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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. K & K Recycling v. Alaska Gold Co. (11/14/2003) sp-5752
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.THE
SUPREME COURT OF THE STATE OF ALASKAK & K RECYCLING,
INC., ) )
Supreme Court No. S-10303 Appellant,
) ) Superior Court No.
v. ) 4FA-98-02362 CI
)ALASKA GOLD COMPANY and ) O P I N I O NGEORGE W.
SEUFFERT, SR., ) )
[No. 5752 - November 14, 2003] Appellees.
)________________________________)
)GEORGE W. SEUFFERT, SR., )
) Supreme Court No. S-10323 Cross-
Appellant, ) )
v. )
)K & K RECYCLING, INC., )
) Cross-Appellee.
)________________________________)
)ALASKA GOLD COMPANY, )
) Supreme Court No. S-10324 Cross-
Appellant, ) )
v. )
)K & K RECYCLING, INC., )
) Cross-Appellee.
)________________________________)Appeal from the
Superior Court of the State of Alaska, Fourth Judicial
District, Fairbanks, Niesje J. Steinkruger, Judge, and
Raymond M. Funk, Judge pro tem.Appearances: Joseph W.
Sheehan, Law Offices of Joseph W. Sheehan, Fairbanks,
for Appellant/Cross-Appellee K&K Recycling, Inc.
Nelson G. Page, Burr, Pease & Kurtz, Anchorage, for
Appellee/Cross-Appellant Alaska Gold Company. Stanley
T. Lewis, Birch, Horton, Bittner & Cherot, Anchorage,
for Appellee/Cross-Appellant George W. Seuffert,
Sr.Before: Fabe, Chief Justice, Matthews, Eastaugh,
Bryner, and Carpeneti, Justices. FABE, Chief
Justice.I. INTRODUCTION K&K Recycling, Inc.
contracted with Alaska Gold Company (AGC) to remove a
gold dredge from AGC's land in Chicken. AGC assigned
the contract to George Seuffert. After K&K removed the
dredge despite alleged interferences by Seuffert, a
dispute arose over K&K's entitlement to equipment and
facilities in the Old Town of Chicken allegedly
associated with the dredge, and a round of summary
judgment motions ensued. A second round of summary
judgment motions followed concerning the claims in
K&K's amended complaint alleging breach of contract and
tortious interference by Seuffert and AGC. This appeal
involves numerous challenges to the superior court's
orders on these summary judgment motions and on a
variety of other issues. We reverse the superior
court's grant of summary judgment on the issue of the
dredge equipment and facilities in the Old Town of
Chicken, and we affirm the remainder of the challenged
rulings.II. FACTS AND PROCEEDINGS
A. Factual History In 1996 Alaska Gold
Company started looking into disposing of seven of its
gold dredges, considering them to be environmental and
personal injury liabilities. AGC's vice-president in
charge of lands, Michael Watson, contacted AGC's
Fairbanks manager, Pete Eagan, for suggestions on
disposing of the dredges. Eagan connected him with K&K
Recycling, Inc., a company that recycles property.
Although AGC sold six of the dredges to other parties,
AGC and K&K signed a contract on June 25, 1997
concerning the remaining dredge, located on an AGC
mining claim in Chicken. The contract encompassed
"all of [AGC's] right, title and interest in and to
gold dredge #4 (the `Dredge'), together with all
attached equipment and related facilities, located on
the #5 Below Discovery placer mining claim in the
vicinity of Chicken." K&K agreed to purchase the dredge
from AGC for one dollar and to move the dredge from
AGC's property within seventeen months. At least ten
days prior to moving the dredge, K&K had to provide AGC
with a $250,000 surety bond guaranteeing performance
and proof of minimum insurance coverage with certain
limits and features. Within ten days of K&K's tender,
AGC had to give K&K a bill of sale for the dredge.
