| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Austin J. Joy Jr. and Regena S. Joy v. Randy Hahn and Best Split Firewood, LLC (8/30/2024) sp-7713
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@akcourts.gov.
THE SUPREME COURT OF THE STATE OF ALASKA
AUSTIN J. JOY JR. and REGENA S. )
JOY, ) Supreme Court No. S-18669
)
Appellants, ) Superior Court No. 3AN-20-08662 CI
)
v. ) O P I N I O N
)
RANDY HAHN and BEST SPLIT ) No. 7713 - August 30, 2024
FIREWOOD, LLC, )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Herman G. Walker, Jr., Judge.
Appearances: Paul J. Nangle, Paul J. Nangle & Associates,
Anchorage, for Appellants. William D. Artus, Anchorage,
for Appellees.
Before: Maassen, Chief Justice, and Carney, Borghesan,
Henderson, and Pate, Justices.
PATE, Justice.
INTRODUCTION
In a dispute between landowners and a commercial lessee, the superior
court granted summary judgment in favor of the lessee and enforced a purchase option
in the parties' lease agreement. The court later ordered specific performance, directing
----------------------- Page 2-----------------------
the landowners to sell the real property according to the terms of the agreement. The
landowners appeal the court's decision granting summary judgment and its award of
specific performance. Because we conclude there were no genuine issues of material
fact precluding summary judgment, the lessee was entitled to judgment as a matter of
law, and the court did not err by awarding specific performance, we affirm the court's
decisions.
FACTS AND PROCEEDINGS
A. The Agreement
Austin and Regena Joy jointly own property in Anchorage. In
October 2017 Austin negotiated with a prospective commercial tenant, Randy Hahn, to
lease that property for three years.
Hahn intended to use the property as the location for a firewood-splitting
business he owns, Best Split Firewood, LLC (BSF). The parties disagree about whether
Hahn mentioned BSF to Austin during their negotiations. Austin drafted a one-page,
typed agreement for a lease beginning November 1, 2017, and ending October 31, 2020.
The agreement stated in part:
After such date occupants shall purchase said property at a
discounted purchase price of $1,295,000 with $100,000
down payment for an owner financed price of $1,195,000.
Terms of owner financing shall be 30 year amortized pay off
in 20 years at a fixed interest rate of 6%. Official purchase
& sale agreement to be signed at such time.
The agreement identified the parties as "Austin Jay Joy & Regena Joy here
in [sic] called the owner and Randy A Hahn," followed by an underlined blank space,
followed by the words, "here in [sic] called the occupant." When Austin and Hahn met
to finalize the agreement, Hahn wrote the words "Best Split Firewood" into the
underlined blank space. Austin and Hahn then signed the agreement. Regena was not
present and did not sign the agreement.
Hahn then used the property as the location for his firewood-splitting
business. In February 20 19 Hahn purchased an adjacent lot from a third party to store
-2- 7713
----------------------- Page 3-----------------------
logs and timber for use in his business. Hahn later asserted that he would not have
purchased the adjacent lot unless he had an option to purchase the property he was
leasing from the Joys.
In October 2020 Hahn notified the Joys that BSF intended to exercise the
purchase option in the agreement. Hahn deposited $100,000 toward the down payment
in a trust account. But the Joys refused to sell the property to BSF. Austin later
explained that the Joys did not believe the purchase option was enforceable, they "were
not interested in" selling the property to Hahn, and they doubted Hahn could afford the
purchase.
B. Litigation Over The Agreement
Later in October 2020, Hahn filed a complaint in the superior court
seeking a declaratory judgment confirming that the agreement contained a valid and
enforceable purchase option that either Hahn "or his limited liability company ," BSF,
could exercise. The Joys filed an answer denying that the agreement contained a
purchase option enforceable by BSF.
The Joys later offered to sell the property to Hahn personally. Their offer
contained various drafting errors and terms that differed from the parties' agreement.
Hahn rejected the Joys' offer in January 2021 and reiterated his desire for BSF to
exercise the purchase option.
