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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
instructions "only for plain error - that is, for obvious error
creating a high likelihood of injustice."31 "As long as the jury
is properly instructed on the law, . . . the trial court has
broad discretion to determine whether to give instructions
specially tailored to the case at hand."32
K&K claims that it did not use the total cost method to
calculate damages and that Instruction No. 34 is thus an
incorrect statement of the law under this case, misled the jury,
and prejudiced K&K.33 Prior to the drafting of this instruction,
K&K argued to the superior court that it did not believe that the
total cost method of calculating damages was involved in this
case but indicated that the court might have to give an
instruction including both actual and total cost instructions,
which is what the court did. After it was drafted, the only
discussions on the instruction were as follows:
THE COURT: [W]e've talked about [this
instruction] several times,
and it sets forth the total
[and] actual - finds both to
be a jury question, sets forth
the four elements.
MR. SHEEHAN: I think you've got a
grammatical mistake on the
second paragraph, third line.
I think that should read
"allowed to recover only if
K&K."
THE COURT: Right. You mean the "for
that" should be deleted.
MR. SHEEHAN: Yeah.
THE COURT: I think so. Got me convinced.
Anybody else? Anything else
on that one anyone sees?
MR. LEWIS: Okay.
THE COURT: Okay?
The court then turned to the next instruction. Although K&K
asserted at oral argument that it did object to Instruction No.
34, our review of the transcript reveals that K&K did not object
to this instruction after it was drafted, apart from asking for a
small grammatical correction. We conclude that K&K's failure to
adequately object constitutes a waiver of its complaints about
the instruction.34 Furthermore, as explained below, the
instruction is also a correct statement of the law.35 As there
was no error or prejudice in giving Instruction No. 34, there are
no grounds for reversal.
K&K argues that Instruction No. 35 is incorrect because
there was no evidence that K&K failed to mitigate and because the
evidence was that K&K did mitigate by moving the dredge despite
the obstacles created by Seuffert and AGC.36 The superior court
specifically found that there was some evidence of failure to
mitigate and allowed the instruction to go to the jury. Because
the court's finding is not clearly erroneous, the instruction is
a correct statement of the law, and there was no clear prejudice
from giving the instruction, we conclude that Instruction No. 35
provides no grounds for reversal.
K&K argues that the last paragraph of Instruction No.
36 concerning speculative damages is misleading, and when read
with Instruction No. 34 requires an unreasonable burden of proof.37
K&K maintains that much of its damages are based on two
promissory notes and that K&K was precluded on cross-examination
from clarifying the contingency of these notes on the grounds of
relevance. K&K contends that it should have been allowed to
explain that the reason the dredge was not operating was because
of this litigation and because K&K needed the parts, equipment,
and facilities in the Old Town to activate the dredge. K&K
alleges that based on the wording of Instruction No. 36, the jury
concluded that payment of these notes was "not reasonably
certain" and that they were not "actual costs" as discussed in
Instruction No. 34.
K&K's disagreement is not really with the wording of
Instruction No. 36, but rather with the superior court's
evidentiary ruling. However, K&K has not raised as a claim of
error its evidentiary argument that it should have been allowed
to explain the promissory notes' contingency on cross-
examination. Furthermore, it is unclear how the giving of this
instruction, as distinguished from the court's evidentiary
ruling, actually prejudiced K&K. Accordingly, we conclude that
Instruction No. 36 also does not constitute grounds for reversal.
E. AGC's Cross-Appeal Concerning Assignment,
Novation, and Attorney's Fees Is Without Merit.
AGC's cross-appeal contends that the superior court
should have dismissed all claims against it because the
assignment to Seuffert was proper and because the agreement
between Seuffert and K&K was a novation. AGC thus challenges the
court's denials of its summary judgment motions on the claim that
the assignment to Seuffert constituted a breach and the claim
that AGC was liable for Seuffert's alleged misconduct. K&K
challenges the court's denial of its summary judgment motions on
these issues as well.38 In addition, AGC argues that it was the
prevailing party in the case and should have been awarded
attorney's fees. We affirm all of the superior court's rulings
on these matters.
