
CARPENETI, Justice.
I. INTRODUCTION
I. Members of a fraternal organization brought suit
against other members asserting claims for breach of a settlement
agreement and a derivative action on behalf of the fraternal
organization. The superior court dismissed the derivative suit
and later granted summary judgment for defendants on the grounds
that, because a previous contempt action raising the same claims
was dismissed, the damages claims for breach of settlement were
barred by res judicata. Because Alaska law does not recognize a
derivative right of action for non-profit members, we affirm the
superior courts dismissal of that claim. However, we conclude
that the order on the contempt motion in the first action was not
a judgment on the merits of plaintiffs claims for damages and
therefore the claims for damages for breach of the settlement
agreement were not precluded by res judicata. The fact that the
judgment in the contempt action did not reach the merits also
prevents the application of issue preclusion, or collateral
estoppel, to these claims. Accordingly, we remand for further
proceedings.
II. FACTS AND PROCEEDINGS
A. Facts1
In November 2002 two of the appellants, Robert Fulton
and Robert Summers, settled a previous suit against appellees
Stephen L. Cox and Leslie R. Little and others. That suit
concerned the suspension of several members of various Masonic
lodges in Alaska, including Fulton and Summers. Cox was a leader
of the Alaska Grand Lodge at the time. The final appellant, Fred
Angleton, is a former Grand Master of the Alaska Masonic Lodge
and advisor to Fulton and Summers and, though not a party to the
first suit, was named in the settlement of that suit because the
plaintiffs wished to protect him from any potential retaliation
for his involvement in the dispute.
The parties reached a settlement at a judicial
settlement conference on November 27, 2002, and Superior Court
Judge Dan A. Hensley placed the terms of the agreement on the
record orally. The settlements essential terms were that, in
exchange for dismissal of all claims, defendants would pay
plaintiffs $10,000 cash within 30 days and immediately restore
the plaintiffs to their status as Master Masons. Cox and Little
would send letters to Masonic and related groups informing them
of the reinstatement, and withdraw a 2002 Grand Master edict
expelling Masons who file lawsuits; they would then seek a review
and vote regarding the Grand Masters power to suspend and expel
members. No Masonic charges would be brought against plaintiffs
or any members who assisted the plaintiffs in the litigation for
any reason arising in connection on . . . or before the date of
this settlement. No parties would speak in a disparaging way
about any other parties at the Grand Lodge. Plaintiffs counsel
further stated
this is meant to be, obviously, a summary
claim in that any assum[ing] the current
resolution, any breach would be actionable
only in the context of the settlement
agreement for rectification of that breach
and would not invalidate the remainder of the
agreement.
It was very important to the suspended members that the
defendants promises be effective immediately because they wished
to attend annual elections at the Seward Masonic lodge six days
later on December 3, 2002. However, Cox took the position that
Fulton and Summers were not effectively reinstated until after a
stipulation for dismissal was entered. Judge Hensley settled
this dispute at a show cause hearing the afternoon of the
election, ordering that defendants were bound to readmit the
plaintiffs immediately.
Throughout December 2002 and January 2003, Cox and
Little acted in ways that may have violated the settlement
agreement. For example, they voided the December 3 election at
which Fulton and Summers were voted into office. They decided
that Fulton and Summers could not be reinstated until the entire
membership of the Grand Lodge voted. Angleton was suspended in
connection with his assistance to Fulton and Summers, and members
were instructed to exclude Fulton and Summers from lodge
membership-only functions, which included funerals of Fultons
friends.
On February 6, 2003, Summers, Fulton, and Angleton were
reinstated by the newly elected Grand Master at the annual Grand
Lodge meeting. In their annual report, Cox and Little discussed
the litigation without using names, stating that the members who
brought the suit failed their brethren and that the Masonry
should be devoid of lawsuits. Little added that three members of
the Grand Lodge sought to set aside their obligations as Masons.