The Joys moved for summary judgment, arguing BSF was not entitled to
enforce the purchase option. The motion was supported by Austin 's assertion that he
had not informed or consulted Regena before signing the agreement and that the Joys
did not believe their agreement with Hahn contained an enforceable purchase option.
Hahn opposed and filed a cross-motion for summary judgment. He
asserted that before signing the agreement, he told Austin that he intended to use the
property "for [his] firewood business and [his] auto detailing/car wash business." Hahn
also stated that he had told Austin he "wanted [his] firewood company to be on the
lease" before signing and that Austin had "agreed that the company could be a lessee."
-3- 7713
----------------------- Page 4-----------------------
Hahn also offered his personal guarantee of BSF's financial obligations to the Joys in
connection with the sale.
The Joys opposed Hahn's cross-motion, and Austin denied having
discussed with Hahn whether his firewood company would be a party to the lease.
Austin also denied that Hahn had told him he owned an LLC or had "said anything . . .
about wanting to have any lessee on the lease other than himself personally ." Hahn
later filed an amended complaint naming BSF as an additional plaintiff.
C. Summary Judgment
The court granted Hahn's cross-motion for summary judgment and denied
the Joys' motion. The court held that the purchase option was enforceable because it
contained the "essential terms" of a purchase option for real property, including the
price, the amount of the down payment, and the financing terms. The court further
stated that "[b]ased on extrinsic evidence," it was "clear the parties intended to form a
binding option agreement." The court concluded that the undisputed evidence showed
that "there was a meeting of the minds regarding the option to purchase ." It noted that
the Joys offered to sell the property to Hahn, Hahn secured a down payment of
$100,000, and Hahn purchased an adjacent lot. The court reasoned that the parties
would not have taken these actions in the absence of a valid purchase option.
The court concluded that the contract "clearly memorialized" the names
of the parties and that Hahn's "failure to include 'LLC' after his business name" to
identify BSF was not "evidence that [Hahn] was doing business in a personal capacity
rather than under his LLC" when he signed the agreement. The court also concluded
that Hahn had not waived the right to exercise the purchase option by failing to accept
the Joys' offer to sell the property to him personally, rather than to BSF. Finally, the
court "provided 'gap fillers' to assist the parties in the performance of the option."
These gap-filling provisions were:
(1) Plaintiff Randy Hahn will personally guarantee the loan,
in addition to Best Split Firewood, LLC, (2) Randy Hahn
-4- 7713
----------------------- Page 5-----------------------
will cover all closing costs . . . , (3) Randy Hahn will
purchase title insurance, and (4) a standard deed of trust note
and deed of trust will be provided.
D. Order To Sell The Property
The superior court later ordered the parties to close the sale according to
the terms of the summary judgment order, but they failed to do so . The Joys then moved
for an order "vacating [the] prior grant of summary judgment and dismissing [Hahn and
1
BSF]'s claims," citing the delay in closing the sale. The Joys also argued that Hahn
was not entitled to specific performance because he did not have "clean hands."
Specifically, the Joys argued that Hahn had unfairly withheld relevant information from
them, including details regarding liens that "could materially impair" their interest in
the property. Hahn and BSF opposed the Joys' motion and moved to compel the Joys
to sell the property and for other related relief. The Joys opposed the motion, reiterating
their unclean-hands argument. The court denied the Joys' motion and granted Hahn
and BSF's motion to compel.
The Joys appeal.
STANDARDS OF REVIEW
"[We] will review de novo the trial court's grant of summary judgment
2
based on the interpretation of a contract." "When applying the de novo standard of
1 The Joys asserted that the court had discretion to vacate its summary
judgment order and dismiss Hahn's claims because Hahn had not "complete[d] his part
of the court's equitable decision." The Joys did not identify the source of the court's
authority to grant this relief, but we construe their pleading as a motion for relief from
judgment under Alaska Rule of Civil Proc edure 60(b).
2 Martech Constr. Co. v. Ogden Env't Servs., Inc., 852 P.2d 1146, 1149
(Alaska 1993).