1. The court did not err in denying AGC
summary judgment on whether the assignment was a
breach of contract.
The statutory provision in dispute between AGC and K&K
concerning assignment is AS 45.02.210(b), which states that a
contract for sale of goods cannot be assigned if "the assignment
would materially change the duty of the other party, increase
materially the burden or risk imposed on the other party by the
contract, or impair materially the chance of obtaining return
performance."39 AGC contends that the assignment did not
materially change anything, since AGC's only duties were to
provide a bill of sale when K&K tendered performance and to
provide reasonable access so the dredge could be moved, while the
only difference for K&K was that it had to tender to Seuffert
instead of to AGC.
The evidence certainly supported K&K's contention that
the test of AS 45.02.210(b) was met. AGC was aware that Seuffert
had a substantially different motive than AGC with respect to the
dredge, since Seuffert considered it an asset to be kept for use
as a tourist attraction instead of a liability to be eliminated.
AGC thus knew that Seuffert had every incentive to burden K&K's
performance, which Seuffert did by increasing K&K's costs,
delays, and risks. The jury therefore justifiably concluded that
AGC's assignment to Seuffert was a breach of contract.40 The
superior court did not err in denying AGC summary judgment on
this question.
2. There was no novation.
Generally, an assignor remains liable on an assigned
contract.41 AGC argues, however, that it should not be held
liable, and that the court erred in failing to grant its summary
judgment motion arguing as much, because the agreement between
Seuffert and K&K constituted a novation. We disagree.
"A novation is a substituted contract that includes as
a party one who was neither the obligor nor the obligee of the
original duty."42 As with accord and satisfaction, any breach of
a novation provides no right of action on the old duty.43 A
novation must have "all of the essential elements of an original
contract and also an intention that the agreement operate as an
immediate discharge of the first contract."44
AGC locates the novation not only in the "pipe yard"
agreement, but also in K&K and Seuffert's correspondence in
August and September 1998 making changes to contract terms such
as the performance bond requirement, the obligation to provide a
bill of sale within ten days of tender, and the date by which K&K
was to remove the dredge equipment and facilities. AGC contends
that these were negotiations for substitute performance and that
Seuffert and K&K's agreement discharged AGC.
AGC's novation argument fails for the same reason
Seuffert's accord and satisfaction argument fails - there was no
evidence of intent to supersede the original contract. K&K
started dealing with Seuffert only after it received AGC's
unequivocal rejection of its tender. K&K characterizes its
contacts and compromises with Seuffert as its efforts to mitigate
the harm caused by AGC's breach. K&K repeatedly conditioned its
dealings with Seuffert and AGC by reserving all its rights.45
K&K's actions are consistent with its explanation of
doing what it was forced to do once AGC refused to be involved.
K&K was merely modifying the contract terms as exigencies
dictated. If AGC's argument could stand, then every time a party
wrongfully assigned a contract and the other party consequently
negotiated with the assignee in an attempt to avoid a total loss,
the breaching assignor would be released from liability. Every
attempt to mitigate would become a novation. Such a rule is
clearly untenable and undesirable.
3. The superior court did not abuse its
discretion in awarding attorney's fees to K&K
instead of to AGC.
AGC contends that the court abused its discretion in
awarding attorney's fees to K&K as the prevailing party, instead
of to AGC. We have "consistently held that both the
determination of `prevailing party' status and the award of costs
and fees are committed to the broad discretion of the trial
court."46 We will only interfere with the court's decision if "it
is shown that the court abused its discretion by issuing a
decision which is arbitrary, capricious, manifestly unreasonable,
or which stems from an improper motive."47
We have held that the prevailing party " `is the one
who successfully prosecutes the action or successfully defends
against it, prevailing on the main issue, even though not to the
extent of the original contention. [The prevailing party] is the
one in whose favor the decision or verdict is rendered and the
judgment entered.' "48 The "main issue" between K&K and AGC was
the assignment of the contract and AGC's joint liability.