While AGC was negotiating with K&K, AGC rejected an
offer by George W. Seuffert, a retired anesthesiologist
who mines gold with his wife Ingrid and son George Jr.,
to buy AGC's mining claims at Chicken, including the
dredge and equipment. About a year later, Seuffert
offered a higher price for "all buildings and contents
and all mining equipment." Seuffert reached agreement
with AGC, and in early March 1998, AGC and Seuffert
executed a variety of documents, including a purchase
and sale agreement and an assignment from AGC to
Seuffert of certain agreements, including the K&K
contract. Seuffert's deed conveyed all thirty-eight of
AGC's mining claims and "any and all improvements
situated thereon." Neither AGC nor Seuffert informed
K&K of the assignment. Shortly thereafter,
Seuffert called K&K's owner, Bernie Karl, told him that
he had purchased AGC's Chicken claims, and
unsuccessfully tried to buy the contract to remove the
dredge. In early June 1998, Seuffert asked AGC for a
bill of sale for the dredge, which AGC provided. The
bill of sale contained a clause stating that Seuffert
"assumes all obligations and liabilities respecting the
Dredge, including all terms and conditions of that
certain agreement . . . between [AGC] and [K&K]." It
appears that neither AGC nor Seuffert told K&K about
the bill of sale. On June 15, 1998, K&K procured
the performance bond required by its contract. AGC
Fairbanks manager Eagan told K&K's Karl to send the
bond, the insurance, and one dollar to AGC when K&K was
ready to move the dredge. Sometime that same month,
Seuffert moved his mining camp in front of the dredge,
blocking the most obvious route for removing the
dredge. Seuffert also blocked the access roads to the
dredge with dirt berms. In July 1998 Seuffert
received a letter from an environmental consultant
stating that the dredge might contain hazardous
materials that could cause contamination if the dredge
were dismantled and recommending preparation of an
environmental assessment and work plan. Twice that
month, Seuffert contacted the Army Corps of Engineers
to ask whether the dredge pond would be considered
wetlands, whether a permit would be needed if K&K
dismantled the dredge, and whether the Corps would
exercise jurisdiction over movement of the dredge. In
addition, Ingrid Seuffert contacted the Department of
Natural Resources to find out what it would do if K&K
moved the dredge by cutting down trees to widen a right-
of-way. On July 31, 1998, Karl found that a lock
he had placed on the dredge had been removed and that
items were missing from the dredge. Karl then had a
confrontation with an armed Ingrid Seuffert, who
ordered Karl off the property. While leaving, Karl
noticed parts and equipment on #6 Below Discovery, an
adjacent claim also known as the "pipe yard," that he
believed were associated with the dredge.
Seuffert's attorney, Stanley Lewis, faxed Karl a letter
on August 4 charging K&K with trespass, asserting that
K&K had no right of entry on the land, and requesting
environmental approvals and assessments. The letter
declared that Lewis had "reviewed [K&K's] . . .
agreement with [AGC] (which has been assigned by AGC to
Dr. Seuffert)" and concluded that K&K's claim of
ownership of the dredge was unfounded. The letter
stated that "[r]easonable written requests to enable
K&K to perform its contract obligations will not be
denied." Lewis enclosed a copy of Seuffert's bill of
sale for the dredge but did not provide a copy of the
assignment. On August 7, 1998, K&K sent AGC the
performance bond, an insurance certificate, and a check
for one dollar, plus a threat of litigation if the
contractual commitments were not met. AGC forwarded
this to Seuffert. A few days later, Karl faxed a
follow-up letter to AGC requesting a response, advising
that K&K had never been informed that AGC sold the
dredge and assigned the contract to Seuffert, and
declaring that K&K had fulfilled its agreement and
expected cooperation. On August 17 AGC mailed
K&K a letter rejecting its tender, telling K&K to
tender to Seuffert, and attaching copies of the
assignment and bill of sale. On August 18, apparently
before receiving this letter, K&K faxed AGC requesting
notice of any claimed deficiencies in its tender and
declaring that it had no responsibility to, and would
not, deal with Seuffert, because K&K's agreement was
with AGC. On August 20 Seuffert faxed K&K a letter
from the Corps asserting jurisdiction and prohibiting
movement of the dredge without a permit. In late
August K&K contacted the Corps to show or confirm that
no permit was required. After K&K's contact, the Corps
reversed its position. The Department of Natural
Resources also ultimately determined that no permit was
needed because K&K was not using a government right-of-
way. On August 26 K&K re-tendered by fax to both
AGC and Seuffert, including a new certificate of
insurance listing both of them as additional insureds.