-5- 7713
----------------------- Page 6-----------------------
review, we apply our independent judgment, 'adopting the rule of law most persuasive
3
in light of precedent, reason, and policy. ' "
The decision to award specific performance of a contract is "within the
discretion of the trial court and will be reversed on appeal only where it is against the
4
clear weight of the evidence." "We will disturb a superior court's refusal to find
unclean hands only if it is clearly erroneous," meaning that "we are 'left with a definite
5
and firm conviction on the entire record that a mistake has been made.' "
DISCUSSION
A. The Superior Court Did Not Err By Granting Hahn's Motion For
Summary Judgment.
The Joys argue that the superior court should not have granted summary
judgment to Hahn and BSF because there were four unresolved material issues
regarding the interpretation and enforceability of the agreement: (1) whether the
agreement contained an enforceable purchase option, (2) whether BSF was entitled to
exercise that purchase option, (3) whether Hahn waived any rights he or BSF had under
6
the purchase option, and (4) whether Regena was a party to the agreement. We agree
3 Alaska Fur Gallery, Inc. v. Tok Hwang , 394 P.3d 511, 514 (Alaska 2017)
(quoting ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc., 322 P.3d 114,
122 (Alaska 2014)).
4 Leisnoi, Inc. v. Stratman, 835 P.2d 1202, 1207 (Alaska 1992) (quoting
Hausam v. Wodrich, 574 P.2d 805, 809 (Alaska 1978)).
5 Cook v. Cook, 249 P.3d 1070, 1082 (Alaska 2011) (quoting Cartee v.
Cartee, 239 P.3d 707, 712 (Alaska 2010)).
6 See Alaska R. Civ. P. 56(c) (stating superior court shall grant summary
judgment when there is no "genuine issue as to any material fact" and moving party "is
entitled to a judgment as a matter of law"); Beal v. McGuire, 216 P.3d 1154, 1162
(Alaska 2009) (explaining court usually may decide interpretation of contract language
as matter of law, but factual issues may arise "if the meaning of the contract language
depends on conflicting extrinsic evidence" and "[s]ummary judgment is inappropriate
if there is an unresolved material factual dispute about the intent of the contracting
parties").
-6- 7713
----------------------- Page 7-----------------------
with much of the superior court's analysis of these issues and affirm the grant of
7
summary judgment.
1. The agreement contained an enforceable purchase option.
The Joys argue their agreement with Hahn was ambiguous about whether
the purchase option would be enforceable as written or would instead require further
negotiation of the terms of purchase. They argue the statement " [o]fficial purchase &
sale agreement to be signed at such time" creates ambiguity about whether the parties
intended to negotiate additional terms in the future. We disagree.
The parties' agreement is enforceable because it contained all the essential
8
terms of an option to purchase commercial real estate . The agreement clearly
identified the property, stated that an "official" agreement would be "signed" - rather
than "negotiated" or "agreed upon" - at a later time, and articulated the central terms
of the purchase. Those terms included the total price, the down payment amount, the
identity of the party providing financing, the interest rate, and the amortization
schedule. Under the circumstances, nothing more was necessary to form a binding
9
purchase option.
7 See Wielechowski v. State, 403 P.3d 1141, 1152 & n.73 (Alaska 2017)
(noting we may affirm superior court's grant of summary judgment on grounds different
from those on which it relied).
8 See Rego v. Decker, 482 P.2d 834, 837 & n.8 (Alaska 1971) (noting that
"[c]ourts would impose too great a burden on the business community if the standards
of certainty were set too high" in contract cases and explaining that "courts should fill
gaps in contracts to ensure fairness where the reasonable expectations of the parties are
fairly clear" (first citing RESTATEMENT OF CONTRACTS § 370 cmt. c (AM. L. INST .
1932) ("Apparent difficulties of enforcement due to uncertainty of expression may
disappear in the light of courageous common sense."); and then citing 5A ARTHUR L.
CORBIN, CORBIN ON CONTRACTS § 1174, at 283 (1964))).