The pain these actions have caused Masonry will, unfortunately,
reach throughout the North American Continent and could perhaps
even tear down the very fabric of Masonry by allowing the courts
to interfere in our Grand Fraternity.
B. Proceedings
1. Final judgment and post-judgment contempt proceedings in the
2002 action
A second show cause hearing was held before Superior
Court Judge Sharon Gleason on December 23, 2002. Fulton,
Summers, and Angleton alleged continuing violations of the
settlement agreement, including being barred from meetings at
their home lodge. On January 7, 2003, Judge Gleason issued an
enforcement order enjoining Cox, Little, and other named
defendants from interfering with Fulton and Summers attendance at
events, from suspending them or anyone named in the settlement
for events connected to the first suit, and from voiding the
Seward Lodge elections at which plaintiffs had won elected
positions. That same day, Judge Gleason also entered a final
order memorializing the settlement terms and dismissing the first
action.
Fulton and Summers again moved for a finding of
contempt on January 13, alleging that Angleton had already
suffered irreparable harm by not being allowed to attend a
meeting at which he was to have been installed as an officer of a
concordant organization and that he and plaintiffs would suffer
further irreparable harm by being barred from a February Grand
Lodge meeting. Fulton and Summers requested that the court hold
defendants Cox, Grand Lodge, and any other culpable persons in
contempt, [and] provide appropriate relief . . . that will
compensate Plaintiffs . . . for the costs, injuries and damages .
. . since Judge Hensleys November 27, 2002 order. The final
hearing in the first case regarding this motion was held on March
4, 2003, before Judge Gleason.
At the March hearing, the parties agreed that the new
leadership of the Lodge was now in compliance with the settlement
agreement and that violations of the order had ceased in early
February 2003, when the suspended members were officially
reinstated by the newly elected Grand Master. The Lodges counsel
asserted that the compliance of the new leadership with the final
order in the case mooted everything. When asked if he agreed,
plaintiffs counsel Joseph Kashi stated that the issue really
devolves primarily to Mr. Cox in his capacity and to Mr. Little .
. . [t]here were a significant number of things that happened
that I think it would be appropriate for this court to give some
fair consideration to. He then stated that ultimate compliance
doesnt necessarily wash away the damages and problems that were
caused prior to that point, and stated twice that a hearing would
be appropriate. However, he then said that there were sufficient
affidavits and a decision on the pleadings as to whether a
hearing should go forward would be the appropriate course in any
event. Finally, near the end of the hearing, he asked the court
to review the affidavits because there was some fairly
significant and still irreparable and unrepaired injuries that
occurred during that two month time when the Court orders were
not obeyed.
On March 7, 2003, the superior court denied the
contempt motion as moot. The order denying the contempt motion
also denied Cox and Littles motion to enter a revised final order
[s]o as to eliminate any question as to the expiration of any
partys right of appeal. The order is silent on any claims or
issues of damages.
2. The 2004 action for breach of settlement agreement
1. In November 2004 Angleton, Fulton, and Summers (collectively
Angleton) filed a new action against two of the defendants in
the prior action, Cox and Little, (collectively Cox) for damages
arising from breach of contract, intentional infliction of
emotional distress, and other alleged torts based on the events
between the November 2002 settlement conference and the March
2003 reinstatement. Cox moved to dismiss the action for failure
to exhaust remedies within the Lodge, and to dismiss any counts
seeking recovery in a derivative action on behalf of the Lodge.