Seuffert notified AGC that he objected to the insurance
certificate, the performance bond, and K&K's moving
plan. AGC forwarded Seuffert's objections to K&K and
told K&K to deal directly with him. On September 2,
1998, K&K provided both a new insurance certificate to
meet Seuffert's objections and the Corps letter
indicating that no permit was needed. On September 8,
following Seuffert's compromise offer to resolve the
performance bond issue, K&K agreed to allow title to
the dredge to remain in Seuffert's name until the
dredge was removed from the property. On
September 9 Seuffert authorized K&K to remove the
dredge and its associated equipment and facilities on
#5 Below Discovery. The next day, K&K informed
Seuffert that it would commence removal operations on
September 12. When K&K arrived on September 12 to
start moving the dredge, Seuffert had partially removed
the berm blocking the access road but had left his camp
in front of the dredge. K&K finished the berm removal
and asked Seuffert to move his camp as it was blocking
the easiest route for removing the dredge, but Seuffert
refused. K&K thus had to excavate and backfill a pit
and construct a ramp in poor soil, but it successfully
removed the dredge from the dredge pond. Once K&K had
the dredge moving, Ingrid Seuffert asked their neighbor
and lessee Crystal Fagundes-Burns to block K&K from
crossing her lease, but she declined. Seuffert then
required K&K to build a ramp to cross the Taylor
Highway. K&K nonetheless timely moved the dredge,
completing the move on October 12. This was twenty
days later than K&K's initial estimate, which had been
based upon using the easiest route. Prior to
beginning removal operations on September 12, K&K told
Seuffert that it believed that not all of the "attached
equipment and related facilities" covered by the
agreement were on #5 Below Discovery. Seuffert offered
to let Karl inspect "the other areas of [his] property"
and tag those items to which K&K believed it was
entitled. On September 17 Karl and Seuffert walked #5
and #6 Below Discovery together and tagged items. Karl
offered to give some of the disputed items to Seuffert,
with K&K getting most of the items on #5 Below
Discovery and in the "pipe yard"; Seuffert accepted,
and they shook hands. K&K began removing the agreed-
upon equipment and facilities on October 12, the same
day it completed the dredge move. On October 13 Karl
discovered items in an old mining camp, the Old Town of
Chicken, that he believed went with the dredge. After
K&K finished removing the agreed-upon items, K&K
advised Seuffert that there were items in the Old Town
that it wanted. After several unsuccessful attempts to
procure the equipment and facilities in the Old Town,
K&K proceeded with litigation. K&K conducted a court-
authorized inspection of the Old Town in July 1999,
discovering property it claimed was associated with the
dredge. B. Procedural History In early
September 1998, K&K filed a complaint and a motion for
a temporary restraining order and preliminary
injunction to gain access to remove the dredge. The
injunction hearing occurred on September 21 before pro
tem Superior Court Judge Raymond M. Funk. By that
point, K&K had started removal, so there was no need to
consider an injunction. The hearing therefore
addressed the moving of the dredge and the agreement
between Seuffert and K&K concerning the "pipe yard"
equipment. Following K&K's court-authorized
inspection of the Old Town, Seuffert filed a summary
judgment motion in August 1999 contending that K&K was
not entitled to the Old Town or its contents under its
agreement with AGC or, alternatively, that K&K and
Seuffert had reached an accord and satisfaction at the
injunction hearing whereby K&K released its claim
concerning the Old Town and its contents. K&K opposed
Seuffert's motion and filed a cross-motion for summary
judgment arguing that the contract encompassed the Old
Town and its contents and that AGC as an assignor was
liable for Seuffert's acts and omissions. On the same
day, K&K filed a Rule 56(f) motion seeking to depose
the Seufferts and Michael Watson, AGC's former vice-
president in charge of lands, if the court denied its
cross-motion for summary judgment. Superior Court
Judge Niesje J. Steinkruger denied K&K's Rule 56(f)
motion. In October 1999 K&K filed an amended
complaint alleging breach of contract, repudiation,
breach of the implied covenant of good faith and fair
dealing, interference with contractual relations and
prospective economic opportunity, conversion, trespass,
and wrongful withholding of property; it also included
a claim for punitive damages. Ten days later, AGC
opposed K&K's summary judgment motion and filed a
motion to dismiss, arguing that the contract was
assignable and that the agreement between Seuffert and
K&K at the injunction hearing constituted a novation.
