Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-akd-3_11-cv-00245/USCOURTS-akd-3_11-cv-00245-2/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

DISTRICT OF ALASKA

David E. Olson, et al., )

)

Plaintiffs, ) 3:11-cv-00245 JWS

)

vs. ) ORDER AND OPINION

)

Mark O’Brien, et al., ) [Re: Motion at Dockets 94 & 110]

)

Defendants. )

)

I. MOTIONS PRESENTED

At docket 94 defendants Mark O’Brien, James Cantor, and Richard Welsh

(collectively, “Defendants”) move to dismiss the complaint of plaintiffs David E. Olson

and Absolute Environmental Services, Inc. (collectively, “Plaintiffs”) pursuant to Federal

Rule of Civil Procedure 12(b)(6). Plaintiffs oppose the motion at docket 102, supported

by a declaration from Plaintiffs’ counsel at docket 103. Defendants reply at docket 109. 

At docket 114 the court authorized Defendants to file a surreply; they did so at

docket 119. 

At docket 110 Defendants move to strike Plaintiffs’ counsel’s declaration. 

Plaintiffs oppose the motion at docket 113. Defendants reply at docket 118. Because

the court does not rely on Plaintiffs’ counsel’s declaration, Defendants’ motion is denied

as moot. Oral argument was not requested and would not assist the court. 

Case 3:11-cv-00245-JWS Document 120 Filed 03/16/17 Page 1 of 9
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II. BACKGROUND

The background of this case is set out in the court’s order at docket 77 and need

not be repeated here. Suffice it to say for present purposes that the Alaska Department

of Administration denied Plaintiffs’ request for an equitable adjustment to the contract

price for the work they performed on the State Office Building (“SOB”) in Juneau. 

Plaintiffs brought an administrative appeal of the denial, which was ultimately denied. 

Plaintiffs’ present complaint alleges that Defendants violated their civil rights by

committing various actions that compromised the integrity of the appeal process.1 

Plaintiffs appealed the administrative decision to the Alaska Superior Court,

arguing in part that the agency’s decision was procedurally flawed. In pertinent part the

Superior Court held that any procedural flaws in the administrative appeal did not

deprive Plaintiffs of a due-process-compliant hearing and, substantively, Plaintiffs had

no contractual right to recover their additional costs. 

Plaintiffs appealed to the Alaska Supreme Court. The Alaska Supreme Court

affirmed the Superior Court’s conclusion that Plaintiffs lacked a substantive contractual

right to recover additional costs. In light of this conclusion, the court refrained from

addressing Plaintiffs’ procedural claims, holding that Plaintiffs cannot show they were

harmed by the procedural issues they identified.

At docket 61 Defendants filed a motion to dismiss Plaintiffs’ complaint on claim

preclusion and issue preclusion grounds. At docket 77 the court granted the motion,

holding that Plaintiffs’ complaint was barred by claim preclusion. In light of this holding,

the court found it unnecessary to consider Defendants’ issue preclusion arguments.2

 

Plaintiffs appealed, and the Ninth Circuit Court of Appeals reversed. The Ninth

Circuit noted that an exception to claim preclusion applies “where the party against

1Doc. 1 at 11 ¶¶ 72–82. See generally id. at 13 ¶ 84 (“The civil rights violations by

Defendants described above caused Plaintiffs to suffer substantial damages.”).

2Doc. 77 at 4.

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whom it is asserted ‘lacked [a] full and fair opportunity to litigate his claims.’”3 The court

held that this exception applies here because Plaintiffs lacked a full and fair opportunity

to litigate their claims for damages regarding the “alleged improprieties in the decisionmaking process” of their administrative appeal.4

 The Ninth Circuit remanded the case

to this court for consideration of Defendants’ issue preclusion arguments. 

III. STANDARD OF REVIEW

Rule 12(b)(6) tests the legal sufficiency of a plaintiff’s claims. In reviewing such

a motion, “[a]ll allegations of material fact in the complaint are taken as true and

construed in the light most favorable to the nonmoving party.”5 To be assumed true,

the allegations, “may not simply recite the elements of a cause of action, but must

contain sufficient allegations of underlying facts to give fair notice and to enable the

opposing party to defend itself effectively.”6 Dismissal for failure to state a claim can be

based on either “the lack of a cognizable legal theory or the absence of sufficient facts

alleged under a cognizable legal theory.”7 “Conclusory allegations of law . . . are

insufficient to defeat a motion to dismiss.”8

To avoid dismissal, a plaintiff must plead facts sufficient to “‘state a claim to relief

that is plausible on its face.’”9 “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the

3Doc. 85 at 2 (quoting Conitz v. Alaska State Comm’n for Human Rights, 325 P.3d 501,

508 (Alaska 2014)).

4

Id. at 2–3.

5Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).

6Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

7Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

8Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001).

9Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 570 (2007)).

