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v. Matanuska-Susitna Borough (11/19/99) sp-5207
Philbin v. Matanuska-Susitna Borough (11/19/99) sp-5207
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
JOSEPH A. PHILBIN, d/b/a )
PHILBIN CONSTRUCTION, ) Supreme Court No. S-8573
)
Appellant, ) Superior Court No.
) 3PA-97-375 CI
v. )
)
MATANUSKA-SUSITNA BOROUGH, ) O P I N I O N
)
Appellee. ) [No. 5207 - November 19, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Palmer,
Eric Smith, Judge.
Appearances: Kenneth D. Albertsen, Palmer,
for Appellant. John L. Aschenbrenner, Assistant Borough Attorney,
and Michael Gatti, Borough Attorney, Palmer, for Appellee.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
CARPENETI, Justice, dissenting.
I. INTRODUCTION
Before he was paid, a contractor signed a release. The
superior court held that the release barred his breach of contract
action. Because the contractor raised genuine material fact
disputes about the intended effect of the release, we reverse the
summary judgment entered against him.
II. FACTS AND PROCEEDINGS
Joseph Philbin, doing business as Philbin Construction,
entered into a written contract with the Matanuska-Susitna Borough
on October 6, 1995 to supply, load, haul, and deliver approximately
9,250 cubic yards of crushed gravel. [Fn. 1] The gravel was to be
overlaid on Beverly Lakes Road, Vine Extension Road, and Meadow
Lakes Road, in that order. The borough issued Philbin a notice to
proceed on October 10; work was to be completed by November 6.
Although Philbin thought he could complete the project
within the time the contract allotted, by October 20 the project
was behind schedule. Chuck Kaucic, a project manager at the
borough's public works department, met that day with Philbin and
discussed the project's status. At that meeting Kaucic gave
Philbin a letter dated October 19 asking for a revised schedule of
anticipated quantities and delivery times, through completion of
the project. [Fn. 2]
By October 24 Philbin had only completed the first,
Beverly Lakes Road, portion of the contract. At the suggestion of
the borough's construction inspector, on October 25 Philbin billed
the borough $19,608 for that portion of the contract. Philbin
blamed his lack of progress on deteriorating weather which made
crushing rock difficult and caused equipment breakdowns. Moreover,
cold weather caused the road surfaces to freeze, preventing
installation of more rock.
In early November but before November 6, Kaucic and
Philbin met and discussed the possibility of a winter shutdown. A
winter shutdown would have allowed Philbin to carry the project
over to the spring. Philbin testified that Kaucic instructed him
to shut down due to the onset of winter, and that written
notification of a winter shutdown would be forthcoming. [Fn. 3]
Kaucic denied telling Philbin to stop producing material. Rather,
he testified that he spoke to Philbin about the possibility of
shutting down and restarting in the spring if the freezing road
conditions prevented further work in 1995.
Regardless of what was said at that meeting, the borough,
by letter dated November 6, 1995, terminated the contract for
nonperformance. The letter stated, in part:
This letter is to serve as official
notification that the Matanuska-Susitna Borough is terminating the
Load, Haul and Supply Gravel Agreement contract signed on October
6, 1995. . . . This agreement is being terminated under Section
10A which states "This Agreement may be terminated by the Borough
if the Contractor fails to perform any obligation under this
Agreement." You are in noncompliance. . . .
. . . As of today, 2,280 cubic yards of
the 9,250 cubic yards specified in the agreement have been produced
and hauled. . . .
. . . [I]t has been agreed that in the
best public interest the Matanuska-Susitna Borough must terminate
this agreement effective 12:01 a.m. November 7, 1995.
On November 8 Philbin met with executives from the
borough's public works department; they reiterated the borough's
decision to terminate the contract. But they suggested that
Philbin submit a written proposal regarding the possible purchase
of crushed rock the following spring. Philbin testified that he
declined that offer until he could speak to an attorney.
Philbin later executed an affidavit describing his
discussions with the borough and his understanding based on the
November 8 discussion of what the borough would do. We discuss
that affidavit below in more detail.