In November 1999 the court permitted K&K to amend its
complaint. Judge Steinkruger granted
Seuffert's motion for summary judgment and denied AGC's
motion to dismiss. K&K filed a Rule 77(k) motion for
reconsideration because the court had not ruled on its
summary judgment motion, because granting Seuffert's
motion and denying AGC's was inconsistent, and because
K&K discovered additional evidence not previously
available. Judge Steinkruger then issued orders
granting AGC's motion to dismiss (vacating the previous
denial), denying K&K's motion for reconsideration, and
denying K&K's motion for summary judgment. The
parties filed a second round of summary judgment
motions on the issues raised by K&K's amended
complaint. In October and November 2000, Superior
Court Judge Raymond M. Funk: (1) granted AGC summary
judgment on K&K's claim that AGC's rejection of K&K's
tender was a breach of contract; (2) denied all summary
judgment motions on K&K's claim that AGC's assignment
to Seuffert constituted negligence and a breach of
contract; (3) granted AGC and Seuffert summary judgment
on K&K's claim that the August 4 letter was a
repudiation and material anticipatory breach; (4)
denied all summary judgment motions on the claim that
Seuffert's contact with government agencies constituted
a breach of the implied covenant of good faith and fair
dealing; (5) granted AGC and Seuffert summary judgment
on the tortious interference claims; (6) denied all
parties summary judgment on whether AGC was jointly and
severally liable for Seuffert's actions; (7) granted
AGC and Seuffert summary judgment on the claims of
conversion, trespass, and wrongful withholding of the
Old Town and its contents; and (8) dismissed the
punitive damages claim. K&K's claims for breach
of contract and breach of the covenant of good faith
and fair dealing went to trial in January 2001. At the
end of K&K's case-in-chief, Seuffert moved for a
directed verdict on the issue of K&K's damages,
claiming that K&K used the disapproved total cost
method and failed to prove its case. Judge Funk
declined to direct a verdict in Seuffert's favor on
this issue. The jury entered a verdict for K&K,
finding that Seuffert and AGC breached the contract and
the implied covenant of good faith and fair dealing,
and that AGC wrongfully assigned the agreement to
Seuffert. The jury awarded a total of $123,051 to K&K
for Seuffert's and AGC's various actions to impede
K&K's ability to remove the dredge: $500 for Seuffert's
contact with governmental agencies, $73,530 against AGC
and Seuffert for Seuffert's placement of his camp, $1
against AGC and Seuffert for the berm placement, and
$49,020 against AGC for the assignment to Seuffert.
Judge Funk awarded prejudgment interest accruing from
August 7, 1998, when K&K sent its letter containing the
threat of litigation. Final judgment was entered
against Seuffert and AGC in September 2001. K&K
appeals the court's orders concerning the dredge
equipment and facilities in the Old Town and its denial
of K&K's Rule 56(f) motion for additional discovery and
Rule 77(k) motion to reconsider. K&K also appeals the
superior court's denial of its summary judgment motions
for breach of contract, repudiation, interference with
a contract or prospective economic opportunity, joint
and several liability, and conversion/trespass, as well
as the court's dismissal of K&K's punitive damages.
Finally, K&K challenges three jury instructions on
damages. AGC appeals the court's refusal to enter
summary judgment on its claims that the contract was
assignable and that the novation meant that AGC was not
liable for Seuffert's conduct. AGC also appeals the
court's award of attorney's fees to K&K as the
prevailing party. Seuffert appeals the court's
denial of his motion for a directed verdict on K&K's
method of proving delay damages, its denial of his
motion for summary judgment on K&K's claim of breach of
the implied covenant of good faith and fair dealing by
contacting government agencies, and the applicability
to the camp location and berm claims of the court's
order that prejudgment interest shall run on all claims
from August 7, 1998.III. DISCUSSION
A. The Superior Court Erred in Granting Seuffert Summary
Judgment on the Issue of the Equipment and Facilities
in the Old Town.
Seuffert's summary judgment motion argued that K&K was
not entitled to the Old Town or its contents under its agreement
with AGC or, alternatively, that K&K and Seuffert had reached an
accord and satisfaction at the injunction hearing whereby K&K
released its claim concerning the Old Town and its contents.
K&K's summary judgment contended that the contract encompassed
"all equipment and facilities associated with the operation of
the dredge, regardless of where located on AGC's Chicken claims."
The superior court granted Seuffert's motion and denied K&K's,
but it is unclear if the court based this decision on contract
interpretation or on the accord and satisfaction argument.
Because genuine issues of material fact exist, we reverse the
grant of summary judgment to Seuffert.
1. Standard of review
We review orders granting or denying summary judgment
de novo.1 "Drawing all reasonable inferences in favor of the
nonmoving party, we will uphold summary judgment if no genuine
issue of material fact exists and the moving party is entitled to
judgment as a matter of law."2 In particular, a grant of summary
judgment based upon contract interpretation is subject to de novo
review because interpretation of contract language is a question
of law.3 The intent of the parties when entering a contract is a
question of fact and is thus reviewed under the clearly erroneous
standard; summary judgment is improper when the evidence before
the superior court establishes a factual dispute as to the intent
of the contracting parties.4
2. Contract interpretation could not
support a grant of summary judgment to Seuffert or
K&K as to personal property and equipment in the
Old Town of Chicken, but the buildings in the Old
Town were not included in the contract.
