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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Airline Support, Inc. v. ASM Capital II, L.P. (6/29/2012) sp-6685
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, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
AIRLINE SUPPORT, INC., )
) Supreme Court Nos. S-13584/13593
Appellant and )
Cross-Appellee, ) Superior Court No. 3AN-07-05082 CI
)
v. ) O P I N I O N
)
ASM CAPITAL II, L.P., ) No. 6685 - June 29, 2012
)
Appellee and )
Cross-Appellant. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, John Suddock, Judge.
Appearances: Charles E. Tulin, Anchorage, for
Appellant/Cross-Appellee. Allen F. Clendaniel, Sedor,
Wendlandt, Evans & Filippi, LLC, Anchorage, for
Appellee/Cross-Appellant.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Stowers, Justices. [Christen, Justice, not participating.]
CARPENETI, Chief Justice.
WINFREE, Justice, concurring.
STOWERS, Justice, concurring in part and dissenting in part.
I. INTRODUCTION
A limited partnership based in New York that invests in the claims of
unsecured creditors sent a letter to an Alaska corporation offering to purchase one such
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claim for about one-third of its face value. The letter was addressed to the credit
manager and was sent to the corporate offices. Upon receiving the envelope, the Alaska
corporation forwarded it unopened to the manager of its accounts receivable department
in Georgia. The manager executed the enclosed assignment agreement and returned it
back to the limited partnership, which then sent a check in payment for the claim. The
Alaska corporation eventually filed suit in superior court to have the agreement set aside.
The superior court declined to do so. Because we conclude that there is a genuine issue
of fact as to whether the manager of the accounts receivable department had apparent
authority to execute the agreement as a matter of law, we reverse and remand for further
proceedings.
II. FACTS AND PROCEEDINGS
Airline Support, Inc. is an Anchorage-based Alaska corporation that
provides support services for airlines at the Ted Stevens Anchorage International Airport
in Anchorage. On September 15, 2005, Northwest Airlines filed for Chapter 11
bankruptcy in the Southern District of New York. At the time of the bankruptcy filing,
Northwest owed Airline Support $62,071. After the filing, Airline Support continued
to provide services to Northwest and bill for those services.
ASM Capital II, L.P. invests in the claims of unsecured creditors in
domestic bankruptcy cases. ASM monitors bankruptcy filings and offers to purchase
claims from bankruptcy creditors at a percentage of their face value. On May 15, 2006,
ASM sent Airline Support a letter proposing to purchase Airline Support's bankruptcy
claim for $19,862.72, which was 32% of the claim's face value. ASM sent the letter to
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Airline Support's corporate office in Anchorage, to the attention of "A/R - Credit
Manager."1 The page-long letter read, in pertinent part:
ASM Capital ("ASM") is a firm that invests in the claims of
unsecured creditors in domestic bankruptcy cases. The above
information refers to an unsecured claim ("Claim") that has
been scheduled by Northwest Airlines Corporation in its case
filed in the United States Bankruptcy Court for the Southern
District of New York, Case. No. 05-17930 ("Case").
ASM is currently buying claims in the Case and is interested
in purchasing your Claim:
Percentage: 32.00% (cents on the dollar)
Claim Amount: $62,071.00
ASM Purchase Price: $19,862.72
If you are interested in selling your Claim, you must send
ASM, via fax or mail, an executed Assignment of Claim
Agreement, a copy of which is attached. ASM reserves the
right (i) to review the validity of the Claim; and (ii) to refuse
to purchase the Claim for any reason without further notice
or obligation. If accepted, payments are typically sent by
regular mail within 7 to 10 business days. Alternate payment
methods may be available upon request.
With the exception of two closing lines, this is ASM's letter in its entirety.
In response, ASM received a letter on Airline Support letterhead signed by
Katie Land, who identified herself as Airline Support's "Accounting Manager." Land
lived in Georgia, and remotely acted as Airline Support's "accounts manager" and
"bookkeeper." Enclosed with the letter from Land was the executed assignment
agreement, dated June 14, 2006. The letter read:
1 "A/R" stands for "Accounts Receivable."
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Dear Mr. Corey,
Enclosed you will find the Airline Support, Inc. invoices that
were part of the Northwest Airlines bankruptcy filing. The
letter you sent to our company listed our claim amount at
$62,071.00. We actually have a total amount open of
$71,404.00. Copies of all open invoices are attached.
Please contact me if you have further questions regarding this
claim. . . .
Regards,
Katie Land
Accounting Manager
Accompanying Land's letter were over 50 pages of invoices relating to Airline Support's
claim in the Northwest bankruptcy. In the space provided on the assignment agreement,
Land had handwritten "$71,404.00" as the amount of Airline Support's claim in the
bankruptcy proceedings.2 Preprinted on the assignment agreement was the purchase
price for the assignment of the claim, $19,862.72. On the "Name/Title" line of the
signature block, Land had written "Katie Land/Acct. Mng." The executed assignment
agreement contained a clause stating that "the individuals whose signatures appear below
hereby expressly represent that they have the authority to bind the party for which they
sign this agreement." The assignment agreement also included an attorney's fee
provision requiring Airline Support to reimburse ASM for all of its expenses in
connection with enforcing the agreement, "including without limitation, reasonable
attorneys' fees at the trial and appellate levels."