On November 15 Philbin picked up a borough check for the
Beverly Lakes Road portion of the contract. Before giving Philbin
the check, the borough required him to sign a form entitled
"CONTRACTOR'S RELEASE AND AFFIDAVIT OF PAYMENTS OF DEBTS AND
CLAIMS." The form stated that "in consideration of the final
payment . . . the undersigned contractor . . . releases and
discharges the Matanuska-Susitna Borough . . . from any and all
further claim, debt, charge, demand, liability or other obligation
whatsoever under or arising from said contract . . . ." By his
handwritten reservation to the release on lines provided for the
purpose, Philbin reserved claims to recover payments to individuals
to whom he owed money for the rock-crushing equipment.
The following spring the borough refused to buy
additional crushed rock from Philbin. In April 1997 Philbin sued
the borough, alleging that the borough's refusal in the spring of
1996 to purchase the remaining "Contract material" from Philbin was
a breach of contract. Philbin's complaint did not claim that the
borough breached the contract by issuing the November 6, 1995
termination letter. The borough raised the release as an
affirmative defense, and moved for summary judgment. Enforcing the
release, the superior court granted the borough's motion. Philbin
appeals.
III. DISCUSSION
A. Standard of Review
We review a grant of summary judgment de novo. [Fn. 4]
Drawing all reasonable inferences in favor of the non-movant, we
determine whether the parties genuinely dispute any facts material
to a viable legal theory and, if not, whether the undisputed facts
entitle the movant to judgment as a matter of law. [Fn. 5] The
moving party bears the initial burden of proving through admissible
evidence (1) the absence of genuine fact disputes, and (2) its
entitlement to judgment as a matter of law. [Fn. 6] Once the
moving party has established a prima facie case, "the non-movant is
'required, in order to prevent entry of summary judgment, to set
forth specific facts showing that he could produce admissible
evidence reasonably tending to dispute or contradict the movant's
evidence, and thus demonstrate that a material issue of fact
exists.'" [Fn. 7]
Whether the trial court applied the law correctly is a
question of law which we review de novo. [Fn. 8] "Under this
standard, it is our duty to adopt the rule of law that is most
persuasive in light of precedent, reason, and policy." [Fn. 9]
B. The Parties' Intentions and Understanding of the Release
Document
Philbin first argues that the evidence demonstrated a
factual dispute concerning the parties' intent when he signed the
release. He also argues that there is a factual dispute as to
whether factors exist sufficient to set aside the release,
precluding summary judgment. [Fn. 10] The borough argues that the
release is clear and unambiguous, that Philbin has not established
by clear and convincing evidence that the release should be set
aside, and that Philbin's unilateral mistake in understanding the
release cannot excuse its application to him.
In our prior cases we have used two approaches to
determine whether a release is enforceable. Though consistent,
they vary in their emphasis.
Under the first approach, a release is to be construed
according to the parties' intent. This approach potentially raises
questions of fact. [Fn. 11] The parties' intent is determinative.
[Fn. 12] Accordingly, summary judgment is inappropriate if there
is a genuine fact dispute as to the parties' intent. [Fn. 13]
The second approach focuses on the aggrieved party's
understanding of the nature of the instrument he or she has signed.
[Fn. 14] Under this approach, releases are presumptively valid and
the releasor must show by clear and convincing evidence that the
release should be set aside. [Fn. 15] In addition, we have stated
that "for a release to be effective it must be given with an
understanding of what is being released." [Fn. 16] But we have
also stated that absent a showing of coercion or fraud, a mistaken
understanding of the contents of a release is not sufficient to
justify setting it aside. [Fn. 17]
Under either approach, the focus is on what a reasonable
person would have understood the release language to have meant.
[Fn. 18]
The evidence permits a reasonable inference that Philbin,
based on his November 8 discussion with Kaucic, justifiably
believed that the borough would purchase the remaining material,
and that, notwithstanding the November 6 termination letter, the
borough had not ruled out the possibility that Philbin could
complete the contract in the spring of 1996. This evidence is
found in part in two paragraphs of Philbin's affidavit opposing
summary judgment:
6. I discussed with Borough personnel
my intentions to complete the contract and produce all of the
contract material prior to the time the Borough would need the
material in the spring of 1996. It was my understanding from
Project Manager Charles Kaucic that the Borough would purchase the
remaining material from me in late spring 1996 after the sub-base
had adequately thawed and could be properly prepared. At that
time, no one told me that the material would not be purchased by
the Borough from me in the spring.