Seuffert maintains that under K&K's contract with AGC
to remove the dredge, K&K was only entitled to "attached
equipment and related facilities" located on #5 Below Discovery.
K&K counters that the contract includes "facilities associated
with the operation of the dredge" in the Old Town and implies
that this includes the buildings in the Old Town. In determining
a contract's meaning, "[t]he parties' expectations must be
gleaned not only from the contract language, but also from
extrinsic evidence."5 The words of the contract are nevertheless
the most important evidence of intention.6
The plain language of the contract states:
AGC agrees . . . to sell to K&K all of its
right, title and interest in and to gold
dredge #4 (the "Dredge"), together with all
attached equipment and related facilities,
located on the #5 Below Discovery placer
mining claim in the vicinity of Chicken,
Alaska . . . for the sum of One Dollar
($1.00) and other considerations.
K&K focuses on the phrase "together with all attached equipment
and related facilities" and argues that while the contract uses
the mining claim to identify the location of the dredge, K&K is
entitled to any equipment or facilities "related" to that dredge
regardless of location. Indeed, Seuffert conceded at oral
argument that dredge parts could be in the Old Town and that a
factual issue exists as to whether K&K and AGC intended those
items to be part of the sale.
It seems unlikely looking at the contract language that
the Old Town itself was included. But Eagan, AGC's Fairbanks
agent who was consulted on the contract's wording, testified by
affidavit that he advised AGC that the "related facilities"
language essentially "encompass[ed] everything on the Chicken
claims except for the claims themselves. Clearly every building
and all facilities, and all of the equipment on the Chicken
claims were there for purposes of supporting the dredging
operation, and related directly to the dredging operation." When
that language remained in the contract, Eagan concluded that AGC
intended the contract to include not only the dredge but also all
equipment and facilities in the "pipe yard" and the Old Town.
Eagan however did not testify that he conveyed his understanding
of the meaning of the related facilities language to Karl before
or contemporaneously with the making of the agreement.
Gary Barker, AGC's president who had knowledge of the
contract as Watson's supervisor, similarly stated in an affidavit
that K&K was entitled to remove the dredge from #5 Below
Discovery and to remove dredge parts "from any other area." He
maintained, however, that he would not have allowed K&K to remove
buildings or other items, except for dredge parts, from the Old
Town without a separate contract and further payment.
The affidavits of Eagan and Barker, both of whom were
AGC agents at the time, confirm that the contract was meant to
include dredge parts wherever they may be located, including in
the Old Town, and create a genuine issue of material fact as to
whether the contract encompasses other related facilities in the
Old Town. But conduct and admissions of K&K preclude the
inclusion of the buildings in the Old Town as "related
facilities." When the agreement reflected in the proceedings of
September 21, 1998 was negotiated, Karl was aware of the
existence of the Old Town yet made no claim to the buildings that
are there. In his letter of September 10, 1998, Joseph Sheehan,
attorney for K&K, discusses the remaining disagreement over
"attached equipment and related facilities." He states in part
that "I am further informed that the equipment and related
facilities are unique to this dredge and would only fit this
dredge. These items should be fairly easy to identify." This
description of "equipment and related facilities" plainly
excludes the Old Town buildings.
Moreover, sometime before October 16, 1998, Karl walked
through the Old Town and identified equipment he thought was
associated with the dredge. Richard Haggart, attorney for
Seuffert, faxed Sheehan a letter suggesting that now that the
dredge was moved as well as all of the materials identified in
court, a stipulation dismissing the case would be appropriate.
Sheehan faxed back on October 16 as follows:
In response to your October 15, 1998,
correspondence, you are correct, the Dredge
move has been completed. As of yet, not all
of the equipment and related facilities have
been moved. I cannot give you a list of
items left to be moved, however, I am told
that there are a number of items, some of
which are in the warehouse, blacksmith shop,
machine shop, and parts in the vicinity of
these buildings. K&K has not moved any of
these items, because Mr. Seuffert was not
available when K&K was ready to make the
move. K&K has since demobilized for the
winter. K&K will complete the movement of
the remaining equipment and related
facilities as soon as the spring weather
permits.
