This dispute arises from the failed contractor-subcontractor relationship between Ogden Environmental Services, Inc. (Ogden) and Martech Construction Co. (Martech). After Ogden and Martech terminated their relationship through a settlement, Martech was sued by another subcontractor for breach of contract related to the Ogden job. Martech joined Ogden as a party and filed a third party complaint against it. The trial court granted Ogden's motion for summary judgment dismissing the third party complaint with prejudice and directing entry of judgment pursuant to Civil Rule 54(b). Martech appeals. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Ogden contracted with ARCO Alaska, Inc. to perform the PCB remediation project at the Swanson River Oil Field Site. Ogden entered into a subcontract with Martech under which one of Martech's tasks was to purchase, deliver and install two 250 kilowatt gas fired generators "including all connection requirements."
Martech brought Ogden together with Cummins Northwest, Inc. (Cummins), a designer who could fabricate switchgear which would automatically shed and transfer electrical loads between the generators. However, a dispute arose in July 1988 over whether "including all connection requirements" required Martech to supply the switchgear, as Ogden claimed, or whether the switchgear was Ogden's responsibility. In October 1988 Martech ordered the switchgear from Cummins at Ogden's request. Both parties continued to deny liability for the switchgear. Each party continued to claim the other was responsible. It was never formally resolved who would pay for or take ownership of the switchgear.
On November 4, 1988, Ogden terminated its subcontract with Martech. On November 10, 1988, Ogden and Martech entered into a Settlement Agreement, Mutual Release and Waiver ending their relationship. The agreement provided that Martech would sell Ogden the on-site equipment and facilities purchased by Martech for the project and listed in the agreement. The switchgear, not yet being on-site, was not listed. Ogden promised to make a payment of $1.5 million to Martech to cover undisputed unpaid invoices.
The settlement recognized that "[t]he exact nature and amounts of the parties' financial and contractual obligations to each other [were] in dispute" and noted that Martech and Ogden were "desirous of fully, finally and forever effecting a mutual release of their financial and contractual obligations to each other." Paragraph 2 of the settlement provides:
Paragraph 18, a comprehensive mutual release, provides:
The settlement agreement also provided for arbitration of disputes regarding approval of daily worksheets for work performed and payment of invoices. Martech filed a demand for arbitration against Ogden on December 30, 1988 on a number of these claims, but not for the switchgear. Martech was awarded $19,127.24 by the arbitrator.
On November 17, 1988, Cummins informed Ogden by letter that Ogden could
On August 24, 1989, Cummins filed suit against Martech alleging numerous payments due, including that for the switchgear. In response, Martech asserted that it was acting as a disclosed agent and that Cummins had failed to join necessary parties. Martech also filed a third party complaint against Ogden. The superior court denied Martech's motion to join Ogden as a third party defendant.
Ogden moved for summary judgment on the third party complaint on the basis of the settlement agreement. The trial court granted the motion. It also granted Ogden's motion for attorney's fees.
Martech appeals the grant of summary judgment on its third party complaint, the removal of Ogden as a joined party,
A. SCOPE OF THE SETTLEMENT
1. Standard of Review.
This court will review de novo the trial court's grant of summary judgment based on the interpretation of a contract. Peterson v. Wirum, 625 P.2d 866, 871-72 (Alaska 1981). A release is interpreted in the same manner as any other contract. Schmidt v. Lashley, 627 P.2d 201, 204 n. 7 (Alaska 1981). Summary judgment is inappropriate where the evidence before the trial court establishes that a factual dispute exists as to the parties' intent. Peterson, 625 P.2d at 870. This court must draw all reasonable inferences of fact in favor of the party opposing the summary judgment. Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985).
2. Was the settlement intended to address the switchgear?
The key inquiry regarding this issue is whether the mutual release set forth in the settlement agreement applies to the dispute concerning the switchgear.