. . . .
9. At the time that I signed the
document, the Borough had not refused to purchase the additional
material that had been produced under the contract and that was
presently stockpiled and ready for use. Rather, Borough personnel
were discussing with me the options of either the Borough
purchasing the stockpiled material on hand at that time, or me
continuing with production to produce all needed material by
spring.
Based on this understanding, Philbin would have had no
reason to expect that the release he signed on November 15 would
preclude him from asserting a breach of contract claim against the
borough in the event the borough declined to purchase the remaining
gravel and permit him to complete the contract.
Other evidence supports the reasonableness of this
interpretation. Kaucic testified in deposition that as of November
2 or 3, a winter shutdown was necessary, and that he had informed
Philbin that they could not continue because of the weather. His
affidavit permits an inference that he talked with Philbin about
completing the project in the spring if weather prevented further
work in 1995. Although Kaucic characterized this as a
"hypothetical" possibility, his testimony that freezing weather
prevented continuation removes that factual contingency.
There is also some evidence that the borough itself did
not consider the release, when Philbin signed it, to foreclose a
breach of contract claim. First, it appears the borough had
decided as of November 3 to obtain its standard "lien release" even
before it issued the termination letter. There is evidence to the
contrary, but given Philbin's assertions about a November 8
conversation with Kaucic, a fact finder could find that the borough
had decided to require him to sign the standard release even before
it decided to terminate the contract. Second, the form of the
release suggests it was primarily intended to protect the borough
from lien claims. The borough's Acting Director of Public Works
referred to it on November 3 as a "lien release." And the claims
Philbin excepted from the release were those of equipment
suppliers, who might have asserted lien claims against the borough.
Philbin's reading of the release form was therefore consistent with
it being a "lien release."
Philbin's theory that the release covered only that part
of the contract relating to Beverly Lakes Road is also supported by
the language of the payment request submitted by the public works
department to the borough receiving department. That request
sought "partial" payment under the contract and indicated that the
contract performance was "incomplete."
Further, the borough could not have insisted that Philbin
execute a complete release as a condition to payment for the
initial gravel deliveries because that would have been coercive and
in bad faith. [Fn. 19] In other words, it could not have expected
Philbin to give up any possible contract breach claim in exchange
for paying him what he had already earned for his partial
performance of the contract to date. [Fn. 20] And the release form
permitted the contractor to except from the release particular
"specified claims." As the borough's counsel explained at oral
argument, this would have permitted Philbin to except a breach of
contract claim. Accepting this assertion at face value, it means
that the borough, in demanding that Philbin sign the release, had
no reasonable advance expectation that the release as finally
executed would preclude a breach of contract claim. This implies
that it did not intend the release to encompass a breach of
contract claim.
Finally, it is significant that Philbin affied that the
borough did not raise the release as a defense when, in the spring
of 1996, Philbin broached the issue of the completion of the
contract with the borough. Philbin also affied that the borough
never mentioned "any 'release'" during the following year while
Philbin attempted to negotiate with the borough "to resolve this
matter short of litigation." The borough first raised the release
as a defense to contract claims in May 1997, a year later. This
implies that the borough never intended the release to cut off any
breach of contract claim.
On the other hand, there is evidence to support the
borough's interpretation of the release and its effect. And
Philbin's testimony in his deposition and in another proceeding
undercuts his affidavits. But this contrary evidence is not
conclusive given the averments in Philbin's affidavit and the
permissible inferences which we must draw in favor of the non-
movant. [Fn. 21]
The standard of proof for setting aside a release is
clear and convincing evidence. But that standard only comes into
play when a fact finder is called upon to consider the parties'
reasonable expectations. Despite the borough's implied argument
that we should apply that standard here, we refuse to do so. It
has no direct application at the summary judgment stage. [Fn. 22]
We conclude that summary judgment is improper, because
there is a genuine fact dispute about what the parties intended
when the borough paid Philbin for his partial performance of the
contract and Philbin signed the release.