K&K is not prepared to dismiss the
pending litigation until all of the property
is moved. I will be filing a status report
with the court advising my understanding of
where we are.
(Emphasis added.) The language of this letter makes it clear
that what is in dispute are the items contained within and in the
vicinity of these buildings, not the buildings themselves. An
affidavit signed by Bernie Karl, president of K&K, dated October
30, 1998, also makes clear that what is in dispute is "a
substantial amount of equipment and related facilities located in
the warehouse, blacksmith shop, machine shop, and in the vicinity
of these buildings" not the buildings themselves. Karl continues
in his affidavit:
Previously, when I had discussions with
Mr. Seuffert concerning the equipment and
related facilities, no mention was made of
the items in the warehouse, blacksmith shop,
machine shop, and the vicinity of these
buildings. I do not know if Mr. Seuffert is
aware of what is in these buildings, or
whether he is aware that these items are only
usable with the dredge owned by K&K.
On November 9, 1998, Haggart on behalf of Seuffert
again inquired of K&K's counsel as to what K&K was "now claiming
with respect to `related equipment and facilities' ":
I have reviewed the tape of proceedings
before Judge Funk on September 21, 1998, and
it appears quite clear that the parties
placed a settlement on the record stating
that all issues relating to identification
and division of the "related equipment and
facilities" had been resolved. It now
appears that K&K is taking the position that
additional material is due them under the
contract, which would be a change from what
was stated in court.
This does not seem appropriate given the
fact that K&K presumably had ample
opportunity to inspect the property it was
buying at the time it negotiated the sale
with AGC, it had an opportunity to identify
all property claimed prior to the court
hearing of September 21st, and the settlement
placed on the record in open court clearly
specified that the issue had been entirely
resolved between the parties.
If we are talking a matter of a few feet
of pipe, then obviously Mr. Seuffert is not
interested in returning the matter to full
scale litigation. If K&K's claims are more
extensive, please provide a specification of
exactly what is claimed, and why K&K, at this
late date, believes it is entitled to set
aside the previous settlement agreement.
Sheehan responded in part:
Mr. Karl did not mention the equipment
located in the warehouse, blacksmith shop,
machine shop, and in the vicinity of those
buildings because he was unaware of what was
in these buildings. Mr. Seuffert represented
that there was no other equipment and related
facilities, other than what was in plain
view.
As far as an inventory, I do not have
one. Perhaps the best way to address this
problem is have Seuffert and Karl coordinate
a time to meet in Chicken to review and
inventory the property. We are open to a
suggested date this winter or early spring.
Let me know how you want to proceed.
(Emphasis added.) Again, in specific response to Seuffert's
counsel's request to identify what K&K was claiming as related
equipment and facilities, Sheehan responded that equipment in the
buildings was included, and did not list the buildings
themselves.
On December 1 Sheehan tentatively suggested that the
inspection and inventory take place on April 1, 1999. The
meeting did not take place then. But on April 28, 1999, Sheehan
wrote Haggart proposing a meeting on May 9 or May 10 "[w]ith
respect[] to the remaining personal property . . . ." By
referring to the outstanding dispute as one concerning "remaining
personal property" the claim clearly excluded the Old Town
buildings. Similarly, Karl in his affidavit of October 30, 1998,
refers to the items that he was still due under the AGC agreement
as personal property:
When I returned in September to move the
dredge, it had been broken into and some
items of personal property had been removed.
I found most of these items of personal
property in the dredge warehouse. I do not
know who is responsible for this conduct,
however, I do know that these items along
with a number of other items in the buildings
which I have identified, belong to the dredge
and can only be used in conjunction with the
particular dredge. Other items are
associated with the dredge in that they are
used as support equipment. By the time I
discovered these other items of personal
property Mr. Seuffert was gone, K&K was
already in the process of demobilizing, and
winter was setting in. For these reasons I
did not move any of these items. My intent
is to return in the spring, soon after break-
up, to retrieve these items.
(Emphasis added.)
In view of the above, there can be no genuine issue of
material fact but that "related facilities" as used in the
contract was a reference to personal property and did not include
the buildings in Old Town.
Because genuine issues of material fact exist as to
which items in the Old Town count as "equipment and related
facilities," we conclude that contract interpretation could not
support a grant of summary judgment to any of the parties on this
issue with respect to personal property. However, conduct and
admissions of K&K make clear that the buildings in Old Town were
not included in K&K's contract with AGC.