Following receipt of the executed assignment agreement, ASM filed a proof
of claim in bankruptcy court against debtor Northwest on June 26, 2006, indicating that
2 In fact, the bankruptcy claim only had a $62,071 value, as ASM had
originally stated. Northwest's additional debt to Airline Support was not part of the
bankruptcy claim, and was directly paid in full by Northwest.
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Airline Support had assigned its claim to ASM. On June 27, 2006, ASM sent a check
to Airline Support for $19,862.72 in exchange for Airline Support's unsecured claim.
In early August, Airline Support received a notice of transfer of its $62,071 bankruptcy
claim. The notice stated that the bankruptcy claim had been transferred and informed
Airline Support that it had until August 22, 2006, to object to the transfer. On September
29, Airline Support brought a challenge to the transfer of the bankruptcy claim in the
United States Bankruptcy Court for the Southern District of New York. Airline Support
moved for leave to file late, explaining that its objection to the transfer was late because,
after receiving notice of the transfer, it conducted an internal investigation, retained
counsel, and attempted to resolve the issue outside of court. Airline Support sought
reconsideration of the bankruptcy court's decision, arguing that the transfer was null and
void because Land had not been authorized to sell the corporation's assets.
After briefing and a hearing, the bankruptcy judge denied Airline Support's
motion and ordered that ASM be substituted as "the transferee of all claims asserted by
Airline Support in the captioned bankruptcy cases." However, the court also noted:
[T]he consequences of refusing to allow Airline Support to
file a late objection to transfer are not fatal to its position, or
even detrimental. The Court's denial of its motion was
without prejudice and thus remitted Airline Support to its
State court rights and remedies. . . . [T]his is where the
dispute [regarding Land's authority to transfer the claim],
which is entirely tangential to the bankruptcy case, should be
resolved.[3 ]
ASM incurred and paid $21,247.94 in attorney's fees responding to Airline Support's
challenge in bankruptcy court.
3 In re Northwest Airlines Corp. , 2007 WL 498285, *4 (Bankr. S.D.N.Y.
2007) (Feb. 9, 2007).
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On February 15, 2007, Airline Support sued ASM in superior court in
Anchorage. Airline Support's amended complaint asserted, among other things, a claim
to set aside the assignment agreement.4 ASM counterclaimed for breach of contract,
asserting that Airline Support had failed to reimburse ASM for the attorney's fees ASM
incurred in bankruptcy court in violation of the terms of the assignment agreement.
Both parties moved for summary judgment as to whether Katie Land had
authority to execute the assignment agreement. Superior Court Judge Michael Spaan
denied both motions. When Superior Court Judge John Suddock succeeded to Judge
Spaan's caseload, the parties renewed their motions for summary judgment. Judge
Suddock denied Airline Support's motion for summary judgment but granted summary
judgment in favor of ASM, holding that Land had apparent authority as a matter of law.
Specifically, the court held that no genuine material issue of fact remained because all
three elements of apparent authority were satisfied as a matter of law: (1) Airline
Support made manifestations that Land was its agent to ASM, (2) ASM relied on those
manifestations, and (3) ASM reasonably interpreted Land's communication as an
expression of authority on behalf of Airline Support. Airline Support moved for
reconsideration; the superior court denied its motion.5 The superior court also awarded
ASM full reasonable fees arising from the state court proceeding pursuant to the fees
provision of the assignment agreement. However, the superior court declined to award
4 Airline Support also asserted an Alaska Securities Act claim and an Unfair
Trade Practices Act claim, neither of which are at issue on appeal.
5 After the superior court granted ASM's motion for summary judgment with
respect to the apparent authority issue, Airline Support may have abandoned its
Securities Act claim and the court granted ASM summary judgment on Airline Support's
Unfair Trade Practices Act claim. This disposed of all of Airline Support's claims
against ASM.
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ASM the fees it had incurred in bankruptcy court, ruling that it did not have authority to
award such fees.
Airline Support appeals the superior court's conclusion that Land had
apparent authority arguing that ASM's interpretation of Airline Support's conduct was
unreasonable as a matter of law. Airline Support also appeals the superior court's award
of attorney's fees, arguing that the fees awarded were not "reasonable." ASM cross-
appeals, arguing that the superior court erroneously concluded that it did not have
authority to award fees incurred in bankruptcy court.
III. STANDARD OF REVIEW
We review grants of summary judgment on questions of contract formation
de novo.6 We will affirm a grant of summary judgment if the evidence in the record
presents no genuine issue of material fact and the moving party is entitled to judgment
as a matter of law.7 A genuine issue of material fact exists where reasonable jurors could
disagree on the resolution of the issue.8 When making the determination whether there
are genuine issues of material fact, we will draw all reasonable inferences in favor of the
nonmoving party.9
6 Askinuk Corp. v. Lower Yukon Sch. Dist. , 214 P.3d 259, 264 (Alaska 2009)
(citing Copper River Sch. Dist. v. Traw, 9 P.3d 280, 283 (Alaska 2000)).
7 Id. (citing Copper River, 9 P.3d at 283).
8 Burnett v. Covell , 191 P.3d 985, 990 (Alaska 2008) (citing McGee Steel Co.
v. State for Use & Benefit of McDonald Indus. Alaska, Inc., 723 P.2d 611, 614 (Alaska
1986)).