The court granted the motion on the derivative claims but denied
it with respect to failure to exhaust, noting that Cox had not
pointed to any language in the Grand Lodges by-laws that would
preclude this action, which appears to be essentially related to
the enforcement of a settlement agreement entered into in
previous litigation. Cox then moved for summary judgment on the
grounds that the previous case was dismissed on March 7, 2003,
the court entered a final order memorializing the settlement
agreement, and all the disputed facts occurred before that date.2
The superior court granted the motion for summary judgment on the
grounds that its March 7, 2003, order should be accorded res
judicata effect for any claims arising from events between the
entry of the settlement agreement in November 2002 and the final
order on March 7, 2003. The court noted that Angelton had made
several requests for hearings on damages, but that the parties
ultimately agreed that the court would instead decide the case on
the pleadings. Further, Angleton could have appealed from the
March 7, 2003, order because of the lack of a damages award or
damages hearing, but did not do so. The March order became the
final and binding decision regarding claims for events before
that order.
The court allowed Angleton to file an amended complaint
to clarify plaintiffs claims for the period after the March
order. The new amended complaint did not comply with the order
and the court denied the motion to amend. The court dismissed
the entire case with prejudice in September 2007. Angleton
appeals.
III. STANDARD OF REVIEW
We review summary judgment rulings de novo3 and may
affirm summary judgment on any basis appearing in the record.4 A
determination that a claim or issue is precluded is a question of
law which we review de novo.5
We review denial of a motion to amend a complaint for
abuse of discretion.6
IV. DISCUSSION
A. The March 7, 2003, Order Denying Angletons Contempt Claims
Was Not A Final Judgment On The Merits.
A. A judgment is given res judicata effect by this court when
it is (1) a final judgment on the merits, (2) from a court of
competent jurisdiction, (3) in a dispute between the same parties
(or their privies) about the same cause of action.7 The question
of whether the cause of action is the same does not rest on the
legal theory asserted but rather on whether the claims arise out
of the same transaction the same set of underlying facts.8 Res
judicata is also known as claim preclusion.9
Cox urges us to accord collateral estoppel effect to
the March 7 order even if we find that res judicata does not
apply. Collateral estoppel is also known as issue preclusion
because it requires that a court has decisively adjudicated a
particular factual or legal issue.10 Like res judicata,
collateral estoppel also requires that an issue be decided on the
merits in order for further litigation to be precluded.11 We
first analyze whether the issues and claims in the second lawsuit
were the same as in the first. We then analyze whether the
order denying the motion for contempt as moot was a decision on
the merits.
1. The issues and claims raised in the second lawsuit are the
same as those raised in the motion for contempt.
1. 1. Angleton argues that there was no identity of claims
(for res judicata or claim preclusion purposes) nor identity of
issues (for collateral estoppel or issue preclusion purposes).
First, he makes the point that all of the disputed transactions
occurred after final settlement of the first action became
effective on November 27, 2002, and most occurred after the
action was dismissed on December 3, 2002. He also argues that
damages for the breach of the settlement agreement were not
before the court as such in the contempt hearing held on March 4,
2003. Both of these points miss the mark. By filing a contempt
motion in which he asked the court to consider damages, asking
the court to hold a hearing on damages, and then accepting that
the court could make that decision on the affidavits, Angleton
clearly raised a claim for damages from the breach of the
settlement agreement. Angleton even pointed to the same
affidavits submitted with the contempt motion as his evidence in
the second action on summary judgment that the plaintiffs
suffered actual damages. Alaska Statute 09.50.040 authorizes,
though it does not require, a trial court to award
indemnification damages to a party harmed by a civil contempt.12
The statute provides that where an indemnification award is made
and accepted, the aggrieved party is barred from later claims for
the same harm.13 Therefore, Cox satisfies the elements of
identity of claims and identity of issues.
2. The order denying the motion for contempt as moot was not a
decision on the merits of Angletons damages claims.
Although the claims and issues presented are the same
claims and issues presented in the contempt action, the March 7,
2003, order will preclude later litigation under either res
judicata or collateral estoppel principles only if it was a
judgment on the merits.14 Angleton argues that this could not
have been a judgment on the merits under this courts rule in
Ostrow v. Higgins15 that a dismissal based on mootness is a
jurisdictional ruling and not based on the merits. We agree with
Angleton.
