Articles Posted in Contracts

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Mariam Bibi and Javed Raja married and later bought a home in Anchorage with loans from IndyMac Bank, F.S.B. (IndyMac). IndyMac’s loans were secured by deeds of trust on their home. The couple later received an additional loan of around $10,000 from Kevin Elfrink. Over the course of six years, the couple made irregular payments, increased the loan balance three times until it exceeded $25,000, and eventually defaulted. Elfrink initiated foreclosure proceedings and then bought the house at his own foreclosure sale by credit-bidding all money he asserted was due to him under the modified promissory note, satisfying the couple’s debt to him. Following the foreclosure, Elfrink filed a complaint against Bibi and Raja for forcible entry and detainer to remove them from the home. Bibi moved out of her home but filed a counterclaim for usury, quiet title and possession, and surplus proceeds from the foreclosure sale. Raja confessed judgment to his removal from the home. As the lawsuit proceeded, IndyMac initiated a foreclosure on its senior deed of trust and Elfrink bought the house for a second time at IndyMac’s foreclosure sale. The superior court ultimately denied Bibi’s usury claim, determining that Bibi had no standing, her claim was time barred, and in any event, the loan did not violate Alaska’s usury statute because the funding fee was not interest and the usury statute did not apply once the loan’s principal rose over $25,000. The superior court also denied Bibi’s claim for title, ruling that the foreclosure statutes gave Elfrink clear title. Bibi appealed. After review, the Alaska Supreme Court held that: (1) Bibi has standing; (2) it was error for the superior court to deny Bibi’s usury claim because the funding fee was disguised interest and violated the usury statute, which applied to at least the initial period of the loan’s life; and (3) the superior court correctly denied Bibi’s claim for title and possession of her prior home because IndyMac’s foreclosure extinguished her claim to the property. View "Bibi v. Elfrink" on Justia Law

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Girdwood Mining Company transferred stock and mineral royalty interests to Comsult LLC pursuant to a contract between the parties. Girdwood Mining later refused to perform its obligations with respect to the stock and royalty interests, arguing that the contract transferring the stock and royalty interests was illegal. The superior court ruled that because the contract was illegal, it would not grant relief to either party. Comsult appealed seeking enforcement of its stock and royalty interests. the Alaska Supreme Court held that Comsult’s stock and royalty interests and its rights to enforce them remained valid, and therefore reversed the superior court’s decision. View "Comsult LLC v. Girdwood Mining Company" on Justia Law

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This case involved a cancelled contract between Richard Feeney and Alaskan Wind Industries (AWI), a renewable energy contractor, for the sale and installation of a wind turbine on Feeney’s property in Homer. Feeney cancelled a contract to install a wind turbine on his property and sued AWI to recover his down payment. The contractor filed a counterclaim for breach of contract. The superior court concluded that the contractor was required to be licensed by the State and had misrepresented its licensing status. It also concluded that the contractor could not maintain the counterclaim because the contractor was unregistered. The court ordered the contract rescinded and the contractor to return the down payment less a setoff covering costs incurred in the transaction. The contractor failed to pay and the court amended the judgment to include the contractor’s individual owners and a successor company. The contractor’s individual owners appealed the licensing determination and the amended judgment. The property owner cross-appeals the setoff calculation. The Alaska Supreme Court concluded that the court erred only in its setoff calculation. View "Daggett v. Feeney" on Justia Law

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Tok Hwang owned a lessee interest in, and related improvements on, a commercial lot (the leasehold) near the Denali National Park entrance. Hwang leased the lot from a third party for $20,000 annually. Hwang subleased the leasehold to Alaska Fur Gallery, Inc. in April 2012. The sublease (the lease) provided that Alaska Fur would pay $55,000 annual rent for a three-summer term. The disputed provision stated, in full: “Lease includes an option to purchase premises with lease amount to be applied to negotiated purchase price.” When the sublessee attempted to exercise the option the lessee declined to sell, claiming the option was unenforceable. The sublessee sued, seeking, among other things, to enforce the option provision. The superior court held that the provision was too uncertain to enforce either as an option or as an agreement to negotiate. The sublessee appealed; but finding no reversible error in the superior court’s decision, the Supreme Court affirmed. View "Alaska Fur Gallery, Inc. v. Hwang" on Justia Law