9 See Slaymaker v. Peterkin, 518 P.2d 763, 765-66 (Alaska 1974) (holding
contract for sale of land was enforceable where parties agreed on purchase price and
interest rate); Hall v. Add- Ventures, Ltd., 695 P.2d 1081, 1088-89 (Alaska 1985)
-7- 7713
----------------------- Page 8-----------------------
We recognize that the purchase option in this case is less detailed than the
option we held was enforceable in Rego v. Decker.10 In Rego, we affirmed the
enforcement of a real estate purchase option that specified not only the price and
payment terms, but also the form of deed and title insurance required and the effect of
lease termination on the validity of the option.11 However, Rego did not establish the
minimum requirements for an enforceable option.12 Instead, we simply decided that
the option at issue in Rego fell within the range of enforceable agreements.13 We
conclude the agreement in this case also falls within that range and contains all the terms
that are necessary to make a purchase option for real property enforceable.14
This case is unlike Alaska Fur Gallery, Inc. v. Tok Hwang, in which we
affirmed the superior court's decision that a purchase option was not enforceable
because - unlike the agreement in this case - the option specified neither the
purchase price nor the method of determining the purchase price.15 We concluded the
(holding contract for sale of land was enforceable where parties agreed on purchase
price and acceptance of proposed financing terms); City of Kenai v. Ferguson, 732 P.2d
184, 188 (Alaska 1987) (holding rental agreement was enforceable because lease stated
duration, which was "the 'essence of the contract,' " and affirming superior court's
decision to impose "a reasonable fair market rent" as implied term of lease (quoting
Chaney v. Schneider, 206 P.2d 669, 671 (Cal. App. 1949))); cf. McCormick v.
Chippewa, Inc., 459 P.3d 1172, 1178 (Alaska 2020) (reversing grant of summary
judgment in contract case involving settlement agreement where "a reasonable person"
could believe "there was no meeting of the minds" regarding scope of agreement, which
was "an essential term"); Magill v. Nelbro Packing Co., 43 P.3d 140, 143-44 (Alaska
2001) (affirming finding that purported profit-sharing agreement that did not set
payment amounts was not enforceable).
10 482 P.2d at 837-38.
11 Id. at 835-36, 838.
12 See id. at 837-38.
13 See id. at 838.
14 See id. at 837-38.
15 394 P.3d 511, 515 (Alaska 2017).
-8- 7713
----------------------- Page 9-----------------------
option in Alaska Fur Gallery was not enforceable because it contained "no key terms,"
meaning that "enforcing the provision would go far beyond filling in one missing
piece."16 By contrast, the parties' agreement in this case specified all the essential terms
and left out only comparatively minor details, such as the allocation of closing costs
and the form of deed, which the superior court resolved with "gap fillers" in its order
on summary judgment.
The Joys argue that this case is analogous to Thrift Shop, Inc. v. Alaska
Mutual Savings Bank , in which we held that the parties had not formed an enforceable
agreement when they orally stated their intention to enter into a written agreement in
the future.17 But Thrift Shop, like Alaska Fur Gallery , involved a vague agreement that
was unenforceable because it specified neither the essential terms of the bargain nor a
mechanism for resolving those terms if negotiations broke down.18 Because the
agreement in this case, which specified both the price and financing terms of the sale,
was much more specific than the agreement in Thrift Shop, our decision in Thrift Shop
does not control.
The Joys argue that the superior court's resort to gap-fillers demonstrated
that the purchase option was not sufficiently clear for the court to hold it was a binding
16 Id. ; see also id. at 516 (holding agreement to negotiate is enforceable
"only if it contains a 'specific way of resolving . . . differences,' as well as a 'basis for
determining . . . breach or for giving an appropriate remedy.' " (footnotes omitted)
(quoting Davis v. Dykman, 938 P.2d 1002, 1008-09 (Alaska 1997))).
17 398 P.2d 657, 658-59 (Alaska 1965).
