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Opinion # 4862
Little Susitna Construction Co. v. Soil Processing, Inc. (7/3/97) sp-4845
<![CDATA[
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.
THE SUPREME COURT OF THE STATE OF ALASKA
LITTLE SUSITNA CONSTRUCTION )
COMPANY, INC., )
) Supreme Court No. S-7451
Appellant, )
) Superior Court No.
v. ) 3AN-93-10331 CI
)
SOIL PROCESSING, INC., ) O P I N I O N
)
Appellee. ) [No. 4845 - July 3, 1997]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Joan M. Woodward, Judge.
Appearances: Roger E. Holl, Anchorage, for
Appellant. M. Gregory Oczkus, Anchorage, for Appellee.
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
BRYNER, Justice.
This appeal arises from a dispute centering on a "turn-
key"provision in an equipment lease.
I. FACTS AND PROCEEDINGS BELOW
In September of 1992, Little Susitna Construction
Company, Inc. (LSC) negotiated with the United States Army Corps of
Engineers and the Small Business Administration (SBA) for the award
of a contract to remediate fuel-contaminated soil at Fort
Richardson. On September 4, 1992, in contemplation of being
awarded the contract, LSC entered into a "turn-key"lease agreement
with Soil Processing, Inc. (SPI).
The agreement called for SPI to provide LSC with thermal
soil-remediation equipment on-site at Fort Richardson "at the turn
key price of $44.00 per ton"of soil processed. SPI was also to
receive $5,500.00 for mobilizing its equipment and an equal sum for
demobilizing. In addition, the agreement provided that LSC would
pay SPI $3,000.00 for each day of stopped production. [Fn. 1]
LSC originally planned to begin processing soil in mid-
October and to complete the project in the first week of December.
On September 28, 1992, the Corps of Engineers and SBA formally
awarded LSC the Fort Richardson contract. On October 5, LSC
notified SPI to proceed with mobilization. SPI had its equipment
on-site by October 15.
Before actually getting underway, however, the project
encountered significant delay. LSC did not begin remediating soil
until the first week of January 1993. This delay forced operations
to be carried out in adverse conditions. Freezing weather led to
numerous equipment breakdowns and reduced the productivity of the
workforce; the soil became much more difficult to process when
frozen. Repairs and a five-month extension in the period of
operation significantly increased LSC's costs on the project.
As a result, LSC withheld payments from SPI. LSC claimed
that SPI was responsible for the delays, repairs, and all related
costs. LSC also claimed that SPI failed to provide equipment and
services it had contracted to supply. LSC eventually received
contract payments of $681,647.99 but paid SPI nothing.
SPI sued LSC for breach of contract, seeking damages of
$189,692.92 under the terms of the lease agreement. LSC counter-
claimed for negligence and breach of contract, seeking damages of
$312,843.00. The case came to trial before a jury in Anchorage.
Upon conclusion of the evidence, the trial court entered a directed
verdict for SPI on its equipment lease claim, determining that, at
the contract rate of $44.00 per ton of soil processed, SPI was due
$178,200. The court submitted all remaining issues to the jury.
The jury returned a special verdict finding in SPI's favor and
rejecting all but a minor portion of LSC's counterclaim. The trial
court entered judgment for SPI in the principal amount of $176,133,
to which it added pre-judgment interest of $47,275 and attorney's
fees of $24,840.81. LSC appealed.
II. DISCUSSION
A. Meaning of Agreement's "Turn-Key"Provision
On appeal, LSC focuses initially on the "turn-key"
provision of the September 4, 1992, lease agreement.
At trial, LSC requested a jury instruction defining the
term "turn-key"to require SPI to assume all risks arising from
weather-related and other job-site problems. The trial court
declined to define turn-key, instead leaving the jury to decide the
term's meaning:
In order to find for [LSC] on this claim,
you must find that it is more likely than not that both parties
understood and intended, or reasonably should have understood and
intended, that "turn key"as used in this lease meant that SPI
would pay for all damages to [LSC] resulting from weather or other
problems on the job.
The jury's special verdict concluded that SPI did not breach its
contract by failing to pay for labor costs incurred by LSC as a
result of job-site equipment problems.
