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Magill v Nelbro Packing Company (08/31/2001) sp-5459
Magill v Nelbro Packing Company (08/31/2001) sp-5459
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
FREDERICK S. MAGILL, DONALD B.)
KALK, and ROBERT E. PRIES, ) Supreme Court No. S-9549
)
Appellants, ) Superior Court No.
) 3DI-98-35 CI
v. )
) O P I N I O N
NELBRO PACKING COMPANY, a )
Washington corporation, ) [No. 5459 - August 31, 2001]
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Dillingham,
Fred Torrisi, Judge.
Appearances: James T. Brennan, Hedland,
Brennan, Heideman & Cooke, Anchorage, for Appellants. James E.
Torgerson and Andrew F. Behrend, Heller Ehrman White & McAuliffe,
Anchorage, Frederick P. Corbit and Rima J. Alaily, Heller Ehrman
White & McAuliffe, LLP, Seattle, Washington, and Dexter A.
Washburn, Law Offices of Dexter A. Washburn, Seattle, Washington,
for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
Fishers and a fish packing company discussed a possible
arrangement for compensating the fishers for roe herring they were
to deliver to the packing company. When the fishers sued for
damages, the superior court found for the packing company. Did the
superior court clearly err in finding that the parties did not have
an agreement with "terms that [were] specific enough to be
enforced"? We conclude that it did not. We also affirm the
superior court's finding that the fishers were not underpaid and
its award of attorney's fees based on the packing company's
successful offer of judgment.
II. FACTS AND PROCEEDINGS
Nelbro Packing Company is a Washington corporation which
owns and operates seafood processing plants in Southeast Alaska and
Bristol Bay. [Fn. 1] Frederick (Rick) Magill, Donald Kalk, and
Robert Pries (sometimes "the Magill group") own or operate three
herring seine boats, and annually engage in the Togiak herring
fishery in Bristol Bay.
The Magill group caught 348 tons of herring during the
1995 Togiak herring fishery and sold it to Nelbro. Nelbro paid the
Magill group according to the industry standard. [Fn. 2] The
Magill group received an advance price of $600 per ton plus $60 per
point, and the group received another payment of $200 per ton and
$20 per point in January 1996, bringing the total payment to $800
per ton and $80 per point. Nelbro's ultimate $80 per-point-formula
was based on estimates -- from early samples of the Magill group's
herring -- that the fish contained an average of 11.4% roe. Nelbro
later determined that the average roe percentage for the entire
catch was 12.43%. Nelbro did not adjust its point payments. On
average, Nelbro paid the Magill group $915 per ton; according to
unrebutted expert testimony, that was a fair price in the industry.
Magill, Kalk, and Pries filed suit against Nelbro in May
1998 seeking damages for breach of contract, conversion, and unjust
enrichment. The complaint alleged that Nelbro should have paid the
plaintiffs the adjusted grounds price for the herring based on a
12.43% roe content, and should have paid them a share of its
profits. After learning that Nelbro made only a $27.56 per ton
profit due to its unprofitable deviation from ordinary industry
practice in shipping the herring to China to be stripped of roe
before being sold, the plaintiffs amended their complaint. The
plaintiffs now claimed that the allegedly unconventional Chinese
transaction, undertaken without notice to the plaintiffs, breached
fiduciary and contractual duties; the plaintiffs sought damages in
the amount of profits the group would have been paid under the
profit sharing arrangement if Nelbro had sold all of the Magill
group's herring whole frozen F.O.B. Bristol Bay.
At trial, the Magill group offered evidence to establish
that the contracting parties intended to enter into an agreement
that included profit sharing. Nelbro offered evidence disputing
Rick Magill's characterization of the agreement. Sitting as the
trier of fact, Superior Court Judge Fred Torrisi concluded that the
plaintiffs had not met their burden of establishing an agreement to
share profits. The court also concluded that Nelbro did not owe
the additional $27,840 sought by the plaintiffs based on the actual
12.43% roe content. The court denied the plaintiffs' Motion for
Entry of Findings of Fact and Conclusions of Law and Motion for
Reconsideration and entered an amended final judgment, awarding
Nelbro attorney's fees of $129,727.87 and costs of $15,797.51,
against the Magill group.
III. DISCUSSION
A. Standard of Review
We review questions of fact -- such as whether the Magill
group and Nelbro reached a meeting of the minds regarding their
alleged agreement to share profits from the 1995 Togiak herring
fishery -- for clear error. [Fn. 3] We will overturn the trial
court's findings only if we are left with a "definite and firm
conviction on the entire record that a mistake has been committed."