We do not agree with the borough's assertion that Martech
Construction Co. v. Ogden Environmental Services [Fn. 23] requires
affirmance. We there held that a release barred suit, where (1)
the release covered "claims of any nature whatsoever," (2) the
settlement clearly "sought to resolve the entire transaction," and
(3) the later dispute was "reasonably ascertainable" when the
release was signed. [Fn. 24] Although the release Philbin executed
covers "any and all further claim[s] . . . whatsoever," and the
subsequent dispute might be described as "reasonably
ascertainable," it is not clear that the settlement sought to
resolve the entire transaction, for the reasons we noted above.
C. Effect of AS 45.01.107
Philbin argues that to read the release as the borough
does would require a conclusion that he released all contract
claims, even as to what he calls Phases II and III of the contract,
without receiving any additional consideration. [Fn. 25] The
borough claims that AS 45.01.107, Alaska's codification of Uniform
Commercial Code (UCC) sec. 1-107, applies, and that because Philbin
executed the release after the borough allegedly breached the
contract, no consideration was required. Alaska Statute 45.01.107
provides:
Waiver or renunciation of claim or right after
breach. A claim or right arising out of an alleged breach can be
discharged in whole or in part without consideration by a written
waiver or renunciation signed and delivered by the aggrieved party.
The UCC applies to a contract for the sale of gravel. [Fn. 26]
The section headings are part of the code. [Fn. 27]
Philbin consequently argues that section 107 would not excuse the
lack of consideration for a broad release, because he signed the
release before the borough allegedly breached the contract by
refusing in spring 1996 to purchase the remaining "Contract
material." The borough claims that Philbin executed the release
after the borough terminated the contract and canceled the purchase
order.
Whether, for purposes of applying section 107, Philbin
signed the release after a breach occurred is a fact question which
remains to be determined. The superior court did not decide this
issue, and we cannot say as a matter of law whether a breach
occurred on November 6, or whether the borough breached the
contract, as Philbin's complaint alleges, in spring 1996 when it
refused to purchase the remaining material.
Consequently, we cannot say as a matter of law whether
section 107 applies here and whether the release was valid despite
the want of consideration. This question will be before the
superior court on remand, subject to being mooted if that court
concludes that the parties intended the release to apply only to
the Beverly Lakes Road portion of the contract.
Philbin also argues that even if section 107 does apply,
the borough did not act in good faith because it indicated to him
that the contract was only shut down for the winter and would
resume in the spring. He asserts that not until spring 1996 did he
know that the borough had breached its contract. The official
comment to the UCC provides that section 107 "must be read in
conjunction with the section imposing an obligation of good faith.
(Section 1-203)." [Fn. 28] "Good faith" is defined as "honesty in
fact in the conduct or transaction concerned." [Fn. 29]
But we cannot say as a matter of law that the borough
failed to act in good faith such that the release must be
invalidated, and Philbin has not asked us to do so.
D. Admissibility of Parol Evidence
As an alternative ground for affirming, the borough
argues that the release was an integrated contract which must be
enforced as a matter of law. It consequently reasons that
Philbin's theory of asserted partial release and partial payment is
inconsistent with the plain and unambiguous language of the
release. Thus, the parol evidence rule would preclude evidence
contradicting the parties' agreement.
The parol evidence rule states that an integrated written
contract may not be varied or contradicted by prior negotiations or
agreements. [Fn. 30] Before the rule can be applied, three things
must be determined: (1) whether the contract is integrated, (2)
what the contract means, and (3) whether the prior agreement
conflicts with the integrated agreement. [Fn. 31] The superior
court did not decide whether these three requirements of the rule
were satisfied.
We agree with Philbin's argument that the release is not
an integrated agreement. There is no evidence that the release
memorialized terms of an agreement between Philbin and the borough;
it appears simply to have been a standard form presented to Philbin
when he went to pick up his check. The release contains no
integration clause. The borough has not disputed that it owed
Philbin the payment he received upon signing the release. That
circumstance is inconsistent with reading the release as having
memorialized a previously reached agreement to waive all past,
present, and future claims.
In any event, it is not apparent that the rule applies
here. The parol evidence rule does not apply "where a contract has
been formed as a result of misrepresentation or mutual mistake."