LSC challenges the trial court's failure to define turn-
key, arguing that "turn-key is a legal term of art and a legal term
with legal meaning." In LSC's view, "'a turn-key job' is any job
or contract in which a contractor agrees to complete the work to a
specified point and to assume all risks." LSC maintains that by
agreeing to furnish thermal remediation equipment to LSC "at the
turn key price of $44.00 per ton,"SPI bound itself as a matter of
law to absorb all added costs resulting from equipment breakdowns
or freezing weather throughout the course of the soil remediation
project. LSC insists that the trial court should have determined
that this is what turn-key meant, that the court should have
instructed the jury accordingly, and that there was no evidence to
support the jury's verdict declining to find a turn-key breach.
Interpreting a written contract is generally a task for
the trial court; however, interpretation becomes a task for the
trier of fact when the parties present extrinsic evidence to
clarify a contract's meaning, when this evidence points toward
conflicting interpretations of the contract, and when the contract
itself is reasonably susceptible to either meaning. Alaska
Diversified Contr., Inc. v. Lower Kuskokwim School Dist., 778 P.2d
581, 584 (Alaska 1989); Restatement (Second) of Contracts sec.
212(2). In such cases, the trial court initially determines
whether the
extrinsic evidence meets the criteria to create a jury question;
when the court finds that the extrinsic evidence does not conflict
or is incompatible with the terms of the written contract,
interpretation remains a question of law for the court's determin-
ation. Alaska Diversified, 778 P.2d at 584; Alaska N. Dev., Inc.
v. Alyeska Pipeline Serv. Co., 666 P.2d 33, 39 (Alaska 1983).
This court exercises its independent judgment when
reviewing a trial court's decision to leave interpretation of a
contract to the jury. Cf. Alyeska Pipeline Serv. Co. v. O'Kelley,
645 P.2d 767, 771 (Alaska 1982). In contrast, we give deferential
review to the jury's verdict interpreting the contract: we do not
reweigh the evidence but ask only whether it creates room for
diversity of opinion among reasonable people. Municipality of
Anchorage v. Baugh Const. & Eng'g. Co., 722 P.2d 919, 927 (Alaska
1986). We must affirm the verdict unless the evidence to support
it is completely lacking or so slight and unconvincing as to make
it manifestly unreasonable and unjust. United Bonding Ins. Co. v.
Castle, 444 P.2d 454, 455 (Alaska 1968).
We first consider whether the evidence at trial pointed
toward conflicting interpretations of the lease agreement's turn-
key provision. The President of SPI testified that the turn-key
provision meant nothing more than, "I supply the equipment, they
turn the key on and it starts." SPI also presented evidence that,
after the project was already underway, LSC sought a contract
modification imposing all risks of operation on SPI; LSC's actions
implied that the original contract did not impose these risks on
SPI. LSC, on the other hand, claimed that it included the turn-key
provision in the lease agreement for the express purpose of
ensuring that SPI would bear all risks of operation. LSC claimed
that the originally proposed price of the contract had been
increased as a result of its insistence on adding the turn-key
provision. [Fn. 2] This evidence unquestionably presented
conflicting interpretations of the lease agreement's turn-key
provision.
We next consider whether SPI's proposed interpretation of
the turn-key provision is necessarily inconsistent with the express
terms of the lease agreement. [Fn. 3] LSC contends that SPI's
proposed interpretation of "turn-key"is incompatible with the
accepted legal definition of the term. To support this contention,
LSC relies on case law and Black's Law Dictionary. However, the
cases LSC relies on all deal with either building contracts or oil
drilling contracts. [Fn. 4] Likewise, while Black's Law Dictionary
does define a turn-key contract as one requiring "all risks to be
assumed by [the] contractor,"Black's does not purport to define
this term generally, but only as "used in [the] building trade"and
"[i]n [the] oil drilling industry."[Fn. 5] Neither the case law
nor the dictionary attaches a fixed meaning to "turn-key"when the
term is used in other types of contracts.
LSC has thus failed to establish that turn-key has any
settled legal meaning in the context of an equipment lease
agreement. Use of the term in this unfamiliar setting almost
inevitably generates uncertainty as to its intended meaning.