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A tour company hired an Ronald Burton ("employee") to work the tourist season as one of its representatives at a Fairbanks hotel where he had worked seasonally in the past. During training, hotel management recalled that the employee had been difficult to work with. They told the tour company they did not want him working at their hotel and, in explaining their decision, made several unfounded statements about him. When the tour company was unable to place the employee at a different hotel because of his limited transportation, it terminated his employment. The employee sued the hotel for defamation and for tortious interference with his prospective business relationship with his employer. Following a bench trial the superior court rejected the tortious interference claim based on lack of causation but found that several of the hotel’s statements were defamatory per se, justifying an award of general damages but not special or punitive damages. The court also denied the employee’s motion to amend his complaint to add a new defamation claim based on events that arose mid-trial. The employee appealed. After its review, the Alaska Supreme Court concluded: (1) the superior court did not abuse its discretion in denying the employee’s post-trial motion to amend his complaint; (2) the court did not clearly err in its application of a conditional business privilege or in its finding that the defamation did not cause the employee’s damages; and (3) the court did not clearly err in its award of damages. View "Burton v. Fountainhead Development, Inc." on Justia Law

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A woman was admitted to a hospital emergency room with pregnancy-related complications. The attending physician recommended that she be transported by medivac to a different facility. The woman and her husband informed the physician that they needed their insurer’s preauthorization for that course of action or they could be personally liable for the costs. The physician allegedly promised to call the insurer and, if it would not approve the medivac, have the hospital bear the costs itself. But the physician failed to contact the insurer until much later, and the insurer declined coverage. The couple sued the physician and the hospital, alleging that the physician breached her fiduciary duty by failing to obtain preauthorization as promised; that her promise created an enforceable contract, which was breached; and that if there was no contract the physician’s promise should be enforced through the doctrine of promissory estoppel. The superior court granted summary judgment to the physician and hospital. The couple appealed. After review, the Alaska Supreme Court held that the superior court did not err when it ruled in favor of the physician and hospital on the claims for breach of fiduciary duty and breach of contract, but that genuine issues of material fact precluded summary judgment on the claim for promissory estoppel. The Court reversed and remanded for further proceedings. View "Thomas v. Archer" on Justia Law

Posted in: Contracts, Health Law

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Williams Alaska Petroleum owned the North Pole refinery until 2004. Williams knew that the then-unregulated chemical sulfolane was present in refinery property groundwater, but it did not know that the sulfolane had migrated off the refinery property via underground water flow. Flint Hills Resources Alaska bought the North Pole refinery from Williams in 2004 pursuant to a contract that contained detailed terms regarding environmental liabilities, indemnification, and damages caps. Almost immediately the Alaska Department of Environmental Conservation informed Flint Hills that sulfolane was to be a regulated chemical and that Flint Hills needed to find the source of the sulfolane in the groundwater. The Department contacted Flint Hills again in 2006. Flint Hills’s environmental contractor repeatedly warned Flint Hills that sulfolane could be leaving the refinery property and that more work was necessary to ascertain the extent of the problem. In 2008, Flint Hills drilled perimeter wells and discovered the sulfolane was migrating beyond its property and had contaminated drinking water in North Pole. A North Pole resident sued Flint Hills and Williams, and Flint Hills cross-claimed against Williams for indemnification. After extensive motion practice the superior court dismissed all of Flint Hills’s claims against Williams as time-barred. Flint Hills appealed. After review, the Supreme Court held that the superior court correctly applied the contract’s damages cap provision, but concluded that the court erred in finding Flint Hills’s contractual indemnification claims and part of its statutory claims were time-barred. The Court also affirmed the court’s dismissal of Flint Hills’s equitable claims. View "Flint Hills Resources Alaska, LLC v. Williams Alaska Petroleum, Inc." on Justia Law