Martech claims that the agreement between Ogden, Cummins and itself was a separate agreement from the principal subcontract and thus not encompassed by the settlement agreement. It argues that the wrongful act from which the claim arose, Ogden's refusal to take delivery of the switchgear, occurred after the settlement was executed and thus did not arise on or prior to November 4, 1988.
Martech relies on Petroleum Sales, Ltd. v. Mapco Alaska, Inc., 687 P.2d 923 (Alaska 1984), for the proposition that a settlement agreement does not release liability for post-settlement conduct. Mapco was sued by two local fuel distributors for antitrust violations. Id. at 925. The suit was
The issue before the court was whether the distributors "asserted a claim sufficiently distinct from those which they voluntarily relinquished" in the settlement. Id. at 927. This court held that the second suit, although based on new conduct which triggered the litigation, "substantially echoe[d]" the settled suit because both required that Mapco be found to hold a monopolistic position. Id. at 928. Since that finding was covered by the settlement, it could not be litigated again. Id. We also held that the behavior addressed in the settlement, unlawful monopolistic pricing, encompassed both the underpricing complained of in the first suit and the overpricing complained of in the second suit. Id.
We did not discount the possibility that in the future the distributors could maintain an antitrust claim against Mapco. "There is no dispute that a new cause of action accrues for damages caused by post-settlement antitrust conduct each time such new or renewed conduct is engaged in." Id. at 929. However, the new cause of action would have to be actionable independently of the monopolistic position approved of in the settlement.
The claim sought to be maintained in this case is not the independent claim envisioned in Mapco. The settlement declares that the parties intended to resolve all of their "financial and contractual obligations to each other." Even assuming that an agreement for Ogden to purchase the switchgear existed,
The release executed by Ogden and Martech was not limited to claims on the principal subcontract. Rather, the liability was released against any "claims of any nature whatsoever" between the parties. The settlement thus sought to resolve the entire transaction. The dispute over the switchgear existed before the settlement, the responsibility for the switchgear being debated back and forth between Ogden and Martech. Certainly the dispute between Ogden and Martech regarding the switchgear was a claim "arising from or relating to the subject contract." We conclude that this claim was abandoned in accordance with the settlement.
Moreover, we conclude that the claim involving the switchgear was encompassed in the settlement according to the test for certainty employed in Mapco.
It is not significant that the switchgear was never actually discussed in the settlement negotiations. First, the agreement indicates a complete washing of the hands between the parties using as soap blatantly broad language to cover all possible causes of action: "All liability from whatever damage," "fully, finally and forever;" "any damages whatsoever;" "claims of any nature whatsoever;" and "all claims, demands, rights, and causes of action that each has or may have against the other with respect to the above-captioned dispute." Second, although the switchgear was not specifically discharged, neither was it specifically reserved as an independent claim. The broad language used implies that claims not specifically contemplated are settled. Those deserving special attention were addressed separately. There are no catch-all phrases to preserve omitted claims as there are to abandon them.
B. RULE 19 JOINDER
1. Standard of Review
This court has before reversed a trial court's order of joinder under Civil
2. Finality of the Judgment
Ogden contends that this court is without jurisdiction to consider the trial court's order that "other than as a prevailing third-party defendant in its motion for attorneys' fees, Ogden is not a party to the remaining lawsuit." It argues that the joinder order was interlocutory and not subject to review by this court.
This court has jurisdiction to consider appeals from final judgments entered by the superior court. Alaska R.App.P. 202(a) (emphasis added). "The basic thrust of the finality requirement is that the judgment must be one which disposes of the entire case, `... one which ends litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Greater Anchorage Area Borough v. City of Anchorage, 504 P.2d 1027, 1030 (Alaska 1972) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1944)), overruled in part by City and Borough of Juneau v. Thibodeau, 595 P.2d 626, 629 (Alaska 1979) (holding that Greater Anchorage Area Borough did not apply to remand orders from the superior court acting in its appellate capacity). This court should look to the effect of the judgment, rather than the form. Id. at 1030-31.