Notably, even as commonly applied in oil drilling and
construction contracts, the term could arguably support allocating
all operational risks to LSC. In the oil industry, for example,
the turn-key driller bears all responsibility for difficulties
encountered while drilling a well (but is not responsible for
problems that arise after the well's delivery to the owner); in
fact, the driller does not even guarantee a producing well. Totah
Drilling Co. v. Abraham, 328 P.2d 1083, 1091 (N.M. 1958). This
allocation of risk would seemingly favor SPI's argument that it
only bargained to furnish a functioning soil decontamination
machine, with LSC to bear all risks during operation.
Moreover, courts encountering turn-key provisions in
novel contexts have not hesitated to look beyond the definition
typically applied to the term in construction and oil drilling
cases. For example, in explaining its willingness to go beyond the
term's usual meaning, the court in Smithco Eng'g. Co., Inc. v.
International Fabricators, Inc., 775 P.2d 1011 (Wyo. 1989), quoting
Justice Holmes, stated:
"A word is not a crystal, transparent, and
unchanged, it is the skin of a living thought and may vary greatly
in color and content according to the circumstances and the time in
which it is used." The use of the term "turn key"does not
abrogate the general rule that the entire contract must be
considered to determine the meaning.
Id. at 1015-16 (quoting Towne v. Eisner, 245 U.S. 418, 425
(1918))(citation omitted). [Fn. 6]
A final measure of the turn-key provision's ambiguity in
the present case may be found in the language of the equipment
lease agreement itself. One clause in the agreement specifies that
SPI will provide "[a]ll required parts, oil, grease, for mainte-
nance of equipment. No penalty charges or damages may be attri-
buted or charged to SPI for down time." This clause suggests that
SPI's repair responsibilities were meant to be limited to routine
maintenance. Another clause guarantees SPI $3,000 a day or $175 an
hour for the time value of its equipment if LSC or even a third
party government agency "request[s] the processor to stop
production." This suggests that the onus was on LSC to assure that
processing not be interrupted. When read as a whole, the lease
agreement thus undermines LSC's claim of certainty as to the turn-
key provision's meaning.
LSC highlights several clauses of its September 1, 1992,
service agreement with SPI. The agreement's preface provides that
"[i]f soil conditions materially change, prices and quotes will be
subject to change by mutual agreement." The fourth clause provides
that the plant will be operated on a round-the-clock basis "until
completion of the project or work is stopped due to inclement
weather."
At first blush, these portions of the service agreement
appear to be in tension with the lease agreement, particularly its
provision for a $3,000 per day standby rate. However, unlike the
lease agreement, which was project specific, the service agreement
set conditions for all dealings between the parties over the
ensuing three-year period. Moreover, the September 1 service
agreement and September 4 equipment lease agreement are separate
contracts; as a separate contract, the service agreement amounts,
at most, to extrinsic evidence of the lease agreement's meaning --
a point serving to illustrate LSC's tacit recognition of the
ambiguity of the lease agreement itself.
All of the foregoing considerations support the trial
court's conclusion that the lease agreement's turn-key provision
was ambiguous and that the extrinsic evidence pointed to two
competing meanings, each viable and neither inconsistent with the
agreement's plain terms. Given these circumstances, the trial
court properly instructed that the task of interpreting the
agreement was a factual matter for the jury. Alaska Diversified,
778 P.2d at 584.
By concluding that the extrinsic evidence supported
reasonable but conflicting interpretations of the contract and
thereby made interpretation a jury question, we have necessarily
determined that the jury would have acted reasonably in accepting
either of the conflicting interpretations. The evidence supporting
SPI's claim that LSC bore the burden of costs resulting from
equipment breakdown is neither slight nor unconvincing; this
evidence creates room for diversity of opinion among reasonable
people. It is therefore sufficient to support the jury's verdict.
Municipality of Anchorage v. Baugh Const. & Eng'g. Co., 722 P.2d
919, 927 (Alaska 1986). LSC's claim to the contrary is groundless.