[Fn. 4]
B. Evidence of Agreement to Share Profits
In order to meet their burden in establishing the
existence of a contract, Alaska plaintiffs must show: "an offer
encompassing all essential terms, unequivocal acceptance by the
offeree, consideration, and an intent to be bound." [Fn. 5] The
contract amount, in particular, must be definite and specific. [Fn.
6] Because contracting parties cannot plan for all contingencies
that might arise, courts may "fill gaps in contracts to ensure
fairness where the reasonable expectations of the parties are
clear." [Fn. 7] But "the courts should not impose on a party any
performance to which he [or she] did not and probably would not
have agreed." [Fn. 8]
The following evidence was presented at trial: (1)
Magill's testimony that he and Nelbro representatives discussed the
"entire" 1995 Togiak herring profit-sharing venture at their March
9 meeting, and that they agreed Nelbro "would take the hard costs
of processing, grounds price, and tendering out, and [the Magill
group and Nelbro] would split 50-50 whatever was left"; (2) the
deposition testimony of Mike Lee, Nelbro's president, in which he
admitted that "[t]here was some discussion of a possible profit
sharing program" but insisted that "there was never a formal
agreement put together"; and (3) documentary evidence variously
referring to "some form of joint/share of the misery type
operation," [Fn. 9] and a "commit[ment]" by Nelbro to purchase
herring "for a[n] established advance price with some form [of]
profit sharing." [Fn. 10]
The Magill group argues on appeal that the trial court
clearly erred in concluding that the plaintiffs failed to meet
their burden of establishing an agreement with Nelbro to share
profits. The court concluded that "Magill's trial testimony set
forth terms that [were definite and] specific enough to be
enforced," but found insufficient evidence that the parties had
actually agreed to these terms. The trial court declined to credit
Rick Magill's trial testimony because it was "substantially
different" from the testimony he had given at his deposition.
We conclude that the trial court's assessment is
reasonably supported by the record. At his deposition, Magill was
asked to identify the "general terms" of the 1995 Togiak herring
venture as they were discussed with Nelbro representatives. Magill
failed to mention the specific and definite terms of the March 9
conversation that he would later recount at trial. Magill's
description of the agreement was much less detailed:
It would be simply a fishermen-Nelbro venture
using some of the Baypack fishermen and some of the non-Baypack
fishermen. And we would simply get the profit -- grounds price and
profitsharing thereafter.
On appeal, Magill has explained that he failed to mention the
specific terms of the agreement at the deposition because he was
not asked specifically about the details. Although this
explanation is plausible, the trial court still acted within the
proper bounds of its discretion when it noted Magill's
inconsistency and decided not to credit his testimony.
The trial court instead gave credit to Lee's deposition
testimony that "there was never a formal agreement put together."
The court found that "Lee testified inconsistently in the past."
But because Lee "never gave any details as to the share to be
allocated to each [party to the agreement], the method of
determining the profit or whether . . . the product would be
marketed in a certain way," the trial court decided not to treat
Lee's testimony as corroborating Magill's assertion that the
parties had reached an enforceable profit-sharing agreement. We
likewise conclude that the trial court's assessment of Lee's
statement was reasonably supported by the evidence in the record.
Even if Lee's 1999 testimony disclaiming his earlier
statement about profit-sharing was not credible, his earlier
statement still could not corroborate the crucial 50/50 profit-
split term that Magill described at trial. Assuming the trial
court gave too much credit to Lee's testimony, such an
misassessment would not amount to reversible error. Lee's initial
testimony -- that "the profit sharing meant that once [Nelbro had]
taken all the costs that were involved in processing the product
and shipping the product, if there was any profit left over after
costs were deducted, then it would be split, paid back" -- did not
describe terms so specific and definite that the trial court was
obliged to find that the parties had agreed upon definite and
specific profit-sharing terms. Applying the standard articulated
in Davis, it is not clear that an agreement to "split" and "pay
back" "any profit left over after costs were deducted" describes
either an amount of payment or a method of calculating an amount of
payment due under the profit-sharing arrangement with sufficient
definiteness and specificity to render the agreement enforceable.
[Fn. 11] Regardless, the trial court's decision to credit Lee's
1999 deposition testimony and to place little emphasis upon his
1998 statements was not clearly erroneous.
The trial court also reviewed several documents the
plaintiffs offered in attempting to prove the existence of an
enforceable profit-sharing agreement; it concluded that the
writings were insufficient. The court characterized one such
writing as "vague and a far cry from the detailed terms that Magill
says were articulated in the March 9 agreement." The trial court
found the documentary evidence insufficient to establish an
enforceable profit-sharing agreement. We conclude again that the
trial court's assessment was reasonably supported by the evidence
in the record. The documentary evidence variously referring to
"some form of joint/share of the misery type operation," and a
"commit[ment]" by Nelbro to Magill to purchase herring "for a[n]
established advance price with some form [of] profit sharing," does
not set forth price terms sufficiently definite and specific to
compel the conclusion that the parties had an enforceable agreement
to share profits.