3. There was no accord and satisfaction.
Seuffert also argues that he was entitled to summary
judgment because K&K and Seuffert reached an accord and
satisfaction at the injunction hearing. "An accord is a contract
between a creditor and debtor for a settlement of the creditor's
claim by some performance other than that which is due.
Satisfaction is the performance of such a contract."7 An accord
and satisfaction discharges the original duty, so any breach of
the new duty provides no right of action on the old duty.8
Antecedent discussions of the accord are ordinarily required to
show the existence of an intent to agree on an accord.9 The
burden of demonstrating that material issues of fact exist
concerning a party's intent to enter an accord is a light one;
"issues of material fact are easily raised in scrutinizing an
alleged accord and satisfaction."10
Seuffert locates the alleged accord in his disagreement
with K&K over the meaning of "attached equipment and related
facilities," the walking of the property to tag items, the
handshake on the division of items, and the testimony at the
hearing as to the nature of the "division agreement." This
accord was satisfied, Seuffert states, because K&K removed the
agreed-upon items. K&K does not dispute that there was an
agreement between Karl and Seuffert as to how the items in the
"pipe yard" should be treated, but it deems this irrelevant to
its case. K&K notes that the only property issue discussed at
the injunction hearing was the "pipe yard" equipment; the
equipment and facilities in the Old Town were never mentioned,
since Karl had not yet learned of them.
Nothing in the record indicates that the agreement
between Seuffert and Karl was meant to settle the whole
litigation, create a new contract, or satisfy the contract.11 The
agreement was never put on record as an accord and satisfaction,
and Judge Funk, who presided over the hearing and who later
presided over the case, was skeptical that an accord and
satisfaction had been agreed to at that hearing. Rather, the
agreement between K&K and Seuffert apparently was made in an
attempt to settle the immediate issue before them, namely
ownership of the items in the "pipe yard" and on #5 Below
Discovery.
Because there was no evidence of an intent to supersede
the original contract or to settle all issues in the litigation,
the superior court's grant of summary judgment cannot be affirmed
on the alternative ground of accord and satisfaction.12
Accordingly, we reverse the superior court's grant of summary
judgment to Seuffert on the issue of the dredge equipment and
facilities in the Old Town.13
B. The Superior Court Did Not Err in Granting AGC and
Seuffert Summary Judgment on K&K's Repudiation Claims.
K&K argues that the August 4 letter from Seuffert's
attorney was a repudiation and material anticipatory breach
because it made demands that were "inconsistent with the terms of
the K&K/AGC agreement." To be a repudiation, "a party's language
must be sufficiently positive to be reasonably interpreted to
mean that the party will not or cannot perform."14 A repudiation
could also involve language that clearly manifests an "intention
not to perform except on conditions which go beyond the
contract[.]"15 Similarly, to be an anticipatory breach based on a
request for additional conditions, "the request must be coupled
with an absolute refusal to perform unless the request is
granted."16
K&K contends that the letter imposed materially
different conditions. For instance, Eagan testified that AGC
would not have required the approval of government agencies,
would not have required a written work plan, and would not have
considered K&K to be trespassing when it went to inspect the
dredge. While Seuffert's letter does appear to impose some new
restrictions on access to the dredge, several other "conditions"
such as the work plan were phrased merely as requests.
Furthermore, Seuffert's request for tender and his statement that
"[r]easonable written requests to enable K&K to perform its
contract obligations will not be denied" show that the letter did
not convey an unequivocal refusal to perform. Accordingly, the
court did not err in granting AGC and Seuffert summary judgment
on this issue.
Similarly, we reject K&K's contention that the court
erred in not granting it summary judgment on its claim that
Seuffert's relocation of his camp, his placement of a berm on the
dredge access road, and his refusal to move his camp all
constitute acts of repudiation and thus breach of the contract
because they are "[s]tatements and/or acts which add terms and
are inconsistent with the terms and performance of the contract."
K&K claims Seuffert relocated his camp and refused to move it in
order to preclude movement of the dredge, whereas Seuffert claims
he had no such intent and that other suitable areas were leased
by someone else. Because genuine issues of material fact clearly
existed concerning Seuffert's intent in making the camp and berm
decisions, the superior court did not err in denying K&K summary
judgment. The issue properly went to the jury, who reasonably
ruled that Seuffert's camp and berm placements constituted
breaches of the contract.
C. The Superior Court Did Not Err in Granting AGC and
Seuffert Summary Judgment on K&K's Tort Claims.