9 Fletcher v. S. Peninsula Hosp. , 71 P.3d 833, 840 (Alaska 2003).
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On questions of law, we exercise our independent judgment.10 We adopt
the rule of law that is most persuasive in light of precedent, reason, and policy.11
IV. DISCUSSION
It Was Error To Hold That Katie Land Had Apparent Authority To Execute
The Assignment Agreement As A Matter Of Law.
In granting ASM's motion for summary judgment, the superior court held
that Airline Support's accounting manager Katie Land had apparent authority to execute
the assignment agreement as a matter of law. Airline Support argues that this was error.
We have adopted the Restatement's general rule for creation of apparent
authority.12 "Apparent authority to do an act is created as to a third person when a
principal's conduct, reasonably interpreted, 'causes the third person to believe that the
principal consents to have the act done on his behalf by the person purporting to act for
him.' "13 We consider three factors when evaluating apparent authority: "(1) the
manifestations of the principal to the third party; (2) the third party's reliance on the
principal's manifestations; and (3) the reasonableness of the third party's interpretation
of the principal's manifestations and the reasonableness of the third party's reliance."14
A. Manifestations by the principal
10 Askinuk , 214 P.3d at 264 (citing Copper River, 9 P.3d at 283).
11 Id.
12
Anderson v. PPCT Mgmt. Sys., Inc. , 145 P.3d 503, 509 (Alaska 2006)
(citing City of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130 (Alaska 1983)).
13 Askinuk , 214 P.3d at 264 (quoting Anderson , 145 P.3d at 509).
14 Id. (citing Anderson , 145 P.3d at 509).
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The manifestation may be in the form of the principal's "written or spoken
words or any other conduct."15 "The manifestation may be directly communicated to the
third party or may come through, among other things, signs or advertising."16 However,
no agency relationship exists where the principal never indicated to the third party that
the supposed agent had authority.17
The superior court appears to have found that two instances of Airline
Support's conduct were "manifestations" under the first prong of the apparent authority
test. First, the superior court noted that Airline Support had forwarded ASM's
solicitation letter and assignment agreement to Katie Land. Second, the superior court
emphasized that Airline Support had furnished Land with Airline Support stationery.18
Airline Support argues that forwarding the solicitation to Land is not a
"manifestation." Citing Bruton v. Automatic Welding & Supply Corp. ,19 Airline Support
argues that its conduct will qualify as a manifestation relevant to an apparent authority
determination only if that conduct occurred before ASM sent the letter to Airline. The
argument lacks merit. Bruton stands for the proposition that the only manifestations
15 Anderson , 145 P.3d at 509 (quoting Delta Junction , 670 P.2d at 1130)
(internal citations omitted).
16 Id. (citing RESTATEMENT (SECOND) OF AGENCY § 8 cmt. b (1958)).
17 Id. (citing Bruton v. Automatic Welding & Supply Corp. , 513 P.2d 1122,
1126 (Alaska 1973)).
18 Although the superior court looked to only these two facts in the record to
support its conclusion that the manifestation prong of the apparent authority test was met
- forwarding ASM's letter to Land and supplying her with company stationery - we
note that other facts in the record support the conclusion: Airline Support provided Land
with access to Airline Support billing invoices and it gave her the title of "accounting
manager."
19 513 P.2d 1122 (Alaska 1973).
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relevant to an apparent authority determination are those that occurred before the third
party relied - not those that occurred before the third party acted in any way
whatsoever.20 Because Airline Support forwarded the letter to Land, supplied her with
company stationery, and provided billing invoices to her before ASM sent its check -
that is, before ASM relied - ASM was entitled to rely and the superior court did not err
in considering these acts a manifestation that Airline Support clothed Land with the title
of accounting manger and the authority implied by that title.21
20 Id. at 1126 ("After the fact manifestations . . . are not evidence that a
purported agent had apparent authority.").
21 The partial dissent disagrees with our conclusion that there are no genuine
issues of material fact with regard to this first factor in the apparent authority analysis.
But the dissent defines this factor too broadly, first characterizing it as " 'the
manifestations of the principal to the third party' to determine whether the principal has
signaled, by word or deed, that the agent has authority to act on the principal's behalf,"
(Dissent 23) and then equating "authority to act" with the ultimate issue in this dispute:
"[w]hether Land had apparent authority to bind Airline Support to the terms of ASM's
assignment agreement."(Dissent 24). This places too much weight on the first factor.
While, as a generality, referring to an apparent agent's "authority to act" is fine, in
applying the first factor we look only to the principal's manifestations and whether those
manifestations clothe the agent with some authority - here, with a given title and
whatever authority is implied by that title.
Thus, the after-the-fact protestations of Airline Support's president that the
corporation was unaware of Katie Land's actions, that the corporation had not authorized
them, and that it took steps to undo them, are all irrelevant to the first factor: the
manifestations that Airline Support made to ASM. There is no genuine issue of material
fact that Airline Support, in forwarding ASM's solicitation letter to Land, in providing
Land with Airline Support letterhead, in providing billing invoices to her, and in
conferring the title of "accounting manager" upon her, had made manifestations to ASM
that she held such a title and whatever authority was implied by that title. Whether that
authority included executing the contract at issue in this case is covered under the third
factor - the reasonableness of Airline Support's reliance - an issue about which
genuine material facts are in dispute.