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defendant is liable for the misconduct alleged.”10 “The plausibility standard is not akin

to a ‘probability requirement,’ but it asks for more than a sheer possibility that a

defendant has acted unlawfully.”11

 “Where a complaint pleads facts that are ‘merely

consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and

plausibility of entitlement to relief.’”12

 “In sum, for a complaint to survive a motion to

dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that

content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”13

IV. DISCUSSION

A. Issue Preclusion

Defendants’ initial motion to dismiss raised both claim preclusion and issue

preclusion. Claim preclusion prohibits a “party from raising any claim or defense in the

later action that was or could have been raised in support of or in opposition to the

cause of action asserted in the prior action.”14 One rationale for this rule is waiver. “If a

party does not raise a claim or a defense in the prior action, that party thereby waives

its right to raise that claim or defense in the subsequent action.”15 Under the exceptionto-claim preclusion that the Ninth Circuit applied here, a party does not waive her right

to raise a claim in a future action unless she had a full and fair opportunity to raise that

claim in the prior action.16 

10

Id.

11

Id. (citing Twombly, 550 U.S. at 556).

12

Id. (quoting Twombly, 550 U.S. at 557).

13Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). See also Starr, 652

F.3d at 1216.

14United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994) (emphasis in original).

15

Id. See also Girdwood Min. Co. v. Comsult LLC, 329 P.3d 194, 200 (Alaska 2014).

16See Conitz, 325 P.3d at 508.

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Issue preclusion, on the other hand, does not concern waiver.17 “Instead, courts

reason that if another court has already furnished a trustworthy determination of a given

issue of fact or law, a party that has already litigated that issue should not be allowed to

attack that determination in a second action.”18 Issue preclusion applies only where the

litigant had a full and fair opportunity to litigate the issue in the first action.19

 

Because the first judgment here was issued by an Alaska court, this court must

apply Alaska law to determine whether issue preclusion bars any of Plaintiffs’ claims.20

To determine whether issue preclusion applies under Alaska law, courts apply the test

set out in the Restatement (Second) of Judgments § 27,21 under which four factors

must be met: “(1) the party against whom the preclusion is employed was a party to or

in privity with a party to the first action; (2) the issue precluded from relitigation is

identical to the issue decided in the first action; (3) the issue was resolved in the first

action by a final judgment on the merits; and (4) the determination of the issue was

essential to the final judgment.”22 As discussed below, these four factors are met in this

case.

1. Plaintiffs were parties to or in privity with a party to the first action

Plaintiffs concede that this requirement is satisfied.23 The first action was

brought by North Pacific Erectors, Inc. (“NPE”). Plaintiff David E. Olson alleges that, as

17Shanbaum, 10 F.3d at 311.

18

Id. See also Wall v. Stinson, 983 P.2d 736, 740 (Alaska 1999).

19Restatement (Second) of Judgments § 29 (1982).

20See Plaine v. McCabe, 797 F.2d 713, 718 (9th Cir. 1986) (“[F]ederal courts . . . give

state court judgments the same full faith and credit they would have in the state’s own courts by

applying the preclusion law of the state in which the judgment was rendered.”).

21See Johnson v. Alaska State Dep’t of Fish & Game, 836 P.2d 896, 906 (Alaska 1991)

(citing Restatement (Second) of Judgments § 27 (1982)).

22

Jackinsky v. Jackinsky, 894 P.2d 650, 654 (Alaska 1995).

23Doc. 102 at 11.

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the president and sole shareholder of co-plaintiff Absolute Environmental Services, Inc.

(“AESI”), he is the assignee of NPE’s civil rights claims against Defendants.24 As such,

Plaintiffs are in privity with a party to the first action. 

2. Issues decided in the first action are identical to issues in this action

In this action, Plaintiffs essentially reassert the procedural claims that the

Superior Court rejected in the first action. Defendants’ motion asserts that these claims

are barred by issue preclusion because the factual issues upon which Plaintiffs’ claims

rely substantially overlap with factual issues decided by the Superior Court in the first

action,25 and the legal issue central to this case—whether Defendants’ actions violated

Plaintiffs’ procedural rights—is identical to a legal issue that was decided in the first

action.26 In response, Plaintiffs argue Defendants have not shown how any of the

factual issues identified in their motion are essential to any elements of Plaintiffs’

claims.27 Plaintiffs do not dispute, however, that the Superior Court resolved the same

legal issues that they assert in this action. In reply, Defendants do not counter

Plaintiffs’ factual argument by identifying any factual issues decided in the first action

that are necessary to any causes of action alleged here. Instead, they focus on the

Superior Court’s resolution of the essential legal issue in this case.28

The court finds that the Superior Court decided at least two issues that are

identical to issues raised in this case. First, the court agrees with Defendants that the

Superior Court decided whether Defendants violated Plaintiffs’ procedural rights in the

administrative proceeding. Second, the Superior Court also decided whether

24Doc. 1 at 2 ¶ 3.

25Doc. 94 at 16.

26

Id. at 17.

27Doc. 102 at 12.

28Doc. 109 at 4.