Generally, orders granting or denying motions to join parties to an existing lawsuit are interlocutory. Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir. Unit A Oct. 1981); Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1325 (10th Cir.1978). However, in this case the order declaring Ogden a non-party was a denial of Martech's motion for clarification of the order dismissing the third party claim. The order dismissing the third party claim was certified by the superior court as a final judgment under Civil Rule 54(b).
3. Was the order joining Ogden as a party ever vacated?
Martech contends that the August 1, 1990 order joining Ogden as a party pursuant to Civil Rule 19 was never vacated. It thus contends that to the extent that the January 4, 1991 order ruled that Ogden was no longer a party, the order was in error.
The trial court's May 25, 1991 order that Ogden was no longer a party to the lawsuit was based on a lack of existing claims against Ogden. Ogden's response to Martech's motion for clarification claimed that the August 1 order was not effective because Cummins refused to file a claim against Ogden as a co-defendant.
The January 4 order, as explained in the clarifying order of May 25, implicitly vacated the August 1, 1990 order which joined Ogden as a co-defendant. It is not necessary for either the trial court or the parties to use the term "vacate" or any derivative thereof. We conclude that Judge Ripley's intention was to supersede the previous order.
3. Did the trial court abuse its discretion in vacating the Rule 19(a) joinder?
Although it urges otherwise, Martech's appeal of the propriety of the January 4 order is tantamount to an appeal of an order vacating a Rule 19 joinder. We thus examine the merits of the refusal to order joinder.
Civil Rule 19(a) provides that a party should be joined if "complete relief cannot be accorded among those already parties." Alaska R.Civ.P. 19(a) (1991-92).
Cummins seeks to recover from Martech for breach of contract. Martech defends that it was acting as an agent of a disclosed principal and thus not a party to the contract. See Restatement (Second) of Agency § 320 (1958). The lawsuit between Cummins and Martech will necessarily make an adjudication about the relationship between Martech and Ogden.
However, Martech, the party seeking joinder, can be found not liable to Cummins without Ogden joined as a party. Cummins will be afforded complete relief if Martech is found to be liable. Cummins would be afforded incomplete relief only if there is a finding that Martech and Ogden
Ogden's presence as a party is not necessary for a just adjudication of the Cummins-Martech dispute. The evidence needed to make the determination that Martech was the disclosed agent of Ogden can be obtained from Ogden as a witness. It is not necessary that Ogden be a party.
If Martech prevails, Cummins may have to sue Ogden to recover payment for the switchgear. Further, Ogden may be bound by a prior finding of agency. However, later litigation will not affect Martech. Ogden strongly resists its inclusion in this suit while being fully aware of this possibility. Cummins is free to amend its complaint again and include Ogden as a defendant.
The settlement agreement contemplated all present and future claims arising out of the Martech-Ogden contracting relationship. The third party complaint was properly dismissed. The trial court's order dismissing the third party claim also effectively vacated the prior order of joinder. The trial court did not abuse its discretion in vacating the joinder. In view of our holding, we do not address the issue of attorney's fees.
MATTHEWS, J., with whom RABINOWITZ, C.J., joins, dissents.
MATTHEWS, Justice, with whom, RABINOWITZ, Chief Justice, joins, dissenting.
On appeal from the grant of a summary judgment we accept as true that version of the facts advanced by the losing party. Frantz v. First Nat'l Bank of Anchorage, 584 P.2d 1125, 1126 (Alaska 1978). If, viewing the case from that perspective, the movant is not entitled to judgment as a matter of law, the case must be reversed. In the discussion that follows I set forth Martech's version of the facts. If these facts are accepted as true, Ogden is not entitled to judgment on the grounds that the settlement agreement of November 10, 1988, released Ogden's obligation to pay Cummins for the automatic switchgear.