18 See id. at 659 (noting testimony that parties had agreed only on "the
general formula under which the lease would be entered into"); see also Sea Hawk
Seafoods, Inc. v. City of Valdez, 282 P.3d 359, 369 (Alaska 2012) (holding putative
agreement to negotiate was not enforceable where we "would not be able to discern
when the agreement to negotiate was breached"); Valdez Fisheries Dev. Ass'n v.
Alyeska Pipeline Serv. Co. , 45 P.3d 657, 668 (Alaska 2002) (holding statement of intent
"to begin the process of negotiating a contract as soon as possible" was not enforceable
as promise to negotiate).
-9- 7713
----------------------- Page 10-----------------------
agreement. However, we have directed courts to fill similar gaps in a real estate contract
when the contract stated the price and other essential terms, noting that filling such gaps
is part of courts' "function of achieving justice between the parties without . . . requiring
additional or unnecessary litigation."19 We have approved of gap-filling at the summary
judgment stage when the language of the contract specifies the essential terms of the
bargain and makes the intent of the parties sufficiently clear.20 The court's decision to
provide similar gap-filling provisions in this case on summary judgment was therefore
appropriate and consistent with its conclusion that the parties formed an enforceable
option agreement.
The court 's conclusion that there was a binding option agreement was
based in part on the fact that the Joys offered to sell Hahn the property after litigation
began. The Joys are correct that it was an error to rely on evidence of their offer in this
way at the summary judgment stage. Drawing all reasonable factual inferences in the
Joys' favor, the court should not have concluded that this offer demonstrated that the
Joys intended to be bound by the purchase option; it would also be reasonable to assume
they might have offered to sell the property even in the absence of such an option.21
19 Rego, 482 P.2d at 838-39 (citing Tayloe v. Merchants' Fire Ins. Co.,
50 U.S. (9 How.) 390, 405 (1850)).
20 See City of Kenai v. Ferguson , 732 P.2d 184, 185-86, 188 (Alaska 1987)
(affirming decision granting summary judgment in which superior court concluded
contract was enforceable and "a fair rental value should be implied" as term of lease
that specified rent was "subject to re-negotiation"); Slaymaker v. Peterkin, 518 P.2d
763, 765 (Alaska 1974) (affirming decision granting summary judgment and noting
court was free to resolve "uncertainties" in real estate contract "as to the starting of
interest accumulation and the parties to the deed" to "enable the parties to fulfill their
mutual expectations").
21 See Alakayak v. B.C. Packers, Ltd. , 48 P.3d 432, 449 (Alaska 2002)
(explaining that when deciding summary judgment motions, "all reasonable inferences
are made in favor of the non-movant").
-10- 7713
----------------------- Page 11-----------------------
However, because the parties' agreement contained on its face the essential terms of an
enforceable option, the court's error was harmless.22
The court also suggested that extrinsic evidence of Hahn's conduct
supported the conclusion that the Joys intended to form an enforceable purchase option.
In particular, it cited Hahn's decisions to secure $100,000 for a down payment on the
property and purchase an adjacent lot. Relying on this evidence to support a conclusion
about the Joys' intent was error. While Hahn's actions might provide evidence of his
own intent, they are minimally probative of the Joys' intent, particularly when drawing
all reasonable factual inferences in the Joys' favor.23 The court therefore should not
have concluded at the summary judgment stage that these actions showed that the Joys
intended to be bound by the option agreement. However, here too the court's error was
harmless because the agreement contained on its face the essential terms of an
enforceable purchase option.24
Finally, the Joys argue that the offer they sent to Hahn after litigation
began was an offer of compromise that was not admissible to prove the validity of Hahn
and BSF's claim.25 Because we have concluded any error the superior court made by
relying on the Joys' offer was harmless,26 we do not decide whether the offer was
22 See Alaska R. Civ. P. 61 ("The court at every stage of the proceeding must
disregard any error or defect in the proceeding which does not affect the substantial
rights of the parties.").