[Fn. 32] Philbin's purpose in offering evidence about what he was
told by borough representatives on November 2, 3 or 8 was to show
that the parties did not intend that the November 15 release had
the meaning the borough ascribed to it, not to vary or contradict
the terms of the written contract. This was a permissible use of
extrinsic evidence to prove mutual mistake.
E. Philbin as "Commercially Sophisticated" Contractor
The borough argues that Philbin was a sophisticated
contractor who must be deemed to have understood that the release
barred all claims arising under the contract. The record does not
establish that Philbin's experience was such that he was compelled
to read the contract in the same way the borough does. We do not
see this to be the determinative issue.
IV. CONCLUSION
Because there are genuine issues of material fact as to
the parties' understanding of the release, we REVERSE and REMAND
for further proceedings.
CARPENETI, Justice, dissenting.
The court today concludes that a disputed issue of
material fact exists as to what the parties intended when the
Matanuska-Susitna Borough presented and Joseph Philbin signed the
release in question. Because I believe that a reasonable person in
Philbin's position, viewing the evidence in the light most
favorable to Philbin, must have understood the release language to
mean that Philbin "release[d] and discharge[d] the Mat-Su Borough
from any and all further claim, debt, charge, demand or liability
whatsoever under or arising from" the contract he had entered, I
would affirm the decision of the superior court.
Our cases make clear, and the court today reiterates,
that the legal standard is "what a reasonable person would have
understood the release language to have meant." [Fn. 1] I agree
that this is the test. But none of the six reasons posited by the
court to support its conclusion that there are material facts in
dispute on this issue withstands scrutiny. For that reason, I
dissent.
The court first relies on two paragraphs in Philbin's
affidavit to support the proposition that "Philbin . . .
justifiably believed that the borough would purchase the remaining
material." [Fn. 2] First, we have made clear that after-the-fact
subjective assertions of intent in contract situations are entitled
to no evidentiary weight:
Differences of opinion among the parties as to
their subjective intent, expressed during the litigation, do not
establish an issue of fact regarding the parties' reasonable
expectations at the time they entered into the contract, since such
self-serving statements are not considered to be probative. [Fn. 3]
Moreover, we have held that where the language of an agreement in
a commercial context is clear on its face, and the releasor
realizes he or she is signing a release, the conclusion that the
release is enforceable may be compelled as a matter of law. [Fn. 4]
In Ahwinona v. State [Fn. 5] we specifically rejected an argument
based on the releasor's claim that he had not understood the
release to preclude a later lawsuit: "Absent any showing of
coercion or fraud, Ahwinona's mistaken understanding of the release
is not sufficient to set it aside." [Fn. 6] And in Mitchell v.
Mitchell we said that the releasor's mistake was "legally
irrelevant because the [settlement] clearly and unambiguously
dismisses the entire lawsuit." [Fn. 7] Finally, whether the
borough and Philbin might re-establish a commercial relationship
the following spring is not the issue. Even if Philbin believed a
continuing relationship was possible, he could not have reasonably
believed that such a relationship, if it did come about, would have
been compelled by the contract which the borough clearly terminated
several days earlier.
The court's second reason to reverse is Kaucic's
deposition testimony that a winter shutdown was necessary as of
November 2 or 3, and that he discussed this with Philbin,
permitting an inference that Philbin might be allowed to complete
the project in the spring. [Fn. 8] There is no question that the
borough and Philbin discussed that possibility before November 6.
But there is likewise no question that the borough abandoned that
approach when it unambiguously terminated the contract for non-
performance on November 6. The mere discussion of options cannot
suffice to create a dispute of material fact when those discussions
are followed by termination of the contract and an unambiguous
release. [Fn. 9]
The court's third reason -- "there is also some evidence
that the borough itself did not consider the release, when Philbin
signed it, to foreclose a breach of contract claim" [Fn. 10] --
fails both legally and factually. Legally, we look to the language
of the release and the parties' reasonable expectations concerning
that language. The release's language is broad and all-
encompassing: the contractor "releases and discharges the
Matanuska-Susitna Borough, its officers, agents and employees of
and from any and all further claim, debt, charge, demand, liability
or other obligation whatsoever under or arising from said contract,
whether known or unknown and whether or not ascertainable at the
time of the execution of this instrument except specified claims .