Because K&K won on those issues, awarding K&K attorney's fees was
well within the superior court's broad discretion. We thus
affirm the court's award of fees to K&K.
F. Seuffert's Cross-Appeal Regarding Damage
Calculation, Government Agencies, and Prejudgment
Interest Is Without Merit.
Seuffert's cross-appeal challenges the trial 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. We affirm all of the superior court's rulings on
these matters.
1. The superior court did not err in
denying Seuffert's motion for a directed verdict
on K&K's method of proving damages.
The trial court denied Seuffert's motion for a directed
verdict on the issue of whether K&K used the disapproved total
cost method without meeting the prerequisites for its use. When
reviewing the denial of a motion for a directed verdict, we must
"determine whether the evidence, when viewed in the light most
favorable to the non_moving party, is such that reasonable
persons could not differ in their judgment as to the facts."49 "
`If there is room for diversity of opinion among reasonable
people, the question is one for the jury.' "50
The parties dispute whether K&K used the total cost
method, which "calculates damages by determining the difference
between the actual costs incurred on a project, plus a reasonable
amount for profit, and the contract price."51 We have determined
that calculating damages by estimating how long a project should
have taken to complete, comparing this to the actual time needed,
and multiplying the difference by the cost of labor, equipment,
and overhead per unit of time constitutes a modified total cost
approach.52 The essence of the method is a comparison between a
party's initial estimates and the actual cost or time of
performing the contract.53 The total cost method is disfavored
"because it assumes that the defendant's breach was the cause of
all of the extra cost, it assumes plaintiff's bid [or estimate]
was accurately computed, and it assumes that plaintiff was not
responsible for increases in cost."54
The preferred method of calculating damages is the
actual cost method, in which each element of extra expense
incurred because of the alleged breach is added up for a total
claimed amount.55 Courts have also allowed a jury verdict method
of calculating damages, a variant on actual cost, that "allows
the contractor to `present evidence of the cost of additional
work to the finder of fact, including any actual cost data,
accounting records, estimates by law and expert witnesses, and
calculations from similar projects.' "56 The jury verdict method
basically reflects the principle that "a contractor need not
prove damages with mathematical precision, but may only recover
those damages which it proves with reasonable certainty."57
Seuffert contends that K&K relied exclusively on the
total cost method. He claims that K&K's accountant arrived at
K&K's damages figures as follows: (1) he identified nineteen
line items or cost areas incurred by K&K during the whole
project, such as payroll, equipment use fees, and fuel; (2) he
figured K&K's total expenses for each line item from information
provided by K&K; (3) after minor adjustments, he totaled the
nineteen line items to arrive at a total cost for the project of
$560,837; (4) he allocated each line item into either a ten-day
or twenty-day category, with the former being the project
duration estimate and the latter being the assumed delay; and (5)
he concluded that $213,840 should be allocated to the ten-day
category and $346,997 to the twenty-day. Seuffert says this
amounts to an arbitrary allocation of one-third of the total
project costs to the ten-day category and two-thirds to the
twenty-day category. Seuffert claims that K&K's accountant
"arbitrarily" allocated one-third of the costs for payroll, cell
phone, consulting, equipment use, fuel and oil, meals, and office
expense to the ten-day estimate and two-thirds to the twenty-day
delay. Seuffert maintains that K&K thus used the total cost
method, just substituting time for costs and relying on an
estimated time instead of an original bid.
K&K counters that it gave evidence of its actual costs.
