Justia Contracts Opinion SummariesArticles Posted in Alaska Supreme Court
Downing v. Country Life Insurance Company
In October 2015, Amy Downing purchased a life insurance policy from Country Life Insurance Company. She purchased both an “executive whole life” policy that would pay a flat amount of $500,000 to her beneficiaries upon her death and a “Paid-Up Additions Rider” (PUAR) that provided an additional death benefit and an investment opportunity. Although Amy's father Tom worked for Country, another employee, Robert Sullivan, met with Amy and Tom to describe the terms of the policy. Amy asked Sullivan why she needed one and a half million dollars in insurance coverage because it was a larger benefit than she expected to need and it required higher yearly premiums. Sullivan explained that although she might not need the large death benefit, the structure of the PUAR provided an investment opportunity because it maximized the policy’s cash value. Sullivan later testified that he never represented to Amy that the death benefit associated with the PUAR was a flat amount. After paying the premiums for a year, Amy informed her parents that she intended to abandon the policy and withdraw its existing cash value. Her mother Kathleen decided to look into the policy as an investment. Kathleen decided to take over payment of the premiums on Amy’s life insurance policy, including the PUAR, as an investment. With Tom’s assistance, Amy assigned her policy to Kathleen. Four months later, on January 27, 2017, Amy died in an accident. Her death occurred in the second year of her policy coverage. Country paid the death benefit of $500,000 on Amy’s whole life policy. Country also paid $108,855 on Amy’s PUAR. Kathleen sued, alleging that she was entitled to $1,095,741 on Amy’s PUAR, minus the $108,855 already paid. Judgment was rendered in favor of Country, and Kathleen appealed. The Alaska Supreme Court determined the superior court did not err in its interpretation of the insurance policy at issue, and affirmed the decision. View "Downing v. Country Life Insurance Company" on Justia Law
Beardsley v. Jacobsen
Two business owners executed a series of transactions to sell a regional airline business. Within two years of the sale, one of the buyer-controlled business entities declared bankruptcy, and the seller commenced litigation to resolve disputes over their agreements. The parties settled before trial. But another buyer-controlled entity later defaulted and declared bankruptcy, and the seller reinitiated litigation. The issue presented to the Alaska Supreme Court was the extent to which the buyers personally guaranteed the obligations of the second bankrupt entity. The superior court granted summary judgment in favor of the seller and held the buyers personally liable for those obligations. The Supreme Court held that whether the parties intended the buyers to personally guarantee the bankrupt entity’s obligations was a disputed material fact, making the issue inappropriate for summary judgment. Judgment was reversed and the matter remanded for further proceedings. View "Beardsley v. Jacobsen" on Justia Law
Bachner Company, Inc. v. Alaska Department of Administration
The Bachner Company leased office space to the State of Alaska. The lease stipulated that the State would occupy 15,730 square feet of space but would not have to pay rent on 1,400 square feet of that space during the lease’s initial ten-year term. The lease further specified that if it was extended beyond the initial term the parties would negotiate a rate for the free space and the State would pay for it. Toward the end of the initial term the State exercised its first renewal option and opened negotiations with the company over the free space’s value. The parties retained an expert to value the space, but the State questioned his methods and conclusions. The State also resisted the company’s claim that the State should begin paying rent for additional space, not identified in the lease, that the company contended the State had been occupying. The parties failed to reach agreement, and the State did not pay rent for any of the extra square footage. Eventually the State executed a unilateral amendment to the lease based on the expert’s valuation and, ten months after the end of the lease’s initial term, paid all past-due rent for the formerly free space identified in the lease. The company filed a claim with the Department of Administration, contending that the State had materially breached the lease, the lease was terminated, and the State owed additional rent. A contracting officer rejected the claim, and on appeal an administrative law judge found there was no material breach, the lease had been properly extended, and the company had waived any claim regarding space not identified in the lease. The Commissioner of the Department of Administration adopted the administrative law judge’s findings and conclusions. The superior court affirmed the Commissioner’s decision except with regard to the space not identified in the lease; it directed the company to pursue any such claim in a separate action. Both parties appealed to the Alaska Supreme Court. After review, the Supreme Court concluded the administrative law judge's findings were supported by substantial evidence, and because the lease did not terminate under the Supreme Court's interpretation of it, the Court affirmed the Commissioner's decision except with regard to the company's claim to rent for space not identified in the lease. The Court concluded that, to the extent it sought rent after the end of the initial term, it was not waived by the document on which the administrative law judge relied to find waiver. Only that issue was remanded to the Commissioner for further consideration. View "Bachner Company, Inc. v. Alaska Department of Administration" on Justia Law
Kenneth P. Jacobus, P.C. v. Kalenka
After a conflict of interest between an attorney and a long-time client arose during settlement negotiations, the attorney filed a confidential motion with the superior court criticizing his client. The client discharged the attorney and hired new counsel. But the attorney continued to control the settlement funds and disbursed himself his fee, even though the amount was disputed by the client. The court found that the attorney’s actions had violated the rules of professional conduct and ordered forfeiture of most of his attorney’s fees. Finding no reversible error in that decision, the Alaska Supreme Court affirmed the superior court. View "Kenneth P. Jacobus, P.C. v. Kalenka" on Justia Law
Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co.