. . ." Factually, it should be of little consequence that a
borough employee referred to the release as a "lien release."
Indeed, the only reasonable interpretation of the document is that
it is a general release with a possible exception for lien and
related claims.
The court's fourth rationale is that "Philbin's theory
that the release covered only that part of the contract relating to
Beverly Lakes Road is also supported by the language of the payment
request submitted by the public works department to the borough
receiving department. That request sought 'partial' payment under
the contract and indicated that the contract performance was
'incomplete.'" [Fn. 11] But this is irrelevant for several
reasons. First, the request was an internal document, not
communicated to Philbin. Second, the request was submitted on
November 3, when the Borough had not yet announced its decision to
terminate the contract; that announcement came three days later.
As the Engineering Manager for the borough testified: "When this
purchase order request for payment was received by borough
purchasing personnel, they changed the 'P' [partial] to 'F' [full]
on both lines, as it was determined by that date that this would
definitely be a closed contract." (Emphasis added.) Finally, the
release is clear on its face. How can an internal document, unseen
by Philbin and subsequently properly modified to reflect the
decision to terminate the contract, be used to justify a conclusion
that Philbin's intent in signing the release is in dispute?
The court's fifth justification relies on the observation
that "the Borough could not have insisted that Philbin execute a
complete release as a condition to payment for the initial gravel
deliveries because that would have been coercive and in bad faith."
[Fn. 12] I have no quarrel with this statement. But the borough
did not do that. The release specifically allowed the releasor to
except whatever claims he wished to except. Counsel for the
borough properly admitted at oral argument that this would have
allowed Philbin to except a breach of contract claim. The majority
somehow turns this into the unwarranted conclusion that "[the
borough] did not intend the release to encompass a breach of
contract claim." [Fn. 13] Philbin did not except any breach of
contract claim, and the language of the release is otherwise
extremely broad. Under these circumstances, the only reasonable
interpretation of the release is that "any and all" claims,
demands, or other obligations arising from the contract were
released, unless specifically excepted.
The court last points to the borough's alleged failure to
mention the release in subsequent negotiations when Philbin tried
to resurrect the terminated contract the following spring. Using
a party's negotiating technique in these circumstances as evidence
of the party's intent in signing a document months earlier seems
questionable. For one thing, the borough's reliance on the release
in negotiations with Philbin would probably have been inconsistent
with reaching a negotiated settlement of the dispute. For another,
positions taken in settlement negotiations have never been relevant
later when negotiations have proved unsuccessful. [Fn. 14] I would
give no weight to the borough's alleged failure to mention the
release several months later in settlement negotiations when
assessing the meaning of the release.
The court fails to set out [Fn. 15] the compelling
evidence that Philbin knew, when he signed the release, that the
contract had been terminated and that he was releasing any and all
claims arising under the contract (except those that he
specifically excepted). While he now argues that the contract
remained open and he therefore had no reason to understand that the
release he signed actually was a release of all claims "arising
under the contract," there is no doubt that he knew the contract
was terminated. His own words prove it:
[F]our or five days [after the meeting with
Mr. Kaucic] . . . I got another letter . . . stating that they've
decided to terminate the contract, I was irate. I've never had
that happen. You don't tell somebody you're going to make a winter
shutdown, especially before the duration of the contract, and then
let that time pass and then hand them a termination notice . . . I
arranged a meeting with the Borough and I told them that within a
two-week period come spring once the ground was thawed, I could
absolutely guarantee that I could crush the material and well
before the road restrictions lifted . . . . I would like to go
ahead and crush the material. And they said no, they just didn't
believe I could do it. My record didn't look good because of this
project.