Karl testified as to how much time K&K spent excavating a pit,
the added equipment needed, the equipment damaged, and the delays
incurred - which allegedly would have been unnecessary if
Seuffert's camp was not blocking the easiest route for moving the
dredge. Karl testified that Seuffert's contact with government
agencies delayed the start of the project by thirty days. He
testified as to how many days it did take and should have taken
to get the dredge out of the pit and on level ground; how many
days it took to move the dredge from the pit to its final
destination, how many of those days were because of Seuffert's on-
site demands and how many were due to the freezing temperatures
that K&K would not have had to face if Seuffert had not delayed
the start of the project; and how many days it took to build a
new ramp up to the highway in order to avoid the parking lot
across which Ingrid Seuffert objected to moving the dredge. Karl
testified about the extra labor, equipment costs, and delays
incurred because of Seuffert's alleged interference. K&K thus
maintains that it specifically identified the added equipment it
needed and the hourly rates for their use, as well as its daily
costs to maintain a crew and equipment in Chicken. K&K claims
that back-up invoices and time records for the labor costs were
in the courtroom and available. K&K thus concludes that its
claim was based on its actual additional costs, identified and
itemized, not on "total cost."
K&K's method resembles a modified total cost approach.58
On the other hand, K&K offered summaries, exhibits, and testimony
concerning delays and costs, and it offered testimony about
Seuffert's actions and their ramifications. Thus, K&K's damages
claim "cannot be dismissed as a mere total cost case."59 The
court's denial of Seuffert's motion for a directed verdict was
therefore proper, and Jury Instruction No. 34, discussed above,
provided accurate information on both the actual and total cost
methods. That instruction listed the four-part total cost
prerequisite test we identified in Anchorage v. Frank Coluccio
Construction Co.60 The jury could thus determine what method it
thought K&K used and assess damages accordingly. Jury
Instruction No. 34 took care of Seuffert's concern.
2. The superior court did not err in
denying all parties summary judgment on K&K's
claims that Seuffert's contacts with government
agencies constituted a breach of contract.
K&K alleges that the superior court erred in denying
K&K's motion for summary judgment on its claim that Seuffert's
contact with the Army Corps of Engineers and with the Department
of Natural Resources constituted a breach of the implied covenant
of good faith and fair dealing.61 In his cross-appeal, Seuffert
argues that he was entitled under the Noerr-Pennington doctrine
to petition government agencies without fear of liability for
breach of contract.
The Noerr-Pennington doctrine evolved out of two United
States Supreme Court cases in which the Court held that those who
attempt to influence legislative and executive officials are
immune from antitrust liability.62 The Court later extended the
doctrine to include attempts to influence adjudicatory
proceedings before the courts and administrative agencies.63
Seuffert argues that the doctrine should be extended to protect a
party from liability for contacting agencies to ensure that a
contractor performing work on his land does so lawfully.
Although we note that Seuffert was not attempting to influence
any proceeding or process, we decline to decide if Noerr-
Pennington should be extended to cover this case.64
Seuffert was not entitled to summary judgment because
genuine issues of material fact existed concerning the
reasonableness of and motives behind his contacts with government
agencies. Seuffert claims that he had genuine concerns about his
own liability and was not trying to block K&K's dredge removal
through agency involvement. K&K claims that Seuffert intended to
interfere with and thwart K&K's dredge removal efforts. When
viewing Seuffert's contacts through the lens of his entire
history of conduct, it is clear that genuine issues existed to
support the court's denials of summary judgment.
3. The court did not err in its award of
prejudgment interest.
The superior court ordered that prejudgment interest on
all claims accrue from August 7, 1998, when K&K sent a letter
that included a threat of litigation. Seuffert's cross-appeal
challenges that date as it applies to the claims relating to
Seuffert's placement of his camp and the dirt berm, arguing that
those claims did not arise until September 12, 1998, when K&K
arrived in Chicken to start moving the dredge, because prior to
that K&K suffered no injury.