In August 2013 the Alaska Department of Transportation and Public Facilities (DOT) entered into a contract with Osborne Construction Company to upgrade the Aircraft Rescue and Fire Fighting building at the Fairbanks International Airport to withstand damage in the event of an earthquake. The DOT appealed a superior court decision reversing the agency's decision in an administrative appeal. The agency denied a contractor’s claim for additional compensation because the claim was filed outside the filing period allowed by the contract. After applying its independent judgment to interpret the contract, the Alaska Supreme Court agreed with the DOT that the contractor failed to file its claim within the period allowed. The Supreme Court therefore reversed the superior court’s decision and reinstated the agency’s. View "Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co." on Justia Law
Lovely, et al. v Baker Hughes, Inc., et al.
A construction contractor’s employees were injured on the job and received workers’ compensation benefits from their employer. The workers later brought a negligence suit against three other corporations: the one that had entered into the construction contract with their employer, that corporation’s parent corporation, and an affiliated corporation that operated the facility under construction. The three corporations moved for summary judgment, arguing that all three were “project owners” potentially liable for the payment of workers’ compensation benefits and therefore were protected from liability under the exclusive liability provision of the Alaska Workers’ Compensation Act. The superior court granted the motion, rejecting the workers’ argument that status as a “project owner” was limited to a corporation that had a contractual relationship with their employer. After review, the Alaska Supreme Court concluded a project owner, for purposes of the Act, "must be someone who actually contracts with a person to perform specific work and enjoys the beneficial use of that work." Furthermore, the Court found the workers raised issues of material fact about which of the three corporate defendants satisfied this definition. Judgment was therefore reversed and the matter remanded for further proceedings. View "Lovely, et al. v Baker Hughes, Inc., et al." on Justia Law
Maxim Healthcare Services, Inc. v. Collens
In May 2009 Jesse Collens, then 21 years old, was permanently injured in a bicycle accident that left him a C-1 quadriplegic, paralyzed from the neck down, and dependent on a ventilator to breathe. In December 2009 he contracted with Maxim Healthcare Services, a national healthcare corporation with a home healthcare division, to provide his nursing care. In late 2011 issues arose between Collens and Maxim over the company’s management of his care. These issues escalated, and in early March 2012, Alaina Adkins, Maxim’s Alaska office manager, met with Collens to discuss his main concerns with Maxim’s services. The following business day, Adkins emailed various members of Maxim’s legal and administrative staff about one of the issues Collens had raised. Internal concerns surfaced about the legal compliance of the staff working with Collens. In an email responding to the report, Maxim’s area vice president wrote, “We are in dangerous territory right now with the liability of this case and we are going to have to seriously consider discharge.” Collens’s care plan was subject to routine recertification every 60 days; Maxim’s Alaska Director of Clinical Services visited Collens’s house to complete the review necessary for this recertification, noting “discharge is not warranted.” Concurrent to the recertification, Adkins requested Maxim’s legal department provide her a draft discharge letter for Collens. The draft letter stated the discharge had been discussed with Collens’s physician and care coordinator and that they agreed with the discharge decision. But in fact neither approved the discharge. The draft letter also included a space for names of other entities that could provide the care needed by the patient. Adkins noted in an email to the legal department, “We already know that there are no providers in our area that provide this type of service.” The discharge letter she eventually delivered to Collens filled in the blank with four agency names. Adkins delivered and read aloud the discharge letter at Collens’s home on March 30. Collens sued Maxim and Adkins for breach of contract, fraudulent misrepresentation, unfair and deceptive acts and practices under Alaska’s Unfair Trade Practices and Consumer Protection Act (UTPA), and intentional infliction of emotional distress (IIED). The superior court ruled for Collens on all his claims and entered a $20,379,727.96 judgment against Adkins and Maxim, which included attorney’s fees. Maxim and Adkins appealed, arguing that: (1) they were not liable under the UTPA; (2) the superior court erred in precluding their expert witnesses from testifying at trial; (3) the court’s damages award was excessive; and (4) the court’s attorney’s fee award was unreasonable. The Alaska Supreme Court agreed the superior court’s attorney’s fee award was unreasonable, but on all other issues it affirmed the superior court’s decision. View "Maxim Healthcare Services, Inc. v. Collens" on Justia Law
Crowley, et al. v Northern Aviation, LLC, et al.
