Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-akd-3_13-cv-00063/USCOURTS-akd-3_13-cv-00063-6/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Personal Injury

---

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

MUNICIPALITY OF ANCHORAGE,

 

Plaintiff,

v.

INTEGRATED CONCEPTS AND 

RESEARCH CORPORATION, a corporation; 

PND ENGINEERS, INC., a corporation; 

CH2M HILL ALASKA, INC., a corporation; 

and GEOENGINEERS, INC. a corporation,

 

Defendants.

_________________________________

CH2M HILL ALASKA, INC. a corporation,

 

Third-Party Plaintiff,

 v.

TERRACON CONSULTING, INC., a 

Delaware corporation,

Third-Party Defendant.

Case No. 3:13-cv-00063-SLG

ORDER RE CH2M HILL ALASKA’S MOTION FOR SUMMARY JUDGMENT

This litigation concerns the Port of Anchorage Intermodal Expansion Project (the 

Project), and the Open Cell Sheet Pile (OCSP) design used in the Project’s construction. 

The facts of this case are familiar to the parties and set out in the Court’s order at Docket 

67. There are currently several motions for summary judgment pending. This order 

addresses one of those motions: CH2M Hill Alaska’s Motion for Summary Judgment at 

Docket 280. The motion has been fully briefed1 and oral argument was held on June 29, 

 

1 See Docket 280 (CH2M Hill Alaska Mot. Summ. J.); Docket 303 (MOA Opp’n to CH2M Hill Alaska 

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2016. For the reasons set out below, the motion will be granted in part and denied in 

part. 

BACKGROUND

The Municipality of Anchorage’s (MOA) First Amended Complaint at Docket 145

alleges three tort claims: negligence, professional negligence, and negligent 

misrepresentation against PND, CH2M Hill Alaska, and GeoEngineers.2 MOA has not 

alleged any contractual claims against these Defendants because MOA did not have a 

direct contractual relationship with any of these parties. CH2M Hill Alaska,3 specifically, 

is four times contractually removed from MOA. 

Defendants have asserted that none of MOA’s alleged losses are recoverable in 

tort. In July 2014, PND and CH2M Hill Alaska filed motions for summary judgment4 in 

which they argued that the economic loss doctrine precluded all of MOA’s tort claims. In 

response, MOA laid out three categories of damages: Category I Damages, which MOA 

described as property damage; and Category II and III Damages, which MOA 

acknowledged constitute economic losses. In its briefing on those earlier motions, MOA 

argued that the economic loss doctrine did not preclude its recovery of its Category I

 

Mot.); Docket 325 (CH2M Hill Alaska Reply). 

2 See Docket 145 (Amend. Compl.) at 43-52.

3 CH2M Hill Alaska, previously known as VECO, is distinct from CH2M Hill, Inc., the parent 

company of CH2M Hill Alaska. MOA hired CH2M Hill, Inc. to evaluate the suitability of the Project. 

See Docket 281-25 (Suitability Study). 

4 Docket 91 (PND Mot. for Summ. J.); Docket 94 (CH2M Hill Alaska Mot. for Summ. J.). 

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damages and that an exception to that doctrine applied to its recovery of economic 

losses.

5

In an order issued in March 2015, the Court denied both motions for summary 

judgment without prejudice, allowing for renewal when the record became more fully 

developed. But the Court did hold that MOA could not recover under a theory that the 

Backlands constitute “other property” that would fall outside the economic loss doctrine. 

The Court also held that the economic loss doctrine applies to parties not in privity;

accordingly, MOA cannot recover in tort for its economic losses unless an exception to 

the economic loss doctrine applies. The prior order also delineated possible exceptions 

to the economic loss doctrine under Alaska law; but the Court’s prior order did not 

determine whether any exception to the doctrine applies in this case.6

CH2M Hill Alaska has now filed another motion for summary judgment. The

motion addresses MOA’s claims for property damage, the exceptions to the economic 

loss doctrine that were discussed in the March 2015 Order, and MOA’s claim for negligent 

misrepresentation, which was filed after the briefing on the first summary judgment 

motions was completed.