[Fn. 7]
B. Jury Instructions on Breach of Warranties
On a separate front, LSC attacks the instruction that the
trial court gave the jury on breach of express and implied
warranties. At trial, LSC maintained that SPI had breached express
and implied warranties concerning the condition, processing
capacity, and fitness for winter use of its thermal remediation
unit. Specifically, LSC claimed that SPI had expressly promised
that its equipment was in good condition and could process soil at
a steady rate of at least six to ten tons per hour. LSC also
claimed that SPI had given implied assurances that the equipment
was capable of maintaining optimal performance throughout the
winter.
SPI denied giving LSC any guarantees about the processing
capacity of the equipment and also denied making any
representations -- express or implied -- about the equipment's
fitness for use in the core winter months of January, February and
March. SPI's position was that both parties had originally
contemplated beginning the remediation project in mid-October and
completing it by mid-December, that LSC had caused startup to be
delayed until January, and that most of the subsequent delays had
resulted from inclement winter weather and frozen-solid soil.
With respect to implied warranty, Instruction Number 18
stated:
The law assumes that if SPI, at the time of
making the contract, had reason to know of a particular purpose for
which the leased equipment was required, and if [LSC] was relying
on the skill or judgment of SPI to furnish the equipment, then
there is an implied warranty that the equipment is fit for that
purpose.
The court more specifically addressed LSC's theory of the
case in Instruction Number 19:
In deciding whether the implied warranty
of fitness for a particular purpose was breached, you may have to
decide whether the cold weather in January, February, and March
1993 was the cause of some or all of the problems on the job. If
you find that the weather was a factor, you must decide whether
[SPI] had a responsibility to give [LSC] written notice sufficient
to alert [LSC] that the machine was not fit to operate in such cold
weather. [SPI] had a responsibility to give [LSC] such notice if
the equipment was not fit for a particular use which [SPI] knew or
reasonably should have known would be part of the Fort Richardson
contract.
[LSC] contends that at the time the
agreement was made with SPI, [SPI] knew, or reasonably should have
known, that [LSC] contemplated using the equipment during cold
winter weather such as occurred during January, February, and March
1993. SPI denies that [it] had reason to know this. If you find
that it is more likely than not that SPI should have given [LSC]
written notice sufficient to alert [LSC] that the equipment was not
warranted for use in cold weather, and if you further find that
cold weather caused problems with the equipment, then you must find
that SPI breached its implied warranty of fitness.
LSC objected to the latter instruction, requesting
additional language stating, in conformity with UCC sec. 2A-214,
that
an implied warranty could be modified only by a clear, conspicuous
written disclaimer. The trial court denied LSC's request, finding
that it was "not necessarily appropriate to incorporate directly
and in total sales provisions of the UCC to equipment leases." The
challenged instruction thus remained intact, requiring "written
notice sufficient to alert [LSC],"of SPI's disclaimer of any
implied warranty of fitness for winter use, but omitting the
requirement that this written notice be clear and conspicuous. In
its special verdict, the jury found that SPI had breached no
express or implied warranties.
On appeal LSC renews its claim that the jury instructions
should have required a clear and conspicuous written disclaimer of
SPI's implied warranty of fitness for intended winter use. Given
the facts of the case, however, this claim lacks merit.
As reflected in Jury Instruction No. 19, SPI's defense to
LSC's implied warranty claim was that no warranty could be implied
because SPI had no reason to know that "[LSC] contemplated using
the equipment during cold winter weather such as occurred during
January, February, and March 1993." In other words, SPI
essentially asserted that it had no reason to disclaim fitness for
winter use because neither party contemplated winter use when the
contract was signed.
The additional language LSC asked the court to include in
Instruction No. 19 -- the challenged instruction -- would have
required a clear and conspicuous written disclaimer of any implied
warranty by SPI. The express language of the instruction, however,
already specified that any implied warranty could be disclaimed
only by a "written notice sufficient to alert LSC." Thus, LSC's
requested addition to the instruction could have had significance
only if the jury had heard evidence suggesting the existence of
some written disclaimer by SPI that was arguably unclear or
inconspicuous. But the jury heard no evidence suggesting the
existence of any disclaimer whatsoever, let alone a written
disclaimer. Had the jury found an implied warranty, it would have
been left with no rational basis for concluding that the warranty
had been disclaimed in any way. Hence, in context, LSC's proposed
addition to Instruction No. 19 was superfluous.