"When prejudgment interest begins to accrue is a
question of law which we review applying our independent
judgment."65 Alaska Statute 09.30.070(b) states that prejudgment
interest accrues from the day process is served on the defendant
or the day the defendant received written notice that an injury
occurred and that a claim might be brought for that injury. This
statute applies "only to actions for personal injury, death, or
damage to property, and does not apply to claims for purely
economic loss."66 Rather, in contract cases, prejudgment interest
runs from the date the claim accrues, unless that would result in
an injustice.67 We cannot say that the date set by the superior
court was incorrect as a matter of law.
"A cause of action accrues when the breach occurs,
regardless of the aggrieved party's lack of knowledge of the
breach."68 Given the jury's conclusions, Seuffert's breaching
conduct apparently began well before September 12. Seuffert
engaged in a continuous course of conduct to impede K&K's
performance of the contract starting at least in the summer of
1998, when he relocated his camp and blocked the access road with
a berm. These actions constituted a breach of the covenant of
good faith and fair dealing, even if K&K had not yet incurred
damages from that breach. A contract cause of action usually
accrues at "the time of the breach of the agreement, rather than
the time that actual damages are sustained as a consequence of
the breach."69 The superior court need not have recalculated
interest from the date of each impediment Seuffert placed before
K&K.70 As a continuing course of conduct, the court could have
accrued interest from as early as June 1998. However, Seuffert
only challenges the date as being too early, not too late.
Accordingly, we affirm the superior court's selection of the date
from which to accrue prejudgment interest as August 7, 1998.
IV. CONCLUSION We REVERSE the superior court's grant of
summary judgment to Seuffert on the issue of the equipment and
facilities in the Old Town and REMAND for further proceedings.
We AFFIRM all the other challenged rulings.
_______________________________
1Moore v. Allstate Ins. Co., 995 P.2d 231, 233 (Alaska 2000).
2Nichols v. State Farm Fire & Cas. Co., 6 P.3d 300, 303 (Alaska
2000).
3Am. Computer Inst. v. State, 995 P.2d 647, 651 (Alaska 2000).
4Sykes v. Melba Creek Mining, Inc., 952 P.2d 1164, 1167 (Alaska
1998); Young v. Hobbs, 916 P.2d 485, 487-88 (Alaska 1996).
5Neal & Co. v. Ass'n of Village Council Presidents Reg'l Hous.
Auth., 895 P.2d 497, 502 (Alaska 1995).
6Id. at 505.
7Air Van Lines, Inc. v. Buster, 673 P.2d 774, 777 (Alaska 1983)
(citation omitted); see also Restatement (Second) of Contracts
281(1) (1981).
8Nat'l Bank of Alaska v. Warfle, 835 P.2d 1167, 1170 (Alaska
1992).
9Id.
10Id. at 1170 n.6.
11See id. at 1170; Alaska Creamery Prod., Inc. v. Wells, 373 P.2d
505, 509-11 (Alaska 1962).
12Seuffert argues that if K&K did not manifest an intent to create
an accord, K&K instead made a unilateral mistake as to a basic
assumption on which their agreement was made, that Seuffert was
not responsible for K&K's ignorance of the Old Town and its
contents, and that the contract allocated the risk of such a
mistake to K&K. See Dickerson v. Williams, 956 P.2d 458, 466
(Alaska 1998). Seuffert's argument fails, however, because the
contract makes no allocation of risk for dredge parts located on
other claims and because Seuffert's blocking of the trail to the
Old Town with a cable, a gate, and a sign warning trespassers
that they will be "executed" makes him responsible for K&K's
failure to inspect that area.
13Because we are reversing on this issue, we need not address
K&K's challenges to the superior court's denial of its Rule 56(f)
motion for additional discovery and its Rule 77(k) motion for
reconsideration.
14Restatement (Second) of Contracts 250 cmt. b (1981); see also
Drake v. Wickwire, 795 P.2d 195, 198 (Alaska 1990).
15Restatement (Second) of Contracts 250 cmt. b (1981).
1617A Am. Jur. 2d. Contracts 738, at 752 (1991).