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B. Third party's reliance
As to the second factor, the superior court found that ASM relied on Airline
Support's manifestations by sending a check for $19,862.72 to Airline Support. Airline
Support does not challenge this finding and has support in the record. Moreover, nothing
in our case law or the Restatement suggests ASM's check did not satisfy the reliance
requirement.22
C. Reasonableness of the third party's reliance
The third element of apparent authority is satisfied if the third party's
interpretation of the principal's manifestations and reliance on those manifestations were
reasonable.23 On appeal, Airline Support asserts that the superior court erred in holding
that ASM's interpretation of Airline Support and Land's actions was reasonable as a
matter of law. Although we do not agree with all aspects of Airline Support's argument,
we agree that Airline Support has raised genuine issues of material fact. Accordingly,
we reverse and remand for further proceedings.
The reasonableness of a third party's reliance on an alleged principal's
manifestations is generally a question of fact.24 A court should resolve a factual issue as
22 In fact, the Restatement explains that "an action or forbearance on the part
of a third party as a result of the agent's action and the principal's manifestation" will
generally satisfy the reliance requirement. RESTATEMENT (THIRD) OF AGENCY § 2.03
cmt. e (2006). Furthermore, "[t]o establish that an agent acted with apparent authority,
it is not necessary for the plaintiff to establish that the principal's manifestation induced
the plaintiff to make a detrimental change in position. Id.
23 Askinuk Corp. v. Lower Yukon Sch. Dist. , 214 P.3d 259, 264 (Alaska 2009)
(citing Anderson v. PPCT Mgmt. Sys., Inc. , 145 P.3d 503, 509 Alaska 2006)).
24 See Cummins, Inc. v. Nelson, 115 P.3d 536, 544 (Alaska 2005).
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a matter of law only if no reasonable juror could reach a different conclusion.25 We have
been reluctant to decide the reasonableness issue as a matter of law.26 It is only in the
most straightforward cases - those where reasonable jurors could not disagree - that
it is appropriate for a court to decide the issue on summary judgment.27
This is not one of those cases. The two manifestations the superior court
identified give rise to a narrow set of factual inferences. First, the fact that Airline
Support furnished Land with its stationery gives rise to the inference that she is an
Airline Support employee who has some authority to speak for the corporation. Second,
the fact that Airline Support forwarded an envelope addressed to the "A/R Credit
Manager" Katie Land gives rise to the inference that Land held the position of "credit
manager" at Airline Support or a position akin to "credit manager."
ASM argues that because it sent the letter to Airline Support's "credit
manager" in Anchorage and received a response from someone identifying herself as
25 Cf. Holland v. Union Oil Co. of Cal., Inc., 993 P.2d 1026, 1031 (Alaska
1999) ("Because it is 'generally . . . a question of fact whether the manual did modify the
employment agreement,' this court should only conclude, as a matter of law, that the
memo did not create a 'just cause' employment relationship, if no reasonable juror could
conclude that it did." (citing Parker v. Mat-Su Council on Prevention of Alcoholism &
Drug Abuse , 813 P.2d 665, 666 (Alaska 1991))); Drobny v. Boeing Co., 907 P.2d 299,
302 (Wash Ct. App. 1995) ("Only if reasonable minds could not differ in resolving this
[question of fact] should a trial court decide it as a mater of law.")
26 See, e.g., City of Delta Junction v. Mack Trucks, Inc., 670 P.2d 1128, 1130-
31 (Alaska 1983) (reversing superior court's decision that there was no apparent
authority as a matter of law on grounds that reasonable jurors could disagree as to
whether inference of authority was reasonable); Cummins, 115 P.3d at 544 (affirming
superior court's decision to have jury evaluate evidence of apparent authority and decide
whether third party's interpretation was reasonable).
27 Cf. Delta Junction, 670 P.2d at 1130-31.
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Airline Support's "accounting manager" in Georgia,28 it was reasonable to infer that
Airline Support had intentionally routed the letter to a company official with authority
to sell the claim. The superior court seems to have agreed with ASM's assertion that
routing the envelope to another office gave rise to "an inference of affirmative
forwarding." From the fact that Airline Support forwarded the envelope to Land in
Georgia, the superior court concluded that Airline Support "opted to put that matter
under her purview." We disagree.
"Accounting manager" and "credit manager" are nebulous titles that do not
obviously apply to distinct positions within the corporate structure. Having addressed
a letter to the "credit manager" and having received a response from the "accounting
manager," ASM's inference - on this basis alone - that Airline Support had purposely
put the solicitation before the accounting manager because she had the authority to
transfer the claim, is not the only inference possible. Another reasonable inference is that
Airline Support routed the letter to Land because she functioned as the "credit manager"
- (or something like it). But it cannot be said that this must mean that Airline Support
had intentionally put the matter before Land because she had the authority to assign
Airline Support's claim.