LSC raises no other challenge to the implied warranty
instruction, nor does the instruction otherwise appear
inappropriate. See UCC sec. 2A-213. The trial court did not err
in
giving it.
 C. Expert Witness Issue
LSC next raises an evidentiary point, challenging the
trial court's decision to allow Bob Langberg to testify as an
expert witness. Langberg was LSC's Contract Manager and Job
Manager. He participated in the negotiation of LSC's agreement
with the Corps of Engineers. LSC's answer to SPI's complaint
included a third-party complaint naming Langberg as a defendant.
Langberg was evidently deposed and subpoenaed to testify as a fact
witness while still a party. He apparently settled with LSC
shortly before trial.
At trial, SPI moved to qualify Langberg as an expert
witness on the impact of cold weather on construction equipment,
noting his thirty years' experience in the construction industry in
Alaska. Counsel for LSC objected. The trial court, citing
Langberg's experience, allowed him to testify as an expert on this
subject. LSC now complains that Langberg lacked educational and
experiential qualifications to testify as an expert on cold weather
impacts.
We review a trial court's decision to qualify an expert
witness only for abuse of discretion. Colt Ind. v. Fran W. Murphy
Mfr. Inc., 822 P.2d 925, 932 (Alaska 1991). Alaska Evidence Rule
702 allows a witness to be qualified as an expert on the basis of
experience alone. The record and briefs indicate that Langberg had
thirty years' experience in the Alaskan construction industry. We
find no abuse of discretion in the trial court's decision to allow
Langberg to be qualified as an expert on the impact of cold weather
on construction equipment.
At any rate, Langberg never actually testified about the
impact of cold weather on construction equipment. Instead, he was
questioned at length about his personal knowledge of the contract
negotiations, his understanding of the meaning of particular terms
in the contracts, and his understanding of industry usage.
Although LSC now argues about Langberg's lack of expertise in cold
weather impacts, its complaints address only Langberg's testimony
concerning SPI's contract negotiations with LSC and the meaning of
the resulting equipment lease agreement. Langberg addressed these
matters as a fact witness testifying from personal knowledge, not
as an expert witness. His personal knowledge of these matters and
his involvement in this case qualified him to express his opinion
as a lay witness. See Alaska Rule of Evidence 701; In re D.J.A,
793 P.2d 1033, 1036 (Alaska 1990). See also Reutter v. State, 886
P.2d 1298, 1309 (Alaska App. 1994). [Fn. 8]
D. Award of Attorney's Fees
LSC lastly challenges the trial court's award to SPI of
$47,275 in prejudgment interest and $24,840.81 in attorney's fees.
The trial court calculated prejudgment interest from the date of
service of process. This date is appropriate "[e]xcept when the
court finds that the parties have agreed otherwise[.]" AS
09.30.070(b). [Fn. 9] LSC contends that the parties here agreed
otherwise, because, under the terms of the service agreement, SPI
agreed to receive periodic contract payments "as directed"by SBA.
According to LSC, at the inception of this litigation, SBA directed
that contract funds be deposited in a court account. LSC reasons
that SPI thus had no right to the funds and was entitled to no
interest until the court entered judgment.
This argument is specious, since SBA sheltered the funds
only because LSC contested its obligation to pay SPI. Moreover, in
its response to SPI's post-trial motion for prejudgment interest,
LSC conceded that "[t]he number of days of prejudgment interest
calculated by plaintiff is essentially correct." We find no error
in the award of prejudgment interest. [Fn. 10]
The trial court based its award of attorney's fees on the
schedule specified in Civil Rule 82(b). LSC contends that the
trial court abused its discretion by not departing downward from
the schedule on the basis of Civil Rule 82(b)(3)(I), which provides
that "[t]he court may vary an attorney's fee award . . . [to the
extent that] a given fee award may be so onerous to the non-
prevailing party that it would deter similarly situated litigants
from the voluntary use of the courts[.]" LSC has failed to
explain, either below or on appeal, how this provision might apply
to its situation, particularly since SPI initiated the litigation
and LSC made no "voluntary use of the courts." We find no error in
the attorney's fee award.