17K&K also challenges the court's refusal to grant it summary
judgment on the question of whether AGC was liable in tort for
negligent assignment. K&K agreed just before trial, however, to
dismiss this claim without prejudice. As such, we decline to
address it.
18Odom v. Lee, 999 P.2d 755, 761 (Alaska 2000).
19Id.
20See CSY Liquidating Corp. v. Harris Trust & Sav. Bank, 162 F.3d
929, 932-33 (7th Cir. 1998) ("[T]he tort of intentional
interference with contract is meant to protect the parties
(including third_party beneficiaries, assignees, and others
having the rights of parties) to contracts, rather than persons
who might be harmed by a breach of someone else's contract.")
(citations omitted); Easton Nissan, Inc. v. Ford Motor Credit
Co., 755 F. Supp. 671, 674-75 (D. Md. 1991) (holding that tort of
intentional interference with contractual rights cannot lie
against assignee because "subsequent to the assignment,
[assignee] was a party to the contracts"); Douglas Theater Corp.
v. Chicago Title & Trust Co., 681 N.E.2d 564, 568 (Ill. App.
1997) ("[T]he assignee of a contract should not be subjected to
tort liability for a subsequent breach of the assigned contract.
. . . [T]he law governing tortious interference with contract
claims . . . requires that the tortfeasor be a third party to the
contractual relationship.").
21Odom v. Fairbanks Mem'l Hosp., 999 P.2d 123, 132 (Alaska 2000).
22Carver v. Quality Inspection & Testing, Inc., 946 P.2d 450, 456
(Alaska 1997) (quoting Dressel v. Weeks, 779 P.2d 324, 328
(Alaska 1989)).
23Silvers v. Silvers, 999 P.2d 786, 793 (Alaska 2000).
24Mitchell v. Heinrichs, 27 P.3d 309, 311 n.1 (Alaska 2001).
Trespass to chattels can be committed when a party intentionally
dispossesses another of the chattel or intentionally uses or
interferes with a chattel in another's possession. Restatement
(Second) of Torts 217 (1965).
25Kalenka v. Taylor, 896 P.2d 222, 228 (Alaska 1995).
26Alaska Pacific Assur. Co. v. Collins, 794 P.2d 936, 946 (Alaska
1990).
27Id. ("Only where the duty breached is one imposed by law, such
as a traditional tort law duty furthering social policy, may an
action between contracting parties sound in tort.").
28See Walt v. State, 751 P.2d 1345, 1354 (Alaska 1988) ("Since
[plaintiff] asserts no recognizable tort claims, his request for
punitive damages cannot withstand summary judgment.").
29The total and actual cost methods of calculating damages are
discussed below in the section on Seuffert's cross-appeal.
30State v. Johnson, 2 P.3d 56, 59 (Alaska 2000); Conam Alaska v.
Bell Lavalin, Inc., 842 P.2d 148, 152-53 (Alaska 1992); Alaska R.
Civ. P. 51(a).
31Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20, 29
(Alaska 1998).
32Id.
33Instruction No. 34 states:
Damages are to be presented by the
best measure that can be used under
the circumstances. In this case,
damages are to be calculated by
showing each element of extra
expense included. You must decide
if K&K Recycling has done so. If
it has, you may compute damages for
each extra expense shown.
As to expenses for which K&K Recycling
has presented damages evidence only as a
portion of total damages, K&K Recycling is
allowed to recover only if K&K Recycling
proves all four of the following:
1. The nature of the extra moving expenses
made it impossible or highly
impracticable to determine them with a
reasonable degree of accuracy;
2. K&K Recycling's estimate of its expenses
for the move of the dredge was
realistic;
3. its actual costs were reasonable; and
4. it was not responsible for the added
expenses.
If you find that is [sic] has shown all
four of these to be more true than not true,
you may calculate and award a portion of
total damages accordingly.