According to Martech's president, Ben Tisdale, there was a dispute between Martech and Ogden concerning whether Martech was obliged to supply the automatic switchgear. This dispute arose in July of 1988. Martech consistently took the position that the automatic switchgear was not necessary to the project, that Martech was not obligated to supply the automatic switchgear, and that Martech would not
By a letter dated November 3, 1988, Ogden terminated its contract with Martech, claiming six material breaches on the part of Martech and, alternatively, claiming the right to terminate the contract for Ogden's convenience. None of the claimed breaches entailed the previous switchgear controversy. The parties then negotiated a settlement agreement entitled Settlement Agreement Mutual Release and Waiver which was signed on November 10, 1988. Neither the switchgear nor Ogden's obligation to pay for the switchgear — which had not yet been delivered — was mentioned in the settlement agreement or in the discussions leading up to the settlement agreement. At some point after the settlement agreement was signed, Ogden declined to accept delivery of the automatic switchgear and refused to pay for it. Cummins sued Martech for the switchgear; Martech filed a third-party claim for indemnity against Ogden. The trial court granted Ogden's motion for summary judgment concerning Martech's third-party claim, presumably on the basis that the claim is barred by the settlement agreement.
An important aspect of the settlement agreement is that it contemplates certain
First, in the release clause, section 18 of the 22 section agreement, care is taken to limit application of the clause to listed claims and claims which are described in the past tense, that is, claims which "arose" on or prior to November 4, 1988. The key sentence of the release clause reads as follows:
Second, as to past work or services which have not been billed and as to future services arbitration remedies are provided in case of a dispute.
Ogden was not called upon to perform its promise to pay for the automatic switching equipment until after the date of the settlement agreement. Thus, Ogden did not breach its promise to make payment for the switchgear until after the date of the agreement. Consequently, Martech's claim for indemnity did not arise on or prior to November 4, 1988, and therefore the claim was not released.
In footnote 10, Op. at 1151 n. 10, the court acknowledges that this conclusion is correct: "Indeed, an agreement by Ogden to purchase the switchgear would have made the switchgear an item subject to invoice and thus arbitrable under paragraph 5(d) of the settlement." Since, under the view of the transaction most favorable to Martech, Ogden did agree to purchase the switchgear, we must, for summary judgment purposes, treat the switchgear as subject to resolution under paragraph 5 of the settlement agreement. This necessarily means that the claim has not been released.
What remains is the court's suggestion that Martech may be barred — by some variant of the doctrine of res judicata — from litigating its claim because the claim was not arbitrated. Op. at 1152-53 n. 13. A sufficient answer to this contention is that Martech's claim for indemnity is not a mandatory subject for arbitration until it ripens, that is until and unless Martech is required to pay Cummins. This view is supported by much authority in the litigation context.
For the above reasons, the judgment of the superior court should be reversed and this case should be remanded for further proceedings.
Martech's president, Ben Tisdale, supplied an affidavit in support of Martech's opposition to Ogden's motion for summary judgment. Attached to the affidavit are letters and memoranda evidencing that each party continued to deny liability for the switchgear and to insist that the other was responsible. Mr. Tisdale then states, "After the design was finalized, Ogden directed Martech to place an order for the switchgear. Martech did so, but only after Ogden agreed to pay for the switchgear." There is evidence that Ogden requested Martech to order the switchgear. However, aside from Tisdale's assertion, there is no evidence that Ogden "agreed" to pay for the switchgear, thereby abandoning its position that Martech was responsible for paying for the switchgear. Tisdale offers no facts to support his assertion. There is no reference to letters, memoranda, or other writings in which Ogden agreed to pay for the switchgear. There is no reference to any conversations during which Ogden agreed to pay for the switchgear. There is no evidence who, by whatever means, agreed on Ogden's behalf to pay for the switchgear. There is no evidence to whom at Martech the agreement was conveyed. There is nothing in the record except Mr. Tisdale's naked assertion that before Martech placed the order, Ogden "agreed" to pay for the switchgear.