III. CONCLUSION
The judgment is AFFIRMED.
FOOTNOTES
Footnote 1:
On September 1, 1992, three days before entering into the
above-quoted equipment lease, LSC and SPI signed a separate "Letter
of Understanding/Service Agreement"in which SPI obtained the right
of first refusal to provide LSC with soil remediation equipment for
all government work offered to LSC in the next three years. As
part of the letter of understanding, SPI agreed to screen and
approve personnel to operate the remediation equipment, and LSC
agreed to hire all SPI-selected employees at specified rates.
Footnote 2:
SPI conceded that the turn-key provision had been added to the
lease agreement contemporaneously with an increase in the contract
price, but it produced evidence indicating that the price hike
reflected an equipment requirement also added at that time.
Footnote 3:
"[I]f '[SPI's] asserted meaning [is not] one to which the
language of the writing, read in context, is reasonably
susceptible,'"then interpretation of the contract should have
remained a matter of law, and the jury should have been informed of
the contract's legal meaning. Alaska N. Dev., Inc. v. Alyeska
Pipeline Serv. Co., 666 P.2d 33, 39 (Alaska 1983) (quoting
Restatement (Second) of Contracts sec. 215 comment b (1979)).
Accord Western Pioneer, Inc. v. Harbor Enterprises, Inc., 818 P.2d
654,
657 n.4 (Alaska 1991); Alaska Diversified Contr., Inc. v. Lower
Kuskokwim School Dist., 778 P.2d 581, 584 (Alaska 1989).
Footnote 4:
LSC cites Dachner v. Union Lead Mining & Smelter Co., 195 P.2d
208, 211 (Nev. 1948) (defining 'turn-key job' as used in a
construction contract); Totah Drilling Co. v. Abraham, 328 P.2d
1083, 1091 (N.M. 1958) (defining "'turnkey contract' in the oil
industry"); Retsal Drilling Co. v. Commissioner, IRS, 127 F.2d 355,
357 (5th Cir. 1942) ("a turn key job has a fixed and definite
meaning in the [oil] industry"); and T.K. Harris Co. v.
Commissioner, IRS, 112 F.2d 76, 78-79 (6th Cir. 1940) (noting the
"ordinary"meaning of "turnkey contract"in an oil drilling case).
Footnote 5:
Thus Black's states, in relevant part, that a "turn-key
contract"is a
Project in which all the owner need do is
"turn the key"in the lock to open the building with nothing
remaining to be done and all risks to be assumed by contractor.
Term used in building trade to designate those contracts in which
builder agrees to complete work . . . to certain specified point,
such as building a complete house ready for occupancy as a
dwelling, and that builder agrees to assume all risk.
In the oil drilling industry . . . . [a]
turn-key contract to drill a well involves the testing of the
formation contemplated by the parties and completion of a producing
well or its abandonment as a dry hole, all done for an agreed-upon
total consideration, putting the risk of rising costs, well
trouble, weather, and the like upon the driller[.]
Black's Law Dictionary 1516 (6th ed. 1990) (citations omitted).
Footnote 6:
In Smithco, International Fabricators, Inc., (I.F.I.) agreed
to supply movable louvers for installation by Smithco in a large
construction project and agreed to "provide a turn key or total
responsibility service to Smithco[.]" Smithco, 775 P.2d at 1013.
After Smithco installed the louvers, design problems arose,
preventing them from operating efficiently and necessitating costly
modifications by Smithco. Id. at 1014. Smithco withheld a portion
of I.F.I.'s contract price, and I.F.I. sued. Id. The trial court
construed the contract to hold Smithco liable for the modification
costs. Id. On appeal, Smithco claimed that the trial court
"failed to give effect to the term 'turnkey.'" Id. at 1012. The
Wyoming supreme court affirmed, stating that it agreed "with the
trial court in this factual situation, regardless of the term's
["turnkey"'s] more normal meaning." Id. at 1015.