(Emphasis added.) This testimony was given in a related case
pitting Philbin against an equipment supplier on the contract in
this case. In the same case, Philbin testified that the proposed
winter shut-down option had been discarded by the borough, a
decision with which he heartily disagreed. Specifically, he
testified that he was "shocked" when he received the termination
letter instead of a shut down order:
In the context of the conversation [on
November 2 or 3, Chuck Kaucic] informed me that the road surfaces
were too hard to blade and prepare to accept gravel and then if we
put gravel down on it, it wouldn't bond, it would come off. And at
that point I was glad to hear that because I wasn't getting any
production out of the plant at all. The material was frozen,
lumped up. It wouldn't process right. And it came as a shock
after he'd -- he'd orally told me that [--] to get this letter
saying they terminated it. That it no longer was considering
picking back up in the spring to let me finish it.
(Emphasis added.)
Given Philbin's own testimony, no reasonable fact-finder
could conclude that, as of the time he signed the release, he
reasonably believed that the road contract was still in effect,
that he would resume work on it in the spring, and that the release
only concerned the work already performed. A reasonable person in
Philbin's position must have understood that he was releasing the
borough from the claims he now seeks to pursue. Moreover, the law
is clear that, absent coercion or fraud, even a mistaken
understanding of the contents of a release is not sufficient to set
it aside. Under these circumstances, and given the breadth of the
release language, I believe that the superior court was correct
when it found no material issues of fact in dispute. I would
affirm that decision.
FOOTNOTES
Footnote 1:
Because this case was dismissed on summary judgment, our
description of the facts draws all permissible inferences in favor
of the non-movant, Philbin. See Maddox v. River & Sea Marine,
Inc., 925 P.2d 1033, 1035 (Alaska 1996).
Footnote 2:
No such letter is in the record. See infra note 3.
Footnote 3:
Some months after Philbin so testified in his deposition in
this case, he testified, at the trial of a related claim, that
Kaucic in fact handed him a letter officially notifying him to stop
producing crushed gravel. According to Philbin, the letter also
indicated that he and the borough should discuss restarting in the
spring. But no such letter is in the record in this appeal. It
may be that this was the letter dated October 19 regarding a
revised schedule that Kaucic hand delivered to Philbin on October
20. See supra note 2.
Footnote 4:
See Arctic Tug & Barge, Inc. v. Raleigh, Schwarz & Powell, 956
P.2d 1199, 1200 (Alaska 1998).
Footnote 5:
See id.
Footnote 6:
See Shade v. Co & Anglo Alaska Serv. Corp., 901 P.2d 434, 437
(Alaska 1995).
Footnote 7:
Jennings v. State, 566 P.2d 1304, 1309 (Alaska 1977) (quoting
Howarth v. First Nat'l Bank, 540 P.2d 486, 489-90 (Alaska 1975))
(internal brackets omitted).
Footnote 8:
See Langdon v. Champion, 752 P.2d 999, 1001 (Alaska 1988).
Footnote 9:
Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
Footnote 10:
Philbin also argues that a fact dispute exists as to whether
the borough validly terminated the contract. But this question is
only relevant to the extent it implicates Philbin's understanding
and intent when he signed the release. Therefore, we will discuss
it in context of that issue.
Footnote 11:
See, e.g., Schmidt v. Lashley, 627 P.2d 201, 203 n.4 (Alaska
1981).
Footnote 12:
See id. at 204 n.7.
Footnote 13:
See Alaska Continental, Inc. v. Trickey, 933 P.2d 528, 534
(Alaska 1997).
Footnote 14:
See, e.g., Ahwinona v. State, 922 P.2d 884, 887 (Alaska 1996);
Witt v. Watkins, 579 P.2d 1065, 1067-68 (Alaska 1978).
Footnote 15:
See Ahwinona, 922 P.2d at 887 ("[O]nce the party relying on a
release establishes that it was given with an understanding of the
nature of the instrument, the burden is on the releasor to show by
clear and convincing evidence that the release should be set
aside."); Mitchell v. Mitchell, 655 P.2d 748, 751 (Alaska 1982);
Witt, 579 P.2d at 1067-68.
Footnote 16:
Alaska State Hous. Auth. v. Sipary, 668 P.2d 824, 828 (Alaska
1983) (citing Schmidt, 627 P.2d at 204).
Footnote 17:
See Ahwinona, 922 P.2d at 887. See also Mitchell, 655 P.2d at
753 (refusing to set aside settlement, stating that releasor's
mistake was "legally irrelevant because the [settlement] clearly
and unambiguously dismisses the entire lawsuit").