In Ostrow the superior court adjudicated a first
lawsuit for an injunction against the sale of a property and
damages.16 After the plaintiff failed to pursue the injunction
beyond the temporary stage, the defendant sold the property while
the suit was pending.17 The plaintiff then moved for the
injunction but defendants argued mootness and the plaintiff
withdrew the motion.18 The superior court dismissed the entire
suit at that point and Ostrow did not appeal.19 Ostrow later
brought a new lawsuit.20 That new suit was dismissed on res
judicata grounds.21 We disagreed because mootness is a
jurisdictional issue which does not preclude a second action on
the same claim if the justiciability problem can be overcome.22
Ostrow is applicable to this case whether the case is
analyzed under res judicata or collateral estoppel. Here, as in
Ostrow, the claim presented was dismissed as moot without a
ruling on a simultaneous damages claim; in both cases the
plaintiff did not appeal the failure to rule on damages in the
first action. Under AS 09.50.040, the superior court had
discretion to award damages sufficient to indemnify the
plaintiffs for the harm caused by the contempt. However, the
order makes no mention of a determination of that issue even
though damages were requested in the motion for contempt and
during the hearing.
Whether to award damages in an action for contempt is
within the discretion of the court.23 Under AS 09.50.040, a court
has discretion not to award any damages. However, in the absence
of an explicit finding that no damages have been suffered, the
fact that a court does not exercise its discretion to indemnify a
party in a particular case is not equivalent to a substantive
decision that the party is not entitled to damages. Damages in
contempt actions often have different purposes than damages in
other actions, which is why the decision to award damages is left
to the sound discretion of the trial court.24
Here, we cannot conclude from the order that the court
found that no damages could be shown. The court did allude
during the hearing to affidavits presented by Fulton and Summers
at the end of the contempt hearing and did ask Fultons counsel
whether the court could solve those alleged harms. Fultons
counsel suggested that the affidavits would be sufficient to
enable the court to make a decision on the damages. It is not
clear that the evidence in the record shows an entitlement to
damages, but without an explicit statement in the order by the
finder of fact regarding the substantive merits of the damages
claims, dismissal based on res judicata was inappropriate.25
Because the court was not required to reach the merits
of the damages question in the particular context of a contempt
hearing, and did not address the merits of the damages claims, we
conclude that this particular contempt order was not a judgment
on the merits of the claims for damages.26 We emphasize that the
only reason the second action survives res judicata is that
dismissal of the contempt motion was jurisdictional and thus
there was no judgment on the merits. If the dismissal had been
on the merits, including a dismissal based on summary judgment,
res judicata would bar a subsequent action and the only relief
available to the claimant would be an appeal of the dismissal.
B. It Was Not Error To Take Judicial Notice Only Of The Record
From The First Case And Decline To Take Judicial Notice Of 83
Facts Listed In Fultons Motion.
Angleton moved for partial summary judgment requesting
the court to take judicial notice or to enter an order that 83
specific facts were established. The superior court noted in its
decision on the record that it disagreed with many of the stated
facts and that it had taken judicial notice of the record in the
previous case. Angleton argues that the court fail[ed] to make
any cognizable findings when denying a motion that was basically
ascertainable prima facie from the Courts own record and further
states that he will not argue each factual point individually
because they are each self-proving.
Judicial notice is appropriate if the fact is either
(1) generally known within the state or (2) capable of accurate
and ready determination by resort to sources whose accuracy
cannot be reasonably questioned.27 Facts and inferences about
which reasonable minds could differ are not the proper subject of
judicial notice.28 The basis for the courts denial of most of the
motion for partial summary judgment was clear: The court found
the statements arguable or incorrect. We affirm the courts
ruling on this issue.
C. We Decline To Imply A Derivative Cause Of Action For
Nonprofit Organization Members.
