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Little Susitna Construction Co. v. Soil Processing Inc. (8/1/97), 944 P 2d 20
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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. 4862 - August 1, 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.
1. FACTS AND PROCEEDINGS BELOW
1. 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.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
1. 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 of either meaning.
Alaska Diversified Contr., Inc. v. Lower Kuskokwim Sch. Dist.,
778 P.2d 581, 584 (Alaska 1989); Restatement (Second) of
Contracts ' 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 determination. 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 Constr. & 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.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.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.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."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).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
maintenance of equipment. No penalty charges or damages may be
attributed 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 Constr. &
Eng'g. Co., 722 P.2d 919, 927 (Alaska 1986). LSC's claim to the
contrary is groundless.7
2. 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 ' 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 ' 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).8
4. Award of Attorney's Fees
1. 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).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 prejudg
ment 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.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.
_______________________________
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.
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.
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 ' 215 cmt. b (1979)). Accord
Western Pioneer, Inc. v. Harbor Enters., Inc., 818 P.2d 654, 657
n.4 (Alaska 1991); Alaska Diversified Contractors, Inc. v. Lower
Kuskokwim Sch. Dist., 778 P.2d 581, 584 (Alaska 1989).
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).
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).
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).
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
discernible 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 "demobilization"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.
LSC suggests that inclusion in the equipment lease
agreement of a heading stating "REF: CONTRACT DACA 85-R-007" --
an apparent reference to LSC's then-pending contract with the
Corps of Engineers -- had the effect of incorporating the
LSC/Army Corps contract into the LSC/SPI equipment lease
agreement, thereby making the LSC/Army Corps contract control
various terms of the LSC/SPI lease agreement, such as the meaning
of the lease agreement's mobilization and demobilization
requirements and the anticipated time for SPI's completion of its
soil remediation efforts. LSC's incorporation by reference
theory lacks merit. As we stated in Prichard v. Clay, 780 P.2d
359, 361 (Alaska 1989), "[p]arties do not undertake obligations
contained in a separate document unless their contract clearly
says so."
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.
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.
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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