28 Apparent authority is based on a principal's manifestations not the agent's.
See Anderson v. PPCT Mgmt. Sys., Inc., 145 P.3d 503, 509 (Alaska 2006) (quoting
RESTATEMENT (SECOND) OF AGENCY § 27 (1958)). Consequently, the fact that Land
identified herself as "accounting manager" would not, on its own, be relevant. However,
in Land's affidavit - which Airline Support submitted with its motion for summary
judgment - she identifies herself as Airline Support's "accounts manager," suggesting
that, at the very least, Airline Support allowed her to use this title, and at most, bestowed
it upon her. For this reason, it is appropriate to conclude that Land's "accounting
manager" title was also a manifestation by Airline Support, and therefore, relevant to the
apparent authority inquiry. Cf. City of Delta Junction, 670 P.2d at 1131 (holding that it
could reasonably be inferred that Alaska Mack's use of Mack, Inc.'s corporate name and
trademark was with Mack, Inc.'s knowledge and approval).
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In its order denying Airline Support's motion for reconsideration, the
superior court appears to have departed slightly from its earlier position. Instead of the
conclusion that Airline Support's manifestations gave rise to the reasonable inference
that it had "opted to put [the] matter under [Land's] purview," it adopted the more
moderate position that the forwarding gave rise to the inference that Land was Airline
Support's credit manager. Rejecting Airline Support's motion for reconsideration, the
superior court wrote:
The letter from ASM to Airline Support was addressed to the
"credit manager". Airline Support tends to minimize her as
a mere bookkeeper. ASM, having mailed the letter to the
credit manager, could reasonably assume that the mail was
routed to a company official of that or comparable rank. . . .
None of [the arguments in Airline Supports's motion for
reconsideration] in any way detracts from the reasonable
conclusion that this particular credit manager had authority
by virtue of her corporate status to consummate the
assignment of a bankruptcy claim. In this instance, there is
simply no logical link between [those arguments] and her
apparent authority to act consistently with her perceived rank
in the corporate hierarchy. (Emphasis added.)
We agree with the superior court that it was reasonable for ASM to assume
Land occupied a position comparable to credit manager. We disagree, however, that it
was reasonable as a matter of law for ASM to conclude "by virtue of [Land's] corporate
status" that she had the authority to sell a company asset potentially worth over $60,000.
"[A]pparent authority can be created by appointing a person to a position, such as that
of manager or treasurer, which carries with it generally recognized duties; to those who
know of the appointment there is apparent authority to do the things ordinarily entrusted
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to one occupying such a position . . . ."29 However, neither "credit manager" nor
"accounting manager" so obviously carries with it the authority to sell a company's
significant assets as to make it a matter of law.30 While a reasonable juror bringing his
or her broad practical experience to bear could reach this conclusion, we cannot say that,
as a matter of law, this is the only reasonable conclusion. Accordingly, we reverse the
superior court's grant of summary judgment and remand for trial.
ASM argues that the superior court's conclusion that Land had apparent
authority is supported by a case from Maine, Steelstone Industries, Inc. v. North Ridge.31
In that case, the Maine Supreme court held that the trial court could infer that the alleged
principal had cloaked the alleged agent with apparent authority where the principal had,
among other things, forwarded certain documents to the agent.32 We conclude that
Steelstone is of limited relevance to the present case for two reasons.
29 RESTATEMENT (SECOND) OF AGENCY § 27 cmt. a (1958). See also
RESTATEMENT (THIRD) OF AGENCY § 3.03 cmt. b (2006) ("A principal may . . . make a
manifestation by placing an agent in a defined position in an organization. . . . Third
parties who interact with the principal through the agent will naturally and reasonably
assume that the agent has authority to do acts consistent with the agent's position or role
unless they have notice of facts suggesting that this may not be so.").
30 Neither party appears to have submitted evidence directly on point. ASM's
senior vice-president did submit an affidavit explaining that his company directed the
letter to "A/R Credit Manager" because "the credit manager of the company's accounts
receivable department . . . manages the debts owed to the company."
31 735 A.2d 980, 983 (Maine 1999). Although the superior court discussed
Steelstone in the context of summarizing ASM's arguments, to what extent, if any, the
superior court actually relied on the case is unclear.
32 Id.
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First, the Maine Supreme Court was reviewing the trial court's conclusion
that the agent had apparent authority as an issue of fact - not as a matter of law.33
Accordingly, the Steelstone court applied the clear error standard and determined that
the record could support such a finding,34 but did not ask whether reasonable jurors could
disagree on the issue, which is the question here. Consequently, Steelstone has only
limited relevance to the current case. Second, the facts of Steelstone are distinct from
those currently before us. In that case, the principal - a business operating an apartment
complex - hired the agent as a sub-contractor, allowed the agent to operate an office out
of its building, and arranged for one of its employees to work for the agent.35 The
principal also orchestrated a meeting between the principal's representative, the agent,
and the third party, during which the principal's representative introduced the agent to
the third party as the project manager, and failed to mention anything about the
contractor/subcontractor relationship.36 While it is true that the Steelstone court observed
that the principal had forwarded the third party's proposals to the agent, the court
considered this detail as only one of many facts, including many which were
demonstrably more significant. In short, the factual landscape was quite distinct from
the one currently before us. Although Steelstone suggests that a principal's decision to
forward documents to an agent is relevant to an apparent authority determination, it in
no way suggests that it is dispositive of the question. For these reasons, Steelstone is of
limited value to the resolution of this case.