CH2M Hill Alaska maintains that MOA’s attempt to characterize its losses as 

property damage fails as a matter of law. It argues that there has not been damage to 

other property and the alleged defective design did not create a significant risk of personal 

 5 Docket 109 (MOA Opp’n).

6 Docket 188 (Order).

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injury or property damage. Moreover, CH2M Hill Alaska asserts that it was not the cause 

of any safety risk because it did not contribute to the final design.7 

CH2M Hill Alaska also argues that MOA is seeking only economic damages, which 

are barred by the economic loss doctrine, as no exception to that doctrine applies. It

maintains that MOA was not a particularly foreseeable plaintiff to CH2M Hill Alaska

because it prepared its March 2007 report for PND, and did not intend for the report to be 

submitted to MOA. CH2M Hill Alaska also maintains that MOA’s claim for professional 

negligence cannot stand against CH2M Hill Alaska because the network of contracts 

between the parties “allocated the parties’ respective risks, duties, and remedies,” and 

the parties set their fees accordingly.8 Finally, CH2M Hill Alaska argues that MOA’s claim

for negligent misrepresentation fails as a matter of law because there is no evidence of 

any reliance by MOA on CH2M Hill Alaska’s statements.

9

In opposition, MOA argues that the economic loss doctrine is inapplicable because 

it is seeking compensation, at least in part, for property damage. MOA explains that

damage to “other property” has already occurred to both the property upon which the

OCSP system stands and to the navigable waters of Cook Inlet.10 It also argues that

there are material disputes of fact as to whether the Project creates a significant risk of 

property damage and personal injury.11 

 7 Docket 280 at 17-23.

8 Id. at 15.

9 Id. at 26.

10 Docket 303 at 30-33.

11 MOA, at Docket 394, sought leave to supplement the record with its expert report, which 

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As for its economic losses, MOA argues that certain exceptions to the economic 

loss doctrine apply such that it can maintain these claims. And it asserts that its claims 

encompass not only CH2M Hill Alaska’s March 2007 Report, but a validation letter 

authored by CH2M Hill Alaska in 2006. For its negligence claim, MOA contends that the 

particularly foreseeable plaintiff exception applies. It explains that CH2M Hill Alaska knew 

or should have known that any negligence on its part would harm MOA, the owner of the 

Port. With respect to professional negligence, MOA argues that this claim is not 

precluded by the indirect contractual relationship between these two parties. In support, 

it points out that CH2M Hill Alaska has not identified any relevant contractual language in 

which the risk of a defective design was allocated to another party. Finally, MOA 

maintains that there are disputed material facts regarding MOA’s negligent

misrepresentation claim, and specifically with respect to MOA’s reliance on CH2M Hill 

Alaska’s alleged misrepresentations. For all of its claims, MOA characterizes CH2M Hill 

Alaska’s work as directly traceable to the alleged defective design.

12 

DISCUSSION

1. Jurisdiction

The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. 

§ 1442(a)(1), the federal officer removal statute.13 The Court also has supplemental 

 

includes an assessment of the risk that the Port Expansion poses to persons and property. The 

Court permitted MOA to supplement the record with that report at Docket 466.

12 See Docket 303.

13 See Docket 67 (Order re Mot. to Remand) for a full discussion of the Court’s subject matter 

jurisdiction in this case. 

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jurisdiction pursuant to 28 U.S.C. § 1367 because all claims arise from the same 

transaction or occurrence. The “invocation of removal jurisdiction by a federal officer does 

not revise or alter the underlying law to be applied.”14 Here, all of MOA’s claims are based 

on Alaska law, so Alaska substantive law applies to this case. 

2. Standard of Review 

Federal Rule of Civil Procedure 56(a) directs a court to “grant summary judgment 

if the movant shows that there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.”15 In cases where the non-moving party 

bears the burden of proof at trial, the moving party “need only prove that there is an 

absence of evidence to support the non-moving party’s case.”16 If the moving party meets 

this burden, then the non-moving party must present specific evidence demonstrating the 

existence of a genuine issue for trial, i.e., “evidence from which a jury could reasonably 

render a verdict in the non-moving party’s favor.”17 When considering a motion for 

summary judgment, a court must draw “all justifiable inferences” in the non-moving party’s

 14 Arizona v. Manypenny, 451 U.S. 232, 241 (1981). 

15 In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex Corp. v. Catrett, 

477 U.S. 317, 323 (1986)). 

16 Id. (citing Celotex, 477 U.S. at 325).

17 Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). Each party may rely on 

any evidentiary materials that are in the record. Celotex, 477 U.S. at 324. This includes 

“depositions, documents, electronically stored information, affidavits or declarations, stipulations,” 

and discovery responses. See Fed. R. Civ. P. 56(c)(1). 