K&K alleged in its amended complaint that Seuffert's
actions and AGC's failure to intervene amounted to tortious
interference with K&K's contractual rights and prospective
business opportunities. K&K also contended that AGC and Seuffert
interfered with and precluded K&K's recovery of the dredge,
constituting conversion and trespass. K&K further maintained
that Seuffert and AGC were wrongfully withholding the Old Town's
contents. K&K challenges the court's grant of summary judgment
to AGC and Seuffert, and its denial of summary judgment to K&K,
on these tort claims.17 If any of its tort claims survive, K&K
also challenges the court's dismissal of its punitive damages
claim. We affirm the superior court's rulings.
1. Tortious interference with a contract
To establish a claim of tortious interference with a
contract, a plaintiff must show: (1) an existing contract between
it and a third party; (2) defendant's knowledge of the contract
and intent to induce a breach; (3) breach; (4) wrongful conduct
of the defendant causing the breach; (5) damages; and (6) absence
of privilege or justification for the defendant's conduct.18 A
party to a contract cannot be liable for tortiously interfering
with that contract.19 Because AGC is undeniably a party to the
contract, this claim cannot lie against AGC. Given that the
assignment essentially gave Seuffert the rights of a party,
Seuffert was not a true outsider to the contract, and thus this
claim also could not lie against him.20
2. Tortious interference with a prospective
business opportunity
To establish a claim for tortious interference with a
prospective business opportunity, a plaintiff must show: (1) an
existing prospective business relationship between it and a third
party; (2) defendant's knowledge of the relationship and intent
to prevent its fruition; (3) failure of the prospective
relationship to culminate in pecuniary benefit to the plaintiff;
(4) conduct of the defendant interfering with the prospective
relationship; (5) damages caused by the defendant; and (6)
absence of privilege or justification for the defendant's
conduct.21
K&K alleges that it had prospective opportunities to
market the dredge as a tourist attraction and that Seuffert and
AGC knew of and intentionally interfered with these
opportunities. The focus of K&K's argument really seems to be
that Seuffert's concealment of the equipment and facilities in
the Old Town, and Seuffert's and AGC's refusal to recognize K&K's
right to them, have precluded K&K from operating the dredge as a
tourist attraction because the dredge cannot be operated without
those parts. K&K's claim fails, however, because the record
contains no evidence of an existing prospective business
opportunity with tourists. Karl testified that K&K had not made
any commitments to third parties to have the dredge operate as a
tourist attraction. There is also no evidence that AGC or
Seuffert knew of any such commitment and intended to interfere
with it. The court therefore did not err in granting summary
judgment to AGC and Seuffert on this claim.
3. Conversion, trespass, and wrongful
withholding
"The tort of conversion is `an intentional exercise of
dominion and control over a chattel which so seriously interferes
with the right of another to control it that the actor may justly
be required to pay the other the full value of the chattel.' "22
To establish a conversion claim, a plaintiff must prove that it
had a possessory interest in the property, that the defendants
intentionally interfered with the plaintiff's possession, and
that the defendants' acts were the legal cause of the plaintiff's
loss of property.23 Trespass to chattels is essentially
conversion but to a lesser degree.24
K&K's allegations are basically that Seuffert and AGC
obstructed K&K's removal of the dredge and that Seuffert refused
to turn over all of the dredge equipment and facilities. These
claims concern contractual breaches and disputes and thus "sound
in contract, rather than tort."25 We have held that "[p]romises
set forth in a contract must be enforced by an action on that
contract."26 If K&K's claims could stand, then any contract case
involving the transfer of goods or realty would also contain a
trespass, conversion, or wrongful withholding claim. But every
contract breach cannot be turned into a tort.27 Furthermore, the
consequential damages that would flow from K&K's tort claims and
from K&K's contract claims significantly overlap. We therefore
affirm the court's grant of summary judgment to AGC and Seuffert
on these tort claims.
4. Punitive damages
Because the gravamen of K&K's allegations is in
contract, and because none of K&K's tort claims can stand, the
superior court did not err in dismissing K&K's punitive damages
claim.28
D. The Superior Court Did Not Err in Giving Its Jury
Instructions.
K&K argues that jury instruction Nos. 34, 35, and 36
are erroneous. Instruction No. 34 deals with methods of
calculating damages.29 Instruction No. 35 concerns K&K's duty to
mitigate damages. Instruction No. 36 addresses speculative
damages. We review jury instructions de novo and will only
consider them grounds for reversal if they were objected to and
caused prejudice.30 If not objected to, we will review jury