33 Id.
34 Id.
35 Id. at 982.
36 Id.
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Airline Support cites a number of outside cases that it argues show that
Land did not have apparent authority. But like Steelstone, these cases are of limited
value. In CSX Transportation, Inc. v. Recovery Express, Inc.,37 a federal court in
Massachusetts held that a third party's inference of a purported agent's authority was
unreasonable as a matter of law when the principal's sole manifestation was the issuance
to the agent of an email address utilizing the principal's domain name.38 Airline Support
analogizes CSX to the current case, arguing that Land's possession of Airline Support
letterhead is insufficient to create apparent authority. Indeed, many courts have held that
furnishing someone with the trappings of corporate legitimacy - letterhead, business
cards, company paraphernalia, etc. - does not necessarily give rise to apparent authority
as a matter of law.39 But the act of furnishing Land with letterhead was not Airline
Support's only manifestation; as discussed above, by forwarding the envelope to Land,
Airline Support also gave rise to the reasonable inference that she was the credit manager
of its accounts receivable department.
37 415 F. Supp. 2d 6 (D. Mass. 2006).
38 Id. at 10-11.
39 See, e.g., Muscletech Research & Dev., Inc. v. E. Coast Ingredients, LLC ,
No. 00-CV-0753A(F), 2004 WL 941815, at *32 (W.D.N.Y. Mar. 25, 2004) (holding that
issuance of company credit card, business cards with company logo, possession of
company paraphernalia, and appearing in company advertisements was insufficient to
create apparent authority were circumstances triggered duty to inquire into agent's
purported authority); Asplund v. Selected Invs. in Fin. Equities, Inc. , 103 Cal. Rptr. 2d 34,
48-49 (Cal. App. 2000) (holding purported issuance of plaque and business cards
insufficient to create apparent authority); Cowburn v. Leventis, 619 S.E. 2d 437, 448 (S.C.
App. 2005) (holding that supplying forms and business cards were not sufficient to create
apparent authority).
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Airline Support also analogizes this case to Trustees of the Ohio Bricklayers
Pension Fund v. Skillcraft Systems of Toledo, Inc. ,40 an unpublished opinion from the
Sixth Circuit. As ASM argues in response, this case is distinguishable. In Skillcraft, the
third party argued that the principal's bookkeeper had apparent authority to execute a
binding collective bargaining agreement because the principal had granted the
bookkeeper authority to perform other related functions in the past, such as
communicating with the public and filling out and signing payroll and fringe benefit
documents that had a binding effect upon the principal.41 The court held that prior
limited grants of authority like these did not create apparent authority to execute a
binding collective bargaining agreement.42 The court also emphasized two additional
details. First, it expressed skepticism regarding the authenticity of the third party's
argument, noting that the third party presented no evidence that it had known before the
litigation began that the bookkeeper had filled out the form.43 Second, it favorably
quoted the district court's conclusion that the third party's argument would have been
much stronger had the agreement contained spaces for the principal's signature - spaces
which, along with "anything purporting to be an actual signature," were absent from the
hard copy of the agreement.44
Unlike Skillcraft, there is nothing that prompts us to doubt the authenticity
of ASM's argument. Additionally, the assignment agreement form at issue here came
40 99 Fed. Appx. 600 (6th Cir. 2004).
41 Id. at 601.
42 Id. at 601-02.
43 Id .
44 Id. at 602 (describing the form's format as "confusing").
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complete with signature lines, and the executed agreement contained what was clearly
Land's signature. But even without these differences, Skillcraft is distinguishable. In
Skillcraft, the Sixth Circuit held that the kinds of acts the bookkeeper had done in the
past did not create apparent authority to do a very different kind of act - that is, to
execute a binding collective bargaining agreement.45 But ASM does not base its
argument on the kind of authority Land exercised in the past. Rather, ASM bases its
argument on the fact that Airline Support forwarded the envelope to Land. As discussed
above, this fact reasonably gives rise to the inference that Land was ASM's "credit
manager"; the question remains whether a credit manager of a company's accounts
receivable department would typically have the authority to sell one of the company's
significant assets.46 Because this question is quite different from the one addressed in
Skillcraft, that case is not relevant.47
45 Id. at 601-02.
46 See RESTATEMENT (SECOND) OF AGENCY § 27 cmt. a (1958) ("[A]pparent
authority can be created by appointing a person to a position, such as that of manager or
treasurer, which carries with it generally recognized duties; to those who know of the
appointment there is apparent authority to do the things ordinarily entrusted to one
occupying such a position, regardless of unknown limitations which are imposed upon
the particular agent.").
47 Airline Support presents several other arguments that are both waived and
unpersuasive. First, it makes the policy argument that holding that Land had apparent
authority on these facts will harm small Alaskan businesses, which often rely on outside
bookkeepers to collect on accounts and debts. This argument is waived because Airline
Support failed to raise it below. Millette v. Millette , 177 P.3d 258, 267-68 (Alaska 2008)
(explaining that issues are waived for purposes of appeal if not adequately raised below).
In any event, this argument is unpersuasive. It is just as likely that precluding apparent
authority in a case like this one, where a reasonable juror could reach the conclusion that
the third party's reliance on the principal's manifestations was reasonable, could harm
Alaskan businesses. If this court were to depart from the current reasonableness standard
(continued...)
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V. CONCLUSION
Because whether Land had apparent authority to execute the assignment
agreement is a disputed question of material fact, we REVERSE and REMAND to the
47 (...continued)
in the way Airline Support seems to suggest, out-of-state companies like ASM could be
unsure about which kinds of manifestations they can safely rely on and in turn be
hesitant to contract with Alaskan companies.