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favor.18 If the evidence provided by the non-moving party is “merely colorable” or “not 

significantly probative,” summary judgment is appropriate.19

3. Property Damage

Under Alaska law, tort-based claims that seek only a recovery for economic losses

are generally precluded by the economic loss doctrine. But when the action seeks 

damages for personal injury or property damage, the economic loss doctrine does not 

apply and such damages may be recoverable. The line between property damage and 

economic loss is at times difficult to discern. Under Alaska law, damage to “other 

property” that is separate and distinct from the defective product is recoverable in tort.20 

In addition, the Alaska Supreme Court has held that a party may recover for damage to 

the defective product itself when the loss occurs under dangerous circumstances that 

created a significant risk of personal injury or property damage.21 Here, MOA argues 

both that the OCSP system has damaged “other property” and that the OCSP system 

creates a significant risk of personal injury or property damage such that the losses 

associated with the alleged defects in the Project itself are recoverable.

a. Other Property

In MOA’s opposition to the earlier summary judgment motions at Docket 109, it 

argued that it had suffered property damage in the form of damage to the Backlands. But 

 18 Anderson, 477 U.S. at 255.

19 Id. at 249-50.

20 See Morrow v. New Moon Homes, Inc., 548 P.2d 279 (Alaska 1976) (distinguishing personal 

injury and property damage from economic loss). 

21 N. Power & Eng’g Corp. v. Caterpillar Tractor Co., 623 P.2d 324 (Alaska 1981).

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the March 2015 Order held that the Backlands are not “other property” because they 

constitute “the expanded acreage that was the object MOA bargained for.”22

MOA now maintains that CH2M Hill Alaska’s alleged negligence has damaged 

other property, separate and apart from the Backlands. This other property, asserts MOA, 

consists of two areas: the land upon which the OCSP currently sits and the navigable 

waters of Cook Inlet. With regard to the property underneath the OCSP system, MOA 

maintains that it “never bargained for, or thought, it would be left with a nine story tall onehalf mile long unusable, unstable, and dangerous structure sitting on its property.”23

According to MOA, CH2M Hill Inc. has estimated that MOA must spend approximately 

$135 million to remove the OCSP structure from the land. As to the waters of Cook Inlet, 

MOA alleges that property damage began in July 2010, when sinkholes developed behind 

the face of the OCSP wall that caused fill material to leak into the inlet. Soon after, the

U.S. Army Corps of Engineers notified MOA that it was in violation of its permit. MOA 

indicates that it has already spent approximately $33 million to stem the damage caused 

to the waters of the inlet, an amount for which it appears to seek recovery in this action. 

But the Court is unpersuaded that either area—the property upon which the OCSP 

system stands or the waters of Cook Inlet—constitutes “other property” for purposes of 

MOA’s recovery in tort. The property upon which the OCSP system stands is not separate 

and distinct from the Project property. The Alaska Supreme Court has recognized that 

component parts that are integral to a structure are not “other property” for purposes of 

 22 See Docket 188 (Order) at 8-9.

23 Docket 303 at 32. 

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tort liability.24 The Court finds that the property underneath the OCSP project is 

analogous to a component part of the Project, such that any damage to the underlying

property represents a diminution in the value of MOA’s bargain—not damage to other 

property. Moreover, MOA’s argument that the underlying land has been damaged 

because the OCSP system blocks access to and use of this underlying property seeks

compensation for loss of use, which is an economic loss and not property damage.25 

Similarly, the leakage of fill material into the waters of Cook Inlet does not 

constitute damage to other property. MOA has not demonstrated that it owns the 

navigable waters of Cook Inlet. Rather, Alaska law appears to assign ownership of the

navigable waters around Alaska to the State of Alaska.

26 Moreover, the leakage of fill 

material into the waters of Cook Inlet has not been linked to the OCSP design, let alone 

to CH2M Hill Alaska’s role in the Project. Instead, as Army Corps representative Robert 

Loken testified at deposition, it appears that fill material has been sloughing into the Cook 

Inlet due to an interlock problem.27 CH2M Hill Alaska persuasively notes that “the OCSP 

system was not designed to leave openings in the interlocks.”28 In response, MOA does 

not present any evidence that fill material is leaking into the inlet due to an OCSP design 

 24 N. Power, 623 P.2d at 330 (holding that when a defective component part causes damage to 

another component part, this does not constitute damage to “other property”).

25 Alaska Constr. Equip., Inc. v. Star Trucking, Inc., 128 P.3d 164, 169 (Alaska 2006) (holding that 

compensation for temporary loss of use is economic loss).

26 Alaska Statute 44.03.020.

27 Docket 326-9 (Loken Depo.) at 2-4. 

28 Docket 325 at 14.

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defect. Nor does MOA explain the connection between CH2M Hill Alaska’s role in the 

Project and the interlock problem. 