To defeat a motion of summary judgment an adverse party may not rest upon mere allegations, but must set forth specific facts showing that there is a genuine issue of material fact. Alaska Civil Rule 56(e). To create a genuine issue of material fact there must be more than a scintilla of contrary evidence. Yurioff v. American Honda Motor Co., 803 P.2d 386, 389 (Alaska 1990).
Because we conclude that the settlement release applies to the switchgear regardless of any alleged agreement, even had Martech alleged sufficient facts to establish a dispute whether an agreement existed, this question would not be material to our resolution or defeat summary judgment.
Moreover, the fact that the switchgear was not discussed cannot be interpreted as a positive inference that the release was not intended to address it. This court has before held that "Differences of opinion among the parties as to their subjective intent, expressed during litigation, do not establish an issue of fact regarding the parties' reasonable expectations at the time they entered into the contract... . Rather, the court must look to express manifestations of each party's understanding of the contract." Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981).
Similarly, Martech's contentions that it was at least mistaken and that a question of fact exists as to its liability regarding the switchgear are addressed explicitly by the release: "The parties specifically release and renounce any right they may now or hereafter have to reform, rescind, modify, or set aside this [settlement] because of mutual or unilateral mistake."
DeNardo v. State, 740 P.2d 453, 455-56 (Alaska 1987), cert. denied, 484 U.S. 919, 108 S.Ct. 277, 98 L.Ed.2d 239 (1987).
Martech and Ogden were involved in arbitration which was intended to resolve "a dispute aris[ing] among the parties regarding approval of any daily worksheet or payment of any invoice." Martech contended below that the switchgear was not subject to arbitration because the settlement agreement "only requires that disputes arising out of the settlement agreement itself be addressed by arbitration." However, questions concerning the scope of the release, such as whether it encompasses the switchgear agreement, are arbitrable. The settlement agreement provides for arbitration of "[a]ll claims, disputes and matters in question arising out of or relating to this agreement or the breach thereof."
Martech submitted a number of invoices to arbitration. Eight months later Cummins filed suit against Martech over the switchgear. Eight months later still, the arbitrator awarded Martech $19,127.24. The claim for the switchgear was not submitted to the arbitrator. Martech did not challenge the award.
The problem with res judicata in this case is that the award apparently was never confirmed, nor was a final judgment entered pursuant to AS 09.43.110 and 09.43.140. Ogden argues that since the award was not challenged, it became, "for all practical purposes, a final judgment." Since the statutory period of 90 days to correct, modify or vacate an arbitration award has passed, it is arguable that the entering of the judgment would be a formality. See AS 09.43.120, AS 09.43.130. However, because we conclude that the release encompassed the switchgear claim we need not reach this issue.
It is true that a defendant is not required to file a claim against one it has joined as a co-defendant in order to effect the joined party status. As an alternative, courts have ordered that the plaintiffs file an amended complaint naming the joined party as a defendant. See, e.g., Parkview Corp. v. United States, 85 F.R.D. 145, 148 (E.D.Wis. 1980) (directing sua sponte that plaintiff serve new co-defendant with pleadings); Kodiak-Aleutian Chapter of the Alaska Conservation Society v. Kleppe, 423 F.Supp. 544, 546 (D.Alaska 1976) (using Federal Rule of Civil Procedure 19(a)).
However, we do not believe that Rule 19(a) is self-effectuating. There must be some form of claim filed against the joined party in order for it to be a "party" to the lawsuit. The cases cited by Martech do not support the proposition that a complaint need not necessarily be filed against the joined party.
The referencing of a third party in the defensive posture is not sufficient to effectuate a joinder. Even if the order compelling Cummins to file a complaint against Ogden had not been vacated, Martech still would have had to seek a Rule 19(a) joinder anew.