Judge Gleason dismissed Angletons derivative claim
because no such cause of action exists in Alaskas nonprofit
corporation act. Angleton cites no case law directly supporting
his arguments. Instead, he urges that the court should create
such a cause of action because (1) AS 10.20.360 allows members to
dissolve nonprofit corporations when directors are deadlocked,
acting oppressively or illegally, or in other limited
circumstances and (2) creating a derivative action relates to
procedural rights and therefore is within the constitutional
power of the courts.
We defer to the choices of the legislature in drafting
the statutes governing corporations. The legislature
specifically created a right of shareholders of for-profit
corporations to pursue a derivative cause of action on behalf of
the corporation against parties who commit a wrong against the
corporation, but created no analogous right for members of a
nonprofit corporation.29 We are not persuaded by Angletons
argument that AS 10.20.360, which enables a member of a nonprofit
corporation to sue for dissolution of the corporation in extreme
circumstances,30 somehow implies the creation of a right to
pursue derivative suits.
D. We Decline To Reach The Denial Of Angletons Second Motion To
Amend.
On February 7, 2007, following its grant of summary
judgment to Cox, the court gave Angleton an opportunity to file
an amended complaint restricted to claims that arose after March
[7], 2003. The court had already given instructions on this
point. Angleton filed an amended complaint on February 28, 2007,
but, as the court found, the claims for relief in the proposed
Second Amended Complaint are not restricted to claims that arose
after March [7], 2003. Indeed, the only action that it alleged
occurred after March 7, 2003, was the dissemination of the annual
report in which Cox commented disapprovingly about members
bringing lawsuits. Angleton argues that the binding and
distribution of the comments was a separate breach of the
agreement from the reading of the comments at the annual meeting.
He also argues that it constituted a continuing published libel.
The superior court concluded that Angleton had not complied with
its order concerning amendment of the complaint, denied the
motion to amend, and afforded Angleton 20 days in which to amend
the complaint in conformity with its earlier order. Angleton did
not do so. Angleton now argues that the superior court abused
its discretion in denying his motion to amend.
We decline to reach this issue. First, our reversal of
the superior courts grant of summary judgment may moot this
question as a practical matter, because Angleton will be able to
litigate his principal claims on remand. Second, we note that
the superior court denied the motion to amend in the context of
its decision on summary judgment. Now that the summary judgment
has been reversed, that court should be the first to address the
propriety of the motion to amend, if indeed Angleton wishes to
proceed with his amended complaint.31
V. CONCLUSION
The order of March 7 that dismissed the contempt action
as moot was not a final judgment on the merits as to damages.
Therefore Angletons subsequent damages claims are not precluded.
Accordingly, we REMAND the case for further proceedings
consistent with this opinion.
_______________________________
1 Although many facts are in dispute, for purposes of a
summary judgment motion we assume the non-moving partys
allegations of fact are true. Mat-Su/Blackard/Stephan & Sons v.
State, 647 P.2d 1101, 1102 n.1 (Alaska 1982). We have assumed
the version of Angleton, Summers, and Fulton to be true here
because the grant of the summary judgment motion to Cox and
Little is the main issue on appeal.
2 In fact, the final order memorializing the settlement
agreement was entered January 7, 2003, and some violations
occurred shortly after that, but apparently ended by March 7,
2003, the date of the final order dismissing the contempt action.
3 Olivit v. City & Borough of Juneau, 171 P.3d 1137, 1142
(Alaska 2007).
4 Martinez v. Ha, 12 P.3d 1159, 1162 (Alaska 2000).
5 Alaska Wildlife Alliance v. State, 74 P.3d 201, 205
(Alaska 2003); Maness v. Daily, 184 P.3d 1, 5 (Alaska 2008).
6 Ruckle v. Anchorage Sch. Dist., 85 P.3d 1030, 1034
(Alaska 2004).
7 Smith v. C.S.K. Auto, Inc., 132 P.3d 818, 820 (Alaska
2006).