23 See Alakayak, 48 P.3d at 447.
24 See Alaska R. Civ. P. 61.
25 See Alaska R. Evid. 408 ("Evidence of . . . furnishing or offering or
promising to furnish . . . a valuable consideration in compromising or attempting to
compromise a claim which was disputed as to either validity or amount, is not
admissible to prove liability for or invalidity of the claim or its amount.").
26 See Alaska R. Civ. P. 61.
-11- 7713
----------------------- Page 12-----------------------
admissible for this purpose. The parties' agreement was enforceable because it
contained on its face the essential terms of a purchase option for commercial real estate.
2. BSF was entitled to exercise the purchase option.
The Joys argue that the parties' agreement was ambiguous regarding
whether BSF was a party, and thus the court erred by concluding on summary judgment
that BSF could exercise the purchase option. Because Hahn personally guaranteed
BSF's obligations as purchaser and the court adopted that guarantee in an order, we
conclude that BSF was entitled to exercise the purchase option as Hahn's assignee. The
dispute about whether BSF was a party therefore did not preclude summary judgment
because it was not material to the resolution of Hahn's claim against the Joys.
As a party to the agreement, Hahn was entitled to exercise the purchase
option in his own name. The agreement also did not contain any provision limiting the
assignment of rights under the contract to another entity. We have not exhaustively
defined the circumstances under which a party may assign contract rights to another
entity, but we have approved of assignments of rights in other contexts.27 Other
jurisdictions allow assignment of co ntractual rights so long as assignment is not
prohibited by the terms of the contract or another source of law and the assignment does
not prejudice a non-assigning party.28 This "modern approach" to assignment displaces
27 See, e.g., Deal v. Kearney, 851 P.2d 1353, 1356 (Alaska 1993) (allowing
assignment of claims for indemnity, contribution, and subrogation); Croxton v. Crowley
Mar. Corp. , 758 P.2d 97, 99 (Alaska 1988) (allowing reassignment of personal injury
cause of action assigned to employer by operation of law back to deceased employee's
estate); Howarth v. First Nat 'l Bank of Anchorage, 596 P.2d 1164, 1168 (Alaska 1979)
(concluding assignment of party's interest in proceeds of sale of real property was
binding and served as valid consideration for subsequent oral contract) .
28 See, e.g., Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 881
P.2d 986, 994 (Wash. 1994) ("Contracts are assignable unless such assignment is
expressly prohibited by statute, contract, or is in contravention of public policy.");
Caglioti v. Dist. Hosp. Partners, LP, 933 A.2d 800, 811 (D.C. 2007) ("We have noted
-12- 7713
----------------------- Page 13-----------------------
"traditional common-law restrictions on the alienability of contract rights," recognizing
that those restrictions are a poor fit for the modern economy.29 This approach is
persuasive. Applying it to the circumstances of this case, we conclude that Hahn was
free to assign his interest in the purchase option to BSF because assignment was not
prohibited by the agreement or another source of law and the assignment did not
prejudice the Joys.
Assigning a purchase option to a third party with fewer assets than the
original optionee has the potential to cause prejudice to the optionor, but an assignment
under the circumstances presented here would not cause that kind of prejudice. All else
being equal, assigning the option from Hahn to BSF and requiring the Joys to sell to
BSF rather than to Hahn personally could have prejudiced the Joys by limiting their
recourse to Hahn's personal assets in the event of a default.30 However, Hahn agreed
on the record to provide a personal guarantee of BSF's obligations as purchaser . Hahn's
on several occasions that, as a general rule, claims are freely assignable."); Ruiz v. City
of N. Las Vegas, 255 P.3d 216, 221 (Nev. 2011) ("While we recognize the general rule
that contracts are freely assignable in the absence of language to the contrary, an
assignment that has the effect of increasing the nonassigning party's obligations or risks
under the contract is prohibited."); see also 6 AM. JUR. 2D Assignments § 15 (Westlaw
database updated May 2024) ("Contract rights may be freely assigned unless an
assignment would add to or materially alter the obligor's duty of risk, or there is a
provision in the contract restricting its assignability, or the assignment would violate a
statute. Thus, most rights under contracts are freely assignable." (footnotes omitted));
RESTATEMENT (SECOND) OF CONTRACTS § 317(2) (AM. L. INST . 1981) ("A contractual
right can be assigned unless (a) the substitution of a right of the assignee for the right
of the assignor would materially change the duty of the obligor, or materially increase
the burden or risk imposed on him by his contract, or materially impair his chance of
obtaining return performance, or materially reduce its value to him, or (b) the
assignment is forbidden by statute or is otherwise inoperative on grounds of public
policy, or (c) assignment is validly precluded by contract.").