We therefore conclude that the evidence left uncertainty
as to the profit element and potential uncertainty as to the
advance payment term that the plaintiffs sought to enforce.
Although the trial court might have assessed the evidence
differently, Judge Torrisi's written decision contained a thorough
discussion of the evidence and articulated a well-reasoned
resolution of the issues. The trial court did not clearly err in
holding that the parties did not agree on terms.
C. Underpayment
The Magill group also argues that Nelbro owes the
plaintiffs an additional $27,840 based on the actual 12.43% roe
content. The trial court concluded that Nelbro did not owe this
additional amount because the Magill group did not show either that
roe percentages were actually or customarily adjusted for other
fishers or that payment based on the estimated percentages was
otherwise unreasonable. We hold that the trial court's conclusion
is reasonably supported by evidence, which included unrebutted
expert testimony that the price the group received was a fair price
in the industry. Moreover, the group received the grounds
adjustment, and no evidence in the record indicates that the
parties agreed that there would be a further adjustment following
the unanticipated voyage to China.
D. Attorney's Fees
The trial court awarded Nelbro attorney's fees of
$129,727.87. It based that award on its determination that, under
Alaska Civil Rule 68(b)(1), Nelbro was entitled to recover seventy-
five percent of its reasonable attorney's fees, which the court
found totaled $172,970.50. The Magill group argues that the trial
court should have based the award on reasonable attorney's fees of
$72,071.04.
It seems remarkable at first glance that the trial court
found that Nelbro had incurred reasonable attorney's fees of
$172,970.50 in a case involving a $200,000 controversy. But we
conclude from the circumstances discussed by the parties and from
the trial court's well-reasoned discussion of this issue that the
trial court did not clearly err in finding the amount of Nelbro's
reasonable attorney's fees.
We will not overturn an attorney's fees award solely
because the amount of actual fees upon which the award is based
exceeds or is close to the amount in controversy. [Fn. 12] We are
especially reluctant to overturn fees awards when the trial court
has adequately explained its decision, and has obviously given
careful scrutiny to the parties' submissions in calculating the
amount of fees reasonably incurred, as the court did here. [Fn. 13]
The circumstances justifying the award include the findings that
there was not "a whole lot of unnecessary paper . . . filed" and
that "Nelbro's actions were [not] dilatory or in bad faith." In
addition, some responsibility for the large amount of fees lies
with the plaintiffs, who vigorously pushed the case and insisted on
a forum choice that was more expensive for the parties.
E. Equal Protection Challenge
The Magill group also argues that basing the attorney's
fee award on Civil Rule 68(b) and AS 09.30.065 violates the equal
protection clause of the Alaska Constitution. [Fn. 14] The group
argues that this is so because the new Rule 68(b) "operates
disproportionately" by triggering fee awards based on offers of
judgment that are a least five percent more favorable to the
offeree than the judgment finally rendered. The group explains
that because the dollar amount of a defendant's offer is always
less than the dollar amount of a plaintiff's offer, the rule
requires plaintiffs to concede much more in absolute dollars than
defendants in order to gain the benefits of the offer of judgment
rule. For example, where outcomes range from a $0 defense verdict
to a $1 million plaintiff's verdict, the rule will benefit a
defendant who offers $1 and concedes only 5 cents in a case where
final judgment rendered against the defendant is less than 95
cents. But in order for the plaintiff to gain the benefit of the
rule in a case where the final judgment is for $1 million, the
plaintiff must concede $50,000 by offering $950,000 or less. The
Magill group suggests that the rule is unconstitutional because the
different treatment of plaintiffs and defendants does not bear a
substantial relationship to the rule's legitimate purpose, which is
to provide equal incentives to both plaintiffs and defendants to
settle litigation. The Magill group cites no equal protection
cases and offers nothing further to advance this constitutional
argument and guide our analysis. We decline to reach this
constitutional issue, because it was not preserved below or on
appeal. [Fn. 15]
IV. CONCLUSION
We AFFIRM the trial court's judgment in all respects.
FOOTNOTES
Footnote 1:
In about 1998 Nelbro sold some of its assets to Alaska General
Seafoods Company.
Footnote 2:
Togiak herring are caught for the value of their roe, and the
carcasses generally have little commercial value. Processors
typically determine what percentage of the herrings' weight is roe
and then pay fishers a base price per ton plus an amount for each
percentage point by which the roe content of their catch exceeds
ten percent. An advance price is customarily paid soon after
delivery of the herring with an adjustment later to bring the total
price up to the competitive rate.