Two debtor limited liability companies (LLCs) executed security agreements in favor of two creditor LLCs, giving the creditor LLCs security interests in three airplanes. Disputes arose when the creditor LLCs, considering the debtor LLCs in default, took possession of two airplanes and removed and retained parts of a third airplane. After a bench trial the superior court entered judgment against the debtor LLCs and an individual associated with both of them. The debtor LLCs and the individual appealed, raising issues about default, seizure of collateral, and post-seizure notice; the individual also questioned the judgment against him personally. The Alaska Supreme Court affirmed the superior court’s finding that failure to give Knik Aircraft Leasing notice of default prior to repossession of the Cessnas was harmless; the Court also affirmed the superior court’s interpretation of the text messages between Helmericks and the individual, Brett Crowley. The Court reversed the superior court’s decision that Northern Aviation’s failure to provide notice of disposition of the Cessnas was harmless. The Court vacated the superior court’s decisions about the repossession of the Mooney, its entry of judgment on the Mooney-secured loan, and its entry of judgment against Crowley in his individual capacity. The matter was thereafter remanded to the superior court for further proceedings. View "Crowley, et al. v Northern Aviation, LLC, et al." on Justia Law
SMJ General Construction, Inc., v. Jet Commercial Construction, LLC
In early 2016 Jet Commercial Construction, LLC (Jet), an Oklahoma corporation, entered into a contract with Kona Grill, Inc., for the construction of a restaurant in Honolulu, Hawaii. In May, Jet entered into a subcontract with SMJ General Construction, Inc. (SMJ), an Alaska corporation, “to supply the materials and labor for the construction of the building and other improvements.” When disputes arose, the parties engaged in mediation as their subcontract required, reaching a settlement agreement by which they each “absolutely release[d] the other of and from any and all claims, demands and obligations of any kind arising from [the subcontract].” The settlement agreement, unlike the subcontract, contained no dispute resolution provision. Two weeks after settlement the subcontractor filed suit against the contractor in Alaska superior court, seeking damages and an order setting aside the settlement agreement on grounds that the contractor had concealed facts that made it difficult for the subcontractor to obtain releases essential to the settlement. The contractor moved to dismiss, arguing that the subcontractor’s claims were subject to the subcontract’s dispute resolution provision. The superior court granted the contractor’s motion and awarded it attorney’s fees. The subcontractor appealed. The Alaska Supreme Court concluded the case should not have been dismissed because the parties, by the express language of their settlement agreement, released each other from “any and all” obligation to engage in dispute resolution as required by the subcontract. The matter was remanded for further proceedings. View "SMJ General Construction, Inc., v. Jet Commercial Construction, LLC" on Justia Law
Cox v. Estate of Steve Cooper
This case concerned the interpretation of Alaska’s usury statute and whether it provided for a maximum interest rate on contract or loan commitments in which the principal amount exceeds $25,000. William Cox argued the statute provided for a maximum interest rate of 10.5% on all loans in which the principal exceeds $25,000. The Estate of Steve Cooper and Dorothy Cooper (collectively “the Coopers”) argued that parties could contract for any interest rate if the principal of the contract or loan commitment exceeded $25,000. The superior court initially agreed with Cox that loans over $25,000 had a maximum legal interest rate of 10.5%, but the Coopers moved for reconsideration and provided the court with statutory history. This statutory history convinced the court that the Coopers were correct and that AS 45.45.010 did not limit the interest rate for contract or loan commitments over $25,000. Cox appealed, challenging the superior court’s decision to consider statutory history when ruling on the Coopers’ motion for reconsideration and the superior court’s decision to grant the Coopers reasonable attorney’s fees under Alaska Civil Rule 82. The Alaska Supreme Court affirmed the superior court's ruling in all respects. View "Cox v. Estate of Steve Cooper" on Justia Law