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In 2005 Gordon Timmerman, sole owner of MacDonald Miller Alaska, Inc., agreed to release a claim MacDonald Miller had against Ranes & Shine, LLC, and to pay an additional $18,000 in exchange for equipment Ranes & Shine claimed to own free of any encumbrances. Five years later First National Bank Alaska contacted Timmerman, asserting a security interest in the equipment and requesting its return. First National eventually filed this suit against Timmerman in 2010 to obtain possession of the equipment. Timmerman filed a third-party complaint against Ranes & Shine and its former managing member, Thomas Ranes, asserting breach of warranty of title, misrepresentation, unfair trade practices, and common law contract claims. Ranes & Shine alleged among its other contentions that the applicable statutes of limitation barred Timmerman’s suit because First National’s publicly filed Uniform Commercial Code (UCC) financing statement should have placed Timmerman on inquiry notice of First National’s security interest in the equipment at the time of the agreement in 2005. The superior court disagreed and held Ranes & Shine liable for breach of contract and misrepresentation, while also dismissing the claims asserted against Ranes individually. Ranes & Shine appealed. After review, the Supreme Court affirmed the superior court’s statute of limitations and attorney’s fees and costs rulings, as well as various procedural rulings. But the Court reversed the superior court’s decision to dismiss the misrepresentation claim that Timmerman’s company, MacDonald Miller, had asserted against Ranes in his individual capacity, and remanded for further proceedings on that issue. View "Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc." on Justia Law

Posted in: Business Law, Contracts

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Castle Properties, Inc. held a right of first refusal on approximately 2.4 acres of unimproved land owned by the Wasilla Lake Church of the Nazarene (Church). The City of Wasilla offered the Church another parcel of approximately 17 acres in exchange for this property. Having learned of the City’s offer, Castle requested a copy of the purchase and sale agreement memorializing the exchange. The Church, apparently unaware of the right of first refusal, denied this request. Castle then informed the Church that it was exercising its right and submitted a cash offer, which the Church rejected. Castle filed suit, and the superior court found that Castle received adequate notice when it obtained the city ordinance approving the City’s offer and that the Church acted reasonably in rejecting Castle Properties’ competing cash offer. After review, the Supreme Court concluded that the superior court did not clearly err in finding that Castle received adequate notice, that Castle exercised its rights by making a competing offer, and that the Church’s response did not violate the covenant of good faith and fair dealing. View "Castle Properties, Inc. v. Wasilla Lake Church of the Nazarene" on Justia Law

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Ryan Air entered into a contractual agreement to sublease an airport lot in Kotzebue. The agreement gave Ryan Air an option to purchase the leasehold and apply its rent payments to the final purchase price. But when Ryan Air attempted to complete the purchase, Bruce Andrew Baker d/b/a Baker Leasing, LLC, the other party to the contract, disputed the outstanding balance and sent Ryan Air a notice of breach. Both parties brought their claims to the superior court. After a trial, the court concluded that Ryan Air did not materially breach the contract and ordered the parties to proceed with the transfer. Baker appealed the order, arguing that the court’s factual findings regarding his breach claims were erroneous, that the conveyance documents contained warranties beyond those he was contractually obligated to provide, and that Ryan Air’s attorney’s fees award was unreasonable. After review, the Supreme Court concluded that the trial court’s findings were not clearly erroneous, that the warranties contained in the conveyance documents did not exceed Baker’s contractual requirements, and that Ryan Air’s attorney’s fees were reasonable. The Court therefore affirmed the superior court’s judgment in most respects. However, the parties agreed that the superior court double-counted some of Ryan Air’s rent payments. The case was remanded to allow the superior court to address that issue. View "Baker v. Ryan Air, Inc." on Justia Law

Posted in: Business Law, Contracts