8 Alderman v. Iditarod Props., 104 P.3d 136, 141 (Alaska
2004).
9 Alaska Pub. Int. Research Group v. State, 167 P.3d 27,
44 (Alaska 2007).
10 See Rooney v. Rooney, 914 P.2d 212, 216 (Alaska 1996).
11 Jackinsky v. Jackinsky, 894 P.2d 650, 654 (Alaska
1995).
12 AS 09.50.040 provides in relevant part:
If a loss or injury to a party in an action
or proceeding has been caused by the
contempt, the court, in addition to the
punishment imposed for the contempt, may give
judgment in favor of the party aggrieved . .
. for a sum of money sufficient to indemnify
that party and to satisfy the costs and
disbursements of that party. The judgment
and acceptance of that amount is a bar to an
action or proceeding by the aggrieved party
for the loss or injury.
See also Doyle v. Doyle, 815 P.2d 366, 371-72 (Alaska 1991)
(holding that trial court has discretion to award damages for
contempt, but that damages must correlate with actual injury to
party).
13 AS 09.50.040.
14 Smith v. CSK Auto, Inc., 132 P.3d 818 (Alaska 2006);
Jackinsky, 894 P.2d at 654.
15 722 P.2d 936 (Alaska 1986).
16 Id. at 938.
17 Id.
18 Id.
19 Id.
20 Id.
21 Id.
22 Id. at 938-39 (concluding that any error was
harmless).
23 Doyle v. Doyle, 815 P.2d 366, 371 (Alaska 1991) (noting
that civil contempt damages are means for coercing future
compliance, and have both remedial and punitive elements).
24 Id.
25 Usibelli Coal Mine, Inc. v. State, Dept of Natural
Res., 921 P.2d 1134, 1142 (Alaska 1996) (holding where
commissioner did not address argument in final decision, res
judicata did not apply).
26 While we conclude that summary judgment should not have
been granted on the basis of res judicata, we acknowledge that it
is uncommon for the same claim to be raised in the context of two
separate lawsuits. The values served by the doctrines of res
judicata and collateral estoppel include societys overriding
interest in reaching a final resolution in legal controversies,
promoting efficiency and preserving resources within the judicial
system, and allowing parties to rely on decisions by refusing to
allow future litigation on a cause of action that has been
decided. 50 C.J.S. Judgments 931 (2009). In order to promote
these values, we encourage parties who elect to litigate an
alleged breach of a settlement agreement within the context of an
existing lawsuit to resolve their claim within that lawsuit.
27 Alaska R. Evid. 201(b).
28 F.T. v. State, 862 P.2d 857, 864 (Alaska 1993).
29 See AS 10.06.435.
30 AS 10.20.360 allows a member to sue in superior court
to liquidate the assets and business of a nonprofit corporation
when: (1) the directors are deadlocked in the management of the
corporate affairs, the members are unable to break the deadlock,
and irreparable injury to the corporation is being suffered or is
threatened by reason of the deadlock; (2) the acts of the
directors or those in control of the corporation are illegal,
oppressive, or fraudulent; (3) the members are deadlocked in
voting power, and have failed, for a period which includes at
least two consecutive annual meeting dates, to elect successors
to directors whose terms have expired or would have expired upon
the election of their successors; or (4) the corporate assets are
being misapplied or wasted.
31 Although an appellate court has the power to allow
amendment of pleadings on remand, see Haines Pipeline Const.,
Inc. v. Montana Power Co., 830 P.2d 1230, 1240 (Mont. 1991) (When
an appellate court reverses and remands for new trial, the
appellate court may, in furtherance of justice, grant leave to
the parties to amend their pleadings. . . . Where issues are
inextricably intertwined, the pleadings may be amended on
remand.), overruled on other grounds by Porter v. Galameau, 911
P.2d 1996 (Mont. 1996), we conclude that it is preferable to
allow the superior court to address it initially, if indeed the
issue is even raised below.
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