The interests relevant in Rule 19(a) joinder questions have also been described as follows: "(1) the plaintiff's interest in having a forum; (2) the defendant's wish to avoid multiple litigation or sole responsibility for a liability [it] shares with another; (3) the interest of the outsider; and (4) the interest of the courts and the public in complete, consistent, and efficient settlement of controversies." R.J. Williams Co. v. Fort Belknap Housing Authority, 92 F.R.D. 17, 21 (D.Mont. 1981). According to this list it is difficult to identify an interest which is implicated in this case since the "outsider" disclaims any interest.
Martech also alleged that Ogden would not be entitled to attorney's fees if we ordered that Ogden remained joined in the cause of action. Because of our holding, we need not address that issue.
Similarly, the majority rejects Tisdale's affidavit which states that "Ogden agreed to pay for the switchgear" on the grounds that it is uncorroborated and insufficiently detailed. Id. at 1149-50 n. 7. The majority states regarding Tisdale's affidavit "[t]o create a genuine issue of material fact there must be more than a scintilla of contrary evidence." Id. I agree that sometimes testimony may be so internally inconsistent and in conflict with the apparently reliable evidence offered by the proponent of a summary judgment motion that it may not serve to create a genuine issue of material fact and thus defeat summary judgment. Yurioff v. American Honda Motor Co., 803 P.2d 386, 389 (Alaska 1990), was such a case. There the key issue was whether plaintiff's injury occurred on March 19 or March 20. The defendant moved for summary judgment on the ground that it took place on the 19th, offering clinic records, testimony that the records were accurate, and plaintiff's deposition testimony that the injury probably was suffered on the date indicated on the clinic records. In opposition, plaintiff cited another portion of his deposition where he had stated that he thought he was injured on March 20. We held that this self-contradictory statement was not evidence reasonably tending to dispute or contradict the "authentic documentation of the injury." Id.
This case is unlike Yurioff for a number of reasons. First, Tisdale's affidavit is not self-contradictory. Second, the affidavit is not contradicted by documentary evidence. Third, the movant in this case, Ogden, did not attempt an evidentiary showing that there was no agreement that Ogden would pay for the switchgear. Instead, Ogden moved on the sole ground that regardless of any agreement the release clause of the settlement agreement barred Martech from litigating the switchgear dispute:
Ogden's Reply to Martech's Opposition to Ogden's Motion for Summary Judgment at 6 (emphasis added).
Ogden admittedly failed to address the factual issue concerning whether it had agreed to pay for the switchgear. Indeed, Ogden indicated how it would respond to the question if required to do so:
Id. at 6 n. 1. Ogden, however, offered no evidence to this effect in support of its motion. The proponent of a summary judgment motion has the initial burden of establishing the absence of genuine issues of material fact. Ratcliff v. Security Nat'l Bank, 670 P.2d 1139, 1142 (Alaska 1983). Thus, since Ogden — the movant — did not carry its initial burden of showing by admissible evidence that no agreement existed, the court errs by requiring Martech — the nonmovant — to produce evidence, a "scintilla" or otherwise, on the issue.
Op. at 1151-52 & n. 11. However, use of the verb "arose" places these seemingly broad phrases in the past tense with November 4, 1988, as the reference date. The court acknowledges the parties' use of the past tense, Op. at 1152 n. 12, but fails to give effect to the verb "arose" in construing the release language. The court points out that the two clauses in which "arose" appears are joined by the disjunctive "or." Since both clauses are framed in the past tense, however, severing the clauses does not alter the tense of the release sentence. Yet, use of the disjunctive leads the court to conclude that "[t]he release then specifically encompasses `claims of any nature whatsoever (including any liability pursuant to the contract which might have arisen in the future had the contract not been terminated).' (Emphasis added.)" Id. From its use of emphasis, I take the court to rely in part on the highlighted parenthetical language in support of its reading of the release. Even the parenthetical clause, however, only further specifies the claims that are released, which claims are already limited by the use of the past tense.