29 Rumbin v. Utica Mut. Ins. Co. , 757 A.2d 526, 531 (Conn. 2000).
30 See AS 10.50.265 (providing that limited liability company members are
generally not liable for company's debts).
-13- 7713
----------------------- Page 14-----------------------
guarantee, which the court adopted in an order, eliminated any potential prejudice to
the Joys that assignment to BSF might have caused, leaving Hahn free to assign his
personal right to purchase the property to BSF. Whether BSF was a party to the
agreement thus did not materially affect Hahn's right to exercise the purchase option
through BSF.
We disagree with the Joys that if Hahn and BSF were both parties to the
lease agreement, they would have been required to exercise the option as joint
purchasers. The Joys rely on two out-of-state decisions to support this theory.31 But
both these decisions rest on the principle that a party may not exercise a joint option
without the consent of a fellow optionee.32 Because Hahn consented to BSF's exercise
of the option in the parties' agreement, allowing BSF to exercise that option without
including Hahn as a joint purchaser is consistent with the reasoning of these cases.
Because we conclude that BSF's status as a party to the agreement was
not material to the resolution of Hahn's claim against the Joys, we affirm the superior
court's conclusion that the dispute regarding BSF's status as a party did not preclude
summary judgment.
3. Hahn did not waive any rights he or BSF had under the
purchase option.
The Joys also argue the court erred by rejecting their argument that Hahn
waived any rights that he or BSF had to exercise the purchase option when he declined
the Joys' offer to sell the property to him personally. They argue the court failed to
draw reasonable factual inferences in their favor and improperly relied on a
typographical error in their offer.
31 See In re Est. of Maguire, 466 P.2d 358 (Kan. 1970), modified on reh'g,
476 P.2d 618; Chournos v. Evona Inv. Co., 93 P.2d 450 (Utah 1939).
32 See In re Maguire, 466 P.2d at 359, 361-62; Chournos, 93 P.2d at 452-53.
-14- 7713
----------------------- Page 15-----------------------
However, the court's conclusion that Hahn could reject the offer without
waiving the purchase option did not depend on the typographical error it identified;
instead, after considering all the evidence, the court explained that the Joys' offer was
"poorly drafted and confusing - containing various mistakes throughout." The offer
also contained material terms that differed from the express terms of the parties' original
agreement, including provisions raising the monthly rent Hahn would owe between the
expiration of the lease and the closing of the sale. Given the drafting errors and
discrepancies, the court was correct to conclude that Hahn's refusal to accept the offer
did not waive the purchase option, even when making all reasonable factual inferences
in the Joys' favor.
4. It was not plain error to conclude the agreement was
enforceable against Regena Joy.
The Joys also argue that Regena Joy was not a party to the agreement, and
thus the purchase option was not enforceable against her. However, because the Joys
failed to raise this or any "closely related" argument in the superior court, they have not
preserved the issue for appellate review .33 We therefore review the court's resolution
of the issue only for plain error.34 Because the record does not reveal any "obvious
mistake" involving this issue,35 we will not disturb the court's judgment .
33 See State v. Nw. Constr., Inc., 741 P.2d 235, 239 (Alaska 1987) (stating
"general rule" that we will not consider issues that appellant raises for first time on
appeal unless trial court's resolution of issues was "plain error" or issues are (1) "not
dependent on any new or controverted facts," (2) "closely related to the appellant's trial
court arguments," and (3) issues that "could have been gleaned from the pleadings").