Second, Airline Support argues that its alleged repudiation precludes
apparent authority. Because Airline Support raised this argument for the first time in its
reply brief, it is waived. See Weiner v. Burr, Pease & Kurtz, P.C., 221 P.3d 1, 6 n.14
(Alaska 2009). In any case, the argument lacks merit. Where a principal timely
repudiates an agreement entered by an otherwise unauthorized agent, the agreement is
not ratified. See Trs. of Am. Fed'n of Musicians & Emp'rs Pension Fund v. Steven Scott
Enters., Inc., 40 F. Supp. 2d 503, 511 (S.D.N.Y. 1999). But timely repudiation has no
bearing on apparent authority in this context. See Bruton v. Automatic Welding & Supply
Corp., 513 P.2d 1122, 1126-27 (Alaska 1973) (treating ratification and apparent
authority as two distinct and independent bases for binding a principal). Consequently,
timely repudiation has no bearing on apparent authority here.
Finally, Airline Support implies that ASM had a duty to inquire. Again,
because Airline Support failed to raise this argument in its opening brief, the argument
is waived. See Weiner, 221 P.3d at 6 n.14. And in any event, it lacks merit. In Sea Lion
Corp. v. Air Logistics of Alaska, Inc., this court rejected the argument that the third party
always has an affirmative duty to investigate the actual extent of the alleged agent's
authority. 787 P.2d 109, 117 n.3 (Alaska 1990). Moreover, as the Second Circuit has
observed, the duty to inquire is merely "an alternative way of asking whether the third
party reasonably relied on the representations of the agent that he possessed authority to
bind the principal." Herbert Const. Co. v. Cont'l Ins. Co. , 931 F.2d 989, 996 (2d Cir.
1991). By analyzing whether ASM's reliance was reasonable, we have effectively
addressed whether ASM had a duty to inquire as a matter of law. We do not need to
separately analyze the issue in this case. Although there may be circumstances in which
investigating the scope of the purported agent's authority is the third party's only
reasonable course of action, we decline to consider them here.
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superior court for further proceedings. Accordingly, we also VACATE the superior
court's order awarding ASM full reasonable fees.48
48 Because we remand to the superior court for further proceedings regarding
the assignment agreement's enforceability, we do not reach ASM's cross-appeal as to
whether it is contractually entitled to fees incurred in bankruptcy court.
-21- 6685
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WINFREE, Justice, concurring.
I agree with the court's conclusion that the summary judgment ruling in
favor of ASM Capital II. L.P., must be reversed and the matter remanded for trial on the
reasonableness of ASM's reliance on Katie Land's position as "accounting manager" for
apparent authority to enter into the contract on behalf of Airline Support, Inc. There is
no dispute that ASM sent its offer to Airline Support's "A/R - Credit Manger" at its
Anchorage office, that Airline Support routed the mail to Land, that Land was Airline
Support's "accounting manager," and that Land responded to ASM using that title on
Airline Support letterhead. In my view it is unnecessary to delve into questions about
whether Airline Support's internal workings were or were not manifested to ASM for
purposes of apparent authority or what may or may not be manifested by the mere use
of company letterhead. I therefore do not join in that portion of today's decision. The
only issue reasonably in dispute is the issue remanded for trial: whether Land's company
title of "accounting manager" would reasonably manifest apparent authority to enter into
the contract tendered by ASM. I agree with this portion of today's decision.
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----------------------- Page 23-----------------------
STOWERS, Justice, concurring in part and dissenting in part.
I agree that there is a genuine issue of material fact as to whether Airline
Support's accounting manager, Katie Land, had apparent authority to execute ASM
Capital's assignment agreement. The court concludes that a genuine issue of material
fact arises from the third factor in our apparent authority analysis, namely, that on the
state of the evidence it cannot be said as a matter of law that ASM acted reasonably in
relying on the principal's (Airline Support's) manifestations to the third party (ASM) of
the agent's (Katie Land's) authority to bind Airline Support to the assignment agreement.
I agree with this determination and to this extent concur with the court's opinion.
I disagree with the court's conclusion that there are no genuine issues of
material fact with respect to the first factor in our apparent authority analysis. The first
factor looks to "the manifestations of the principal to the third party" to determine
whether the principal has signaled, by word or deed, that the agent has authority to act
on the principal's behalf.1 The court concludes that because Airline Support gave Land
the title "accounts manager," because it provided Land with company stationery, because
it sent ASM's offer and assignment agreement to Land in Georgia, and because it sent
Land the relevant billings from Airline Support to Northwest Airlines, these facts are
"manifestations" of Land's authority to execute the assignment agreement as a matter of
law.
The court is mistaken. These facts might be accepted by a factfinder as
sufficient to establish a manifestation by the principal of authority in the agent, but these
facts, in the context of all of the relevant facts, do not establish a manifestation of
apparent authority as a matter of law.
1 Anderson v. PPCT Mgmt. Sys., Inc ., 145 P.3d 503, 509 (Alaska 2006)
(citing RESTATEMENT (SECOND) OF AGENCY §§ 8 cmt. b, 27 (1958)).