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Defendants’ actions in the administrative proceeding harmed Plaintiffs’ substantive

rights. Both of these issues are also issues in this action.29

3. Whether the Superior Court’s determination of these two issues is

essential to the final judgment

In order for issue preclusion to apply, the issue determined in the first action

must be essential to the final judgment in that case.30

 “If issues are determined but the

judgment is not dependent upon the determinations, relitigation of those issues in a

subsequent action between the parties is not precluded.”31

 

Defendants argue that the Superior Court’s decisions on Plaintiffs’ procedural

claims are essential to the final judgment.32 This argument is untenable. As the Alaska

Supreme Court’s opinion demonstrates, the Superior Court did not need to reach

Plaintiffs’ procedural claims because their contractual claims lack substantive merit. In

other words, Plaintiffs would have lost the appeal even if the Superior Court had not

decided their procedural claims. Because the final judgment is not dependent on the

Superior Court’s rulings on Plaintiffs’ procedural claims, relitigation of those claims is

not precluded. 

That is not the end of the story, however, because the Superior Court’s decision

on the second issue identified above—whether Defendants’ actions in the

administrative proceeding caused Plaintiffs any substantive harm—is essential to the

final judgment. That issue was adjudicated in the first action through the court’s

rejection of Plaintiffs’ contractual claims. As such, the court conclusively determined

that Defendants’ procedural actions, no matter how improper they might have been, did

not cause Plaintiffs to suffer substantive harm.

29See doc. 1 at 10–11 ¶¶ 69–70; id. at 13 ¶ 85 (alleging compensatory damages).

30See Smith v. Stafford, 189 P.3d 1065, 1076 (Alaska 2008).

31Restatement (Second) of Judgments § 27 cmt. h (1982).

32Doc. 94 at 24.

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4. The issue of harm was resolved in the first action by a final judgment

on the merits

Plaintiffs argue that the Superior Court’s decision is not a final judgment because

it was appealed to the Alaska Supreme Court.33

 Plaintiffs cite no authority for this

proposition. Plaintiffs’ argument lacks merit. Because the Superior Court resolved the

issue of harm by a final judgment on the merits and the Alaska Supreme Court upheld

the lower court’s ruling, this factor is satisfied.34

B. Defendants’ Arguments Regarding The Preclusive Effect of the Previous

Judgment 

For the most part, Defendants do not address the preclusive effect of the

Superior Court’s decision on the issue of harm. Instead, they focus primarily on the

preclusive effect of the Superior Court’s decisions on Plaintiffs’ procedural claims. 

Because Defendants did not adequately brief the issue, the court declines to issue a

comprehensive ruling on the preclusive effect of the Superior Court’s decision. One

effect of the Superior Court’s judgment is beyond dispute, however. Because the

Superior Court conclusively determined that Defendants’ actions did not harm Plaintiffs’

substantive rights, Plaintiffs are barred from recovering compensatory damages under

any of their claims.35

Defendants do address the issue of harm, however, where they argue that

Plaintiffs’ civil RICO claim is barred by issue preclusion because the Superior Court

decided that Plaintiffs did not suffer “a concrete financial injury to business or property

as a result of the [D]efendants’ wrongdoing.”36 As Defendants point out, a civil RICO

33Doc. 102 at 14.

34See Restatement (Second) of Judgments § 27 cmt. o (1982).

35

It is unclear what compensatory damages Plaintiffs are seeking. See doc. 1 at 13 ¶ 85

(Plaintiffs allege that they are entitled to recover “all damages direct and consequential,

including without limitation for business devastation, attorneys’ fees, expenses and costs

incurred in the administrative hearing, the superior court appeal, and this action.”).

36Doc. 94 at 19.

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plaintiff must establish, among other things, “that the defendant caused injury to his

business or property.”37 Plaintiffs do not respond to this argument. Because Plaintiffs

are barred from relitigating whether they were financially harmed by Defendants’

actions, Plaintiffs’ civil RICO cause of action is barred by issue preclusion. 

C. Plaintiffs’ Fraud Claim

Finally, Defendants argue that Plaintiffs’ cause of action for fraud fails to state a

claim because Plaintiffs do not plead fraud with particularity.

38

 Plaintiffs do not respond

to this argument. The court agrees with Defendants. Alaska Rule of Civil

Procedure 9(b) states that in all averments of fraud “the circumstances constituting

fraud . . . shall be stated with particularity.” Plaintiffs merely allege that unspecified

defendants represented to Plaintiffs at some unspecified time in some unspecified

manner that their administrative claim would be “resolved fairly.”39 Because Plaintiffs do

not state the circumstances constituting fraud with particularity, their fraud claim will be

dismissed.

 V. CONCLUSION

For the reasons set forth above, Defendants’ motion at docket 94 is GRANTED

IN PART AND DENIED IN PART as follows: Plaintiffs’ civil RICO and fraud causes of

action are dismissed, and Plaintiffs are precluded from recovering compensatory

damages; in all other respects, the motion is denied. Defendants’ motion at docket 110

is denied. 

DATED this 16th day of March 2017.

/s/ JOHN W. SEDWICK

SENIOR JUDGE, UNITED STATES DISTRICT COURT

37See Fireman’s Fund Ins. Co. v. Stites, 258 F.3d 1016, 1021 (9th Cir. 2001) (citing 18

U.S.C. § 1964(c)).

38Doc. 94 at 23 n.128.

39Doc. 1 at 13 ¶ 81.

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