34 See Miller v. Sears, 636 P.2d 1183, 1189 (Alaska 1981) (declining to
review claims not preserved for appeal except for plain error and explaining "[p]lain
error exists where an obvious mistake has been made which creates a high likelihood
that injustice has resulted").
35 See id.
-15- 7713
----------------------- Page 16-----------------------
B. The Superior Court Did Not Err By Awarding Specific Performance.
Finally, the Joys argue that Hahn was not entitled to specific performance
of the purchase option because Hahn acted with unclean hands in his dealings with
them.36 The Joys mistakenly rely on the standard that applies at the summary judgment
stage: They argue the court erred by ordering specific performance because there were
"genuine issues of material fact" regarding whether Hahn acted with unclean hands.
However, whether Hahn acted with unclean hands was not among the issues the court
decided on summary judgment. Instead, it was only after summary judgment had been
granted that the Joys asked the court to consider whether unclean hands warranted relief
from the judgment or precluded the court from ordering specific performance. Under
these circumstances, the summary judgment standard did not apply, and the Joys had
the burden to prove their allegation of unclean hands.37
To successfully raise an unclean hands defense, a party must show
"(1) that the plaintiff perpetrated some wrongdoing; and (2) that the wrongful act related
to the action being litigated."38 An allegation of unclean hands is "untenable" without
specific factual findings regarding the accuracy of allegations of wrongdoing.39 We
will not apply the unclean hands doctrine to prevent a party from obtaining equitable
relief "if the party asserting unclean hands fails to show harm resulting from the alleged
36 See Sea Lion Corp. v. Air Logistics of Alaska, Inc. , 787 P.2d 109, 114 n.2
(Alaska 1990) ("Equity requires that those who seek it shall have acted fairly and
without fraud or deceit as to the controversy in issue.").
37 See Alaska R. Civ. P. 60(b) (stating grounds for relief from judgment);
Gross v. Wilson, 424 P.3d 390, 396 (Alaska 2018) ("[T]he burden of establishing a basis
for relief . . . falls on the party seeking it."); Cook v. Cook, 249 P.3d 1070, 1082 (Alaska
2011) (stating party raising "unclean hands" defense bears burden to demonstrate it).
38 Knaebel v. Heiner, 663 P.2d 551, 554 (Alaska 1983).
39 Id.
-16- 7713
----------------------- Page 17-----------------------
wrongful conduct"40 or if the party against whom the defense is raised "acted fairly and
without fraud or deceit as to the controversy in issue."41
The Joys fail to identify any evidence in the record that Hahn deceived
them regarding his financial condition, failed to disclose information he was obligated
to share, or otherwise wronged them in connection with this case.42 Hahn acknowledges
that there is a money judgment against him in an unrelated matter, but that judgment
did not arise from wrongdoing related to this case and the Joys have not shown that the
judgment would prevent him from performing his obligations to them. The superior
court therefore did not clearly err by declining to find that Hahn acted with unclean
hands. Because the Joys have not raised any other argument against the court's decision
to award specific performance, we affirm the court's decision.43
CONCLUSION
We AFFIRM the judgment of the superior court.
40 Windel v. Mat-Su Title Ins. Agency, Inc., 305 P.3d 264, 273 (Alaska 2013)
(quoting Cook, 249 P.3d at 1082).
41 Knaebel, 663 P.2d at 554 (quoting Precision Instrument Mfg. Co. v. Auto.
Maint. Mach. Co., 324 U.S. 806, 814 (1945)).
42 On appeal the Joys argue in their reply brief that Hahn violated the implied
covenant of good faith and fair dealing by "failing to disclose material information
about the substantial money judgment and tax liens against him." The Joys waived this
argument by failing to raise it in their opening brief. See Barnett v. Barnett, 238 P.3d
594, 603 (Alaska 2010).
43 See Hall v. Add- Ventures, Ltd., 695 P.2d 1081, 1087 (Alaska 1985)
("[S]pecific performance is an equitable remedy, the granting or withholding of which
rests in the discretion of the trial court.").
-17- 7713
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