Footnote 18:
See Johnson v. Schaub, 867 P.2d 812, 818 n.12 (Alaska 1994).
Cf. Martech Constr. Co. v. Ogden Envtl. Serv., Inc., 852 P.2d 1146,
1150 n.8 (Alaska 1993). In Martech, we considered the scope of a
release that included "blatantly broad language to cover all
possible causes of action." Id. at 1152. We upheld the
application of the release to a later-arising dispute on grounds
that the disputed claim was "reasonably ascertainable" at the time
the release was executed. Id. at 1151-52.
Footnote 19:
See Restatement (Second) of Contracts sec. 175 (1981) ("If a
party's manifestation of assent is induced by an improper threat by
the other party that leaves the victim no reasonable alternative,
the contract is voidable by the victim.").
Footnote 20:
Such a requirement could constitute economic duress. See
Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Serv. Co., 584
P.2d 15, 20-23 (Alaska 1978) (setting out elements of economic
duress).
Footnote 21:
The testimony we refer to here includes the same testimony
quoted at length by the dissent.
Footnote 22:
See Alaska R. Civ. P. 56(c); Moffatt v. Brown, 751 P.2d 939,
944 (Alaska 1988).
Footnote 23:
852 P.2d 1146 (Alaska 1993).
Footnote 24:
Id. at 1151-52.
Footnote 25:
We addressed a roughly analogous situation in Pride v. Harris,
882 P.2d 381 (Alaska 1994). In that case, Pride obtained a
judgment against a truck driver for property damage caused in a
collision. See id. at 382. On the check tendered to Pride to
satisfy the judgment were the words "For Full & Final Settlement of
all claims." Id. The driver argued that in endorsing the check,
Pride executed an accord and satisfaction of any personal injury
claims he might have had. See id. at 384. We held that such an
accord would be invalid for lack of consideration. See id.
Footnote 26:
See A & G Constr. Co. v. Reid Bros. Logging Co., 547 P.2d
1207, 1211 (Alaska 1976).
Footnote 27:
See AS 45.01.109.
Footnote 28:
UCC sec. 1-107, 1 U.L.A. 57 (1989).
Footnote 29:
AS 45.01.201(20).
Footnote 30:
See Alaska Diversified Contractors, Inc. v. Lower Kuskokwim
Sch. Dist., 778 P.2d 581, 583 (Alaska 1989).
Footnote 31:
See id.
Footnote 32:
Diagnostic Imaging Ctr. Assoc. v. H&P, 815 P.2d 865, 867
(Alaska 1991).
FOOTNOTES (Dissent)
Footnote 1:
Slip Op. at 8.
Footnote 2:
Id.
Footnote 3:
Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981).
Footnote 4:
Ahwinona v. State, 922 P.2d 884, 886 (Alaska 1996).
Footnote 5:
Id.
Footnote 6:
Id. at 887.
Footnote 7:
655 P.2d 748, 752-53 (Alaska 1982).
Footnote 8:
Slip Op. at 9.
Footnote 9:
In this regard, the court's statement about the discussion is
puzzling: "Although Kaucic characterized this as a 'hypothetical'
possibility, his testimony that freezing weather prevented
continuation removes that factual contingency." Slip Op. at 9.
That freezing weather as of early November forced a shutdown did
not preclude the borough from terminating the contract, because
Philbin was significantly behind the contract's production schedule
well before that date. The borough was free to offer a
continuation of the contract, but it was not required to do so.
Footnote 10:
Slip Op. at 9-10.
Footnote 11:
Id. at 10.
Footnote 12:
Slip Op. at 10.
Footnote 13:
Id. at 11.
Footnote 14:
See Alaska Rule of Evidence 408.
Footnote 15:
The court satisfies itself with the observation that this
evidence "support[s] the borough's interpretation . . . [b]ut . . .
is not conclusive given the averments in Philbin's affidavit" and
the inferences which must be drawn in favor of the non-movant.
Slip Op. at 12. This approach ignores our well-established rule
that subjective statements made during litigation are entitled to
no weight "since such self-serving statements are not considered to
be probative." Peterson v. Wirum, 625 P.2d at 870.