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This appeal comes to the court from summary judgment granted by the
superior court. The question is whether there are any genuine issues of material fact
proffered by the opponent of summary judgment.2 If there is a single genuine issue of
material fact, summary judgment is precluded. I believe that the court overlooks several
critical genuine issues of material fact.
Airline Support's president, director, and sole shareholder, Donald Tulin,
provided the superior court with an affidavit in which he swore:
I emphasize that the corporation was unaware of the transfer
of the corporate claim by bookkeeper, Katie Land, until after
the fact. I emphasize that Airline Support, Inc.'s Board of
Directors did not authorize the transfer of its claim, and when
the transfer was discovered, the corporation took action by
contacting ASM and attempting to resolve this matter, and
also took action to set the transfer aside.
Tulin also attested:
Katie Land is, in fact, a bookkeeper. She does not sit on the
Board of Directors; she is not a signatory on the corporation's
bank accounts; she does not buy or sell corporate assets in the
normal course of our business; and . . . her transfer of [Airline
Support's] claims to ASM was a mistake.
These affidavit statements are sufficient to raise a genuine issue of material fact as to the
factual question whether Land had apparent authority to bind Airline Support to the
terms of ASM's assignment agreement, including the question whether Airline Support
did or said anything to create an appearance of authority in its agent, Land.3
2 Alaska R. Civ. P. 56(c).
3 It is undisputed that neither Airline Support's president, director, and sole
shareholder, Donald Tulin, nor anyone at Airline Support's office in Anchorage, ever
communicated directly with ASM prior to ASM's receipt of the assignment agreement
signed by Land.
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The factual context is critical to the proper analysis. ASM sent a letter and
an Assignment of Claim Agreement to Airline Support seeking to purchase, at "deep
discount," amounts owed to Airline Support by Northwest Airlines, which was in
bankruptcy. The assignment form contains the following language:
Assignor represents and warrants that it . . . has the full
authority to enter into this Agreement and that the individuals
whose signatures appear below hereby expressly represent
that they have the authority to bind the party for which they
sign this Agreement.
* * *
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York . . . . Any
action under or relating to this Agreement may only be
brought in any State or Federal court located in Nassau
County, in the State of New York. . . . In any action
hereunder the Assignor waives the right to demand a trial by
jury.
* * *
Assignor will indemnify Assignee . . . and save [it] harmless
from and against all claims, actions, liabilities and Assignee
shall not be liable for any damages, or any lost profits
whatsoever, relating to the performance of its obligations
hereunder.
What is important to understand is that the assignment agreement did not merely seek
Airline Support's assent to sell its Northwest Airlines accounts receivable. The
agreement also sought Airline Support's promises to bestow huge litigation benefits on
ASM in the event that litigation ensued. Putting aside the question whether Land, Airline
Support's account manager and bookkeeper, had authority to sell the accounts receivable,
there was no evidence proffered by ASM (other than the fact that Land signed the
agreement and used company stationery in her correspondence with ASM) that Land had
-25- 6685
----------------------- Page 26-----------------------
authority to: waive Airline Support's right to jury trial; bind Airline Support to an
indemnification and hold harmless agreement; and give up Airline Support's right to seek
damages or lost profits from ASM. What bookkeeper or accounts manager (whose
authority did not even include being a signatory on Airline Support's checks, according
to Tulin's affidavit) has the authority to bind its employer to such one-sided and
potentially devastating promises, even where she received her employer's billing
statements, company stationery, and an unopened letter soliciting a purchase at deep
discount of the company's accounts receivable? And based on what? - the agent's
signature to a form contract prepared by the third party that states that she "represents and
warrants that [she] . . . has the full authority to enter into this Agreement and that [she]
. . . expressly represent[s] that [she] ha[s] the authority to bind the party for which [she]
sign[s] this Agreement."
But it never is the case that a third party can bind the principal based on the
agent's representation of authority.4 Yet that appears to be exactly what has happened in
this case. Because I believe there are genuine issues of material fact as to both the first
factor (manifestation by the principal) and third factor (reasonable reliance by the third
party) of this court's apparent authority analysis, I dissent in part from the court's
opinion.5
4 RICHARD A. LORD , 12 WILLISTON ON CONTRACTS § 35:12 (4th ed. 1990)
("Agents often attempt to create an appearance of authority by their own acts or
statements, but such an appearance does not create apparent authority; the principal is
only liable for the appearance of authority caused by the principal's own conduct.").
5 There is an important issue unaddressed by the parties and the superior
court, and not at issue on appeal. Because there are genuine issues of material fact, at
least as to the reasonableness of ASM's reliance on Airline Support's purported
manifestations giving rise to Land's apparent authority to bind Airline Support, the case
is being remanded for trial. But tried by who? Airline Support filed a demand for jury
(continued...)
-26- 6685
----------------------- Page 27-----------------------
5 (...continued)
trial. ASM's form contract provides that Airline Support has waived its right to jury
trial. The superior court granted ASM's motion for an order providing that Airline
Support is not entitled to a jury trial. But whether Airline Support's waiver of trial by
jury is valid depends on whether Land had apparent authority to bind Airline Support to
all terms of the assignment agreement, and that will be the subject of the trial. To the
extent that ASM relied on Airline Support's purported waiver of jury trial in its motion,
the superior court's reliance on that waiver may have been premature.
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