If it has not proven damages by either
of these methods (extra expenses or a portion
of total expense), you must award K&K
Recycling one dollar ($1.00) in damages.
34Sever v. Alaska Pulp Corp., 931 P.2d 354, 362 (Alaska 1996); see
also Conam Alaska, 842 P.2d at 153 (noting "the policy underlying
Rule 51(a) that counsel should make a specific objection to a
given instruction, even if he has previously argued his position
to the court. The trial court needs an identifiable opportunity
to rule on a party's position." (quotation omitted)).
35K&K admits that this instruction is "consistent with Alaska
law."
36Instruction No. 35 states:
In this case, Mr. Seuffert and Alaska
Gold Company claim that, with reasonable
efforts and without undue risk, expense,
hardship or embarrassment, K&K Recycling
could have avoided some or all of the losses
claimed even if the losses originally
resulted from defendants' failure to keep
their promise or their breach of the duty of
good faith and fair dealing.
If you decide that it is more likely
true than not true that K&K Recycling could
have avoided some losses in whole or in part
with reasonable efforts and without undue
risk, expense, hardship or embarrassment, you
may not require Mr. Seuffert and/or Alaska
Gold Company to pay the amount that K&K
Recycling reasonably could have avoided and
you must subtract any such amount from the
amount of damages you have found.
However, if you find that it is more
likely true than not true that K&K Recycling
incurred costs in making a reasonable effort
to avoid such losses, you must make an award
to K&K Recycling for such costs.
37Instruction No. 36 states:
If you find in favor of Plaintiff K&K
Recycling, but you find that K&K Recycling
did not sustain any monetary loss as
determined under the previous instructions
that I have given you, or that K&K
Recycling's loss cannot be determined with
reasonable certainty, then you must award K&K
Recycling the amount of $1.00.
You are not permitted to include
speculative damages, which means compensation
for loss or harm that, although possible, is
conjectural or not reasonably certain.
38K&K also challenges Judge Steinkruger's order granting AGC's
October 1999 motion to dismiss, a motion that argued both
novation and free assignability of the contract. If in granting
AGC's motion the court accepted AGC's novation argument, then AGC
could not later have been found jointly liable for Seuffert's
actions. Since AGC was in fact later found to be jointly liable,
it appears that Judge Funk drew AGC back into the case. As such,
and as AGC maintains, Judge Steinkruger's dismissal of all claims
against AGC had no effect on the ultimate outcome. K&K's
challenge to the court's grant of AGC's motion to dismiss thus
also appears to be moot.
39AS 45.02.210(b) states:
Unless otherwise agreed, all rights of
either seller or buyer can be assigned except
where the assignment would materially change
the duty of the other party, increase
materially the burden or risk imposed on the
other party by the contract, or impair
materially the chance of obtaining return
performance. A right to damages for breach
of the whole contract or a right arising out
of the assignor's due performance of the
entire obligation can be assigned despite
agreement otherwise.
40K&K also argues that AGC's rejection of its August 7 tender
constituted a repudiation of the contract and thus a breach.
This is merely a variant of K&K's argument that the assignment
was a breach. If the assignment was valid, for example,
rejecting the tender would not be a repudiation because K&K
should have tendered to Seuffert. K&K essentially admits in its
brief the derivative nature of its tender claim: "AGC's rejection
of K&K's tender constitutes a breach of contract as a matter of
law, because the assignment to Seuffert materially changed the
K&K/AGC agreement and therefore constituted a repudiation."
Because they are at root the same claim, we address only the
assignment argument.
41Foster v. Cross, 650 P.2d 406, 410 (Alaska 1982); AS
45.02.210(a).
42Oaksmith v. Brusich, 774 P.2d 191, 196 n.5 (Alaska 1989) (citing
Restatement (Second) of Contracts 280 (1981)).
43Id.
44Alaska Creamery Prod., Inc. v. Wells, 373 P.2d 505, 509-10
(Alaska 1962).