Footnote 3:
See Young v. Hobbs, 916 P.2d 485, 487-88 (Alaska 1996).
Footnote 4:
Alaska Foods, Inc. v. American Mfr. Mut. Ins. Co., 482 P.2d
842, 848 (Alaska 1971).
Footnote 5:
Davis v. Dykman, 938 P.2d 1002, 1006 (Alaska 1997) (affirming
conclusion that parties seeking to settle personal injury lawsuit
had not formed contract when they agreed that Rule 82 attorney's
fees would be included in settlement but did not agree to specific
dollar amount of fees, or a method to calculate such amount)
(citing Young, 916 P.2d at 488; Childs v. Kalgin Lodge, 779 P.2d
310, 314 (Alaska 1989)); Hall v. Add-Ventures, Ltd., 695 P.2d 1081,
1087-89 (Alaska 1985).
Footnote 6:
See Alaska Creamery Prods., Inc. v. Wells, 373 P.2d 505, 510
(Alaska 1962) (holding that trial court erred in concluding that
dairy distributors had contract to sell trucks to Alaska Creamery
where payment was to include down payment, exact amount of which
had not been specifically determined by parties; holding instead
that parties had "at best an agreement to agree in the future" and
explaining that court is not free to fix indefinite down payment
term upon equitable considerations).
Footnote 7:
Rego v. Decker, 482 P.2d 834, 837 (Alaska 1971); see also Yeon
St. Partners v. Environmental Consulting Servs., Inc., 865 P.2d
1325, 1327 (Or. App. 1993) ("When the conduct or expressions of
parties to an agreement indicate a sufficient intent to make a
contract, a court has latitude to fill in the gaps . . . .").
Footnote 8:
Rego, 482 P.2d at 837.
Footnote 9:
February 24, 1995 internal Nelbro memorandum.
Footnote 10:
A March 10, 1995 internal Nelbro memorandum stated in part:
We have reviewed the different options
discussed yesterday and have arrived at the
following game plan:
1. Accessing Herring:
A. We will commit to Rick Magill to
process the herring produced by his "group" which he estimates to
be somewhere in the range of 800 to 1000 tons. The herring will be
purchased for a[n] established advance price with some form [of]
profit sharing.
A March 17, 1995 internal Nelbro memorandum stated: "Because of the
quick start with herring fast approaching, we would agree to just
buy the Togiak herring at an advance price with some form of profit
sharing on completed sales."
Footnote 11:
See Davis, 938 P.2d at 1006.
Footnote 12:
See Joseph v. Jones, 639 P.2d 1014, 1019 (Alaska 1982)
(holding that award of $8,000 in attorney's fees was not manifestly
unreasonable even though judgment was for only $5,000).
Footnote 13:
See Zeilinger v. Sohio Alaska Petroleum Co., 823 P.2d 653, 658
(Alaska 1992) (remanding for redetermination of attorney's fee
award that had been based on actual fees of $200,000 in case "not
particularly complex or unique" and in which "trial was relatively
brief," where superior court "gave no explanation" of the award and
"no indication [that it] carefully scrutinized the submissions and
awarded Rule 82 compensation only on a percentage of reasonable
expenditures").
Footnote 14:
AS 09.30.065, the Offers of Judgment statute, is a
comprehensive act relating to civil actions intended to "reduce the
amount of litigation proceeding to trial by modifying the
allocation of attorney fees and court costs based on the offer of
judgment. . . ." Ch. 26, sec. 1(10), SLA 1997. This court revised
Rule 68 to conform to the statute making it applicable to all
actions filed on or after August 7, 1997. See Alaska Supreme Court
Order No. 1281 (August 7, 1997). Under the new rule, if an offer
was served "no later than 60 days after both parties made the
disclosures required by Civil Rule 26, the offeree shall pay 75
percent of the offeror's reasonable actual attorney fees" incurred
thereafter, and correspondingly less for later offers. Alaska R.
Civ. P. 68(b).
Footnote 15:
See, e.g., Gates v. City of Tenakee Springs, 822 P.2d 455, 460
(Alaska 1991) (claims addressed only cursorily in brief treated as
abandoned on appeal); State v. O'Neill Investigations, Inc., 609
P.2d 520, 528 (Alaska 1980) ("When, in the argument portion of a
brief, a major point has been given no more than cursory statement,
we will not consider it further."); Wernberg v. Matanuska Elec.
Ass'n, 494 P.2d 790, 794 (Alaska 1972) (holding inadequately
briefed issues abandoned on appeal, relying on case law and former
Supreme Court Rule 11(a)(8) requiring briefs to cite to record and
authorities in support of each point).