See also Chapman & Cole v. Itel Container Int'l B.V., 865
F.2d 676, 681-83 (5th Cir. 1989) (contractor who signed a turn-key
agreement to build and lease to a shipper a shipping container
storage facility "capable of [its] intended use"held not liable
for subsequent problems in the facility despite the "well-defined
meaning in law and in fact [of a turn-key contract],"given that
contractor relied on shipper's faulty representations in building
the facility).
Footnote 7:
LSC raises three related points which require only cursory
discussion.
The trial court instructed the jury that "if you cannot
decide whether . . . a particular promise was made, you may
construe the contract against the party who drafted the relevant
portion[.]" LSC argues that the jury should have been required to
construe any ambiguity against the drafting party -- SPI. LSC's
proposed rule, however, applies only to contracts of adhesion where
the parties are "of such disproportionate bargaining power that the
insured could not have negotiated for variations in the terms of
the standard policy." Graham v. Rockman, 504 P.2d 1351, 1357
(Alaska 1972). See Duncan v. City of Fairbanks, 567 P.2d 311, 313-
14 (Alaska 1977); Hahn v. Alaska Title Guaranty Co., 557 P.2d 143,
144-45 (Alaska 1976). Here, the lease agreement was negotiated at
arm's length between equally situated parties.
LSC contends that there was insufficient evidence to
support the finding that it had the duty to pay for labor for
repairs of the leased equipment under the terms of the lease and
letter of understanding of the parties. This point largely
duplicates LSC's principal contention that the evidence did not
support the verdict on the turn-key contract issue. To the extent
LSC contends that the combined provisions of the September 1, 1992,
letter of understanding and the September 4, 1992, lease agreement
unambiguously established the parties' intent to allocate to SPI
the duty of paying for labor and repairs, the argument is
unpersuasive.
LSC contends that there was insufficient evidence to
support the jury's conclusion that SPI performed the mobilization
and demobilization requirements of the lease agreement. In large
measure, this contention depends on LSC's mistaken view that "turn-
key"is a term of art with a fixed legal meaning. If LSC means to
argue something else, its argument is unclear and has no discern-
ible merit. The parties presented disputed evidence concerning the
meaning of the mobilization and demobilization requirements in the
lease agreement. There was sufficient evidence before the jury to
allow it to conclude that the words "mobilization"and "demobili-
zation"had a more limited meaning in the lease agreement than they
did in the Corps of Engineers' contract with LSC. The trial court
did not err in submitting the issue to the jury.
Footnote 8:
LSC cursorily argues for the first time on appeal that
Langberg should have been precluded from testifying as an expert
because he failed to file a pre-trial witness report, as required
by Alaska Civil Rule 26(a)(2)(B). Even if it were adequately
preserved, this argument would be meritless, as Rule 26(a)(2)(B)
applies only to "a witness who is retained or specially employed to
provide expert testimony in the case or whose duties as an employee
of the party regularly involve giving expert testimony[.]"
Langberg does not fit this description.
Footnote 9:
In relevant part, AS 09.30.070(b)provides:
[P]rejudgment interest accrues from the day
process is served on the defendant or the day the defendant
received written notification that an injury has occurred and that
a claim may be brought against the defendant for that injury,
whichever is earlier. The written notification must be of a nature
that would lead a prudent person to believe that a claim will be
made against the person receiving the notification, for personal
injury, death, or damage to property.
Given the second sentence of the above-quoted passage, it is
questionable whether this statute applies to cases other than tort
claims for personal injury, death, or damage to property. See
McConkey v. Hart, 930 P.2d 402 (Alaska 1996). If AS 09.30.070(b)
were inapplicable here, a longer period of prejudgment interest
would result, since breach of the contract and the due date for
payment on the contract both predated the service of process.
However, the parties appear to agree that subsection (b) applies to
this case; we accept this agreement and apply the statute for
purposes of this decision only.
Footnote 10:
LSC sets out a conclusory assertion that the parties agreed on
a different rate of interest than the statutorily specified rate of
10.5 percent. See AS 09.30.070(a). LSC fails to explain this
assertion, and the record fails to support it.
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