45Cf. Restatement (Second) of Contracts 329(2) (1981) ("If the
obligor, with knowledge of such a repudiation [by the assignor],
accepts any performance from the assignee without reserving his
rights against the assignor, a novation arises by which the duty
of the assignor is discharged and a similar duty of the assignee
is substituted.").
46Tobeluk v. Lind, 589 P.2d 873, 878 (Alaska 1979).
47Id.
48Id. at 876 (quoting Buza v. Columbia Lumber Co., 395 P.2d 511,
514 (Alaska 1964)).
49Ben Lomond, Inc. v. Schwartz, 915 P.2d 632, 635 (Alaska 1996).
50Sherbahn v. Kerkove, 987 P.2d 195, 198 (Alaska 1999) (quoting
Petersen v. Mutual Life Ins. Co., 803 P.2d 406, 410 (Alaska
1990)) (alteration omitted).
51Geolar, Inc. v. Gilbert/Commonwealth, 874 P.2d 937, 943 (Alaska
1994).
52Id. at 943-44.
53Id. at 944.
54Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20, 41
(Alaska 1998) (quotation omitted).
55Anchorage v. Frank Coluccio Constr. Co., 826 P.2d 316, 325
(Alaska 1992).
56Id. (quoting New Pueblo Constructors, Inc. v. State, 696 P.2d
185, 194 (Ariz. 1985)) (alteration omitted).
57Id. at 325 n.12 (quotation and alteration omitted).
58See Geolar, 874 P.2d at 944.
59Power Constructors, 960 P.2d at 43.
60826 P.2d 316, 325 (Alaska 1992) (holding that acceptability of
total cost method "hinges on proof that: (1) the nature of the
particular losses make it impossible or highly impracticable to
determine them with a reasonable degree of accuracy; (2) the
plaintiff's bid or estimate was realistic; (3) its actual costs
were reasonable; and (4) it was not responsible for the added
expenses") (quotation omitted).
61Because the jury justifiably ruled for K&K on these issues, its
argument that the trial court erred in denying it summary
judgment is moot. Fairbanks N. Star Borough v. Lakeview Enters.,
897 P.2d 47, 59 n.21 (Alaska 1995).
62E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365
U.S. 127, 136-38 (1961); United Mine Workers v. Pennington, 381
U.S. 657, 669-70 (1965); see also Gunderson v. Univ. of Alaska,
Fairbanks, 902 P.2d 323, 326 (Alaska 1995) (explaining evolution
of Noerr-Pennington doctrine).
63Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510
(1972).
64The applicability of a legal doctrine is a question of law to
which we apply our independent judgment, adopting the rule of law
that is most persuasive in light of precedent, reason, and
policy. Robles v. Shoreside Petroleum, Inc., 29 P.3d 838, 841
(Alaska 2001).
65Beaux v. Jacob, 30 P.3d 90, 100 (Alaska 2001).
66Id.
67Rice v. Denley, 944 P.2d 497, 501 (Alaska 1997).
68AS 45.02.725(b).
69Howarth v. First Nat'l Bank of Anchorage, 540 P.2d 486, 490-91
(Alaska 1975); see also Morris v. Morris, 724 P.2d 527, 529
(Alaska 1986) ("In contract actions, rights to prejudgment
interest generally arise on the date of breach. In tort actions,
they arise on the date of injury.").
70This case is unlike those involving maintenance contracts or
other contracts that require a series of separate performances
over time, for which separate claims accrue as each payment or
performance becomes due. See, e.g., H.J. Tucker & Assoc., Inc.
v. Allied Chucker & Eng'g Co., 595 N.W.2d 176, 183 (Mich. App.
1999); C_B Realty & Trading Corp. v. Chicago & N. W. Ry. Co., 682
N.E.2d 1136, 1140 (Ill. App. 1997); 9 Arthur Linton Corbin,
Corbin on Contracts 956 (interim ed. 2002).