CH2M Hill Alaska has shown that the OCSP system has not damaged MOA’s other 

property, and MOA has not presented evidence upon which a reasonable trier of fact 

could conclude otherwise. 

b. Significant Risk of Personal Injury or Property Damage 

Absent damage to other property, MOA may nonetheless recover for loss to the 

defective product itself when those losses occur under circumstances that create a 

significant risk of personal injury or property damage.29 The Court’s March 2015 Order

found that there was then very little in the record on the topic of significant risk, so the 

Court denied summary judgment without prejudice to renew. Since then, the parties have 

extensively supplemented the record in an effort to fully address the issue. 

The Alaska Supreme Court articulated this theory of recovery in Northern Power, 

a case involving the failure of a generator’s engine.

30 Plaintiff sought recovery in tort 

solely for economic losses. In denying that relief, the Court observed that when the 

engine failed, there was “no evidence of violence, fire, collision with external objects, or 

 29 See, e.g., Pratt & Whitney Canada, Inc. v. Sheehan, 852 P.2d 1173 (Alaska 1993); State for 

Use of Smith v. Tyonek Timber, Inc., 680 P.2d 1148 (Alaska 1984); Shooshanian v. Wagner, 672 

P.2d 455 (Alaska 1983); N. Power & Eng’g Corp. v. Caterpillar Tractor Co., 623 P.2d 324 (Alaska 

1981); Cloud v. Kit Mfg. Co., 563 P.2d 248 (Alaska 1977). While most of the Alaska Supreme 

Court’s analysis on economic loss recovery arises from strict products liability claims, the Court 

has also applied the doctrine to negligence claims. See, e.g., Smith, 680 P.2d at 1154; and

Shooshanian, 672 P.2d at 464-65.

30 623 P.2d 324; see also Cloud, 563 P.2d 248 (distinguishing between direct property damage 

characterized by sudden and calamitous damage and economic loss which includes deterioration 

and internal breakage). 

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other calamity as a result of this failure.”31 “The requirement that the loss occur under 

dangerous circumstances is necessary because, in [the Alaska Supreme Court’s] view, 

allowing recovery solely on proof that a defect could endanger persons or property is too 

speculative.”32 Accordingly, the Court held that the plaintiff could not recover in tort, 

because his loss was “entirely economic.”33 

The Alaska Supreme Court again addressed these issues in Shooshanian v. 

Wagner.

34 In that case, the Shooshanians hired a contractor, Wagner, to insulate the 

walls of their combination home/retail store. Wagner installed foam insulation

manufactured by Borden that emitted toxic fumes. These fumes posed a health hazard, 

causing the Shooshanians to replace both the inner walls and the insulation. The 

Shooshanians sued both Wagner and Borden, but the superior court dismissed both 

claims. The Supreme Court, focusing its analysis on the claims against Borden, reversed 

and held that the Shooshanians could seek recovery from Borden for the replacement 

costs they had incurred. The Court identified the crucial inquiry as “whether the product 

is dangerously defective and whether the dangerous defect caused the property 

damage.”35 The Court held that the insulation was “dangerously defective because it 

emits toxic fumes that have caused physical harm to the occupants and will continue to 

 31 N. Power, 623 P.2d at 329.

32 Id. at n.11.

33 Id. at 330. 

34 672 P.2d at 457. 

35 Id. at 464.

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pose a health threat,” such that their tort claim against Borden for the replacement costs 

could proceed.

36

A decade later, in Pratt & Whitney Canada Inc. v. Sheehan, the Alaska Supreme 

Court again applied these principles.

37 In Pratt & Whitney, an aircraft owner sued the 

manufacturer of the aircraft’s engine in strict liability in tort after the engine failed in midair, resulting in a forced landing that damaged the aircraft. The aircraft manufacturer 

urged the Court to overrule its holding in Northern Power and adopt the rule set out by 

the United States Supreme Court in East River.

38 But the Alaska Supreme Court 

declined, reasoning, in part, that, “East River unjustifiably dismisses the safety concerns 

attendant to products injuries caused by hazardous defects.”39 The Court then reaffirmed 

the approach it had adopted in Northern Power, which it described as based “on the 

potential danger posed by the defect when that danger results in damage to the product 

itself.”40 The Alaska Supreme Court reasoned that since mid-flight engine failure is “a 

 36 Shooshanian, 672 P.2d at 463. The Shooshanians also had personal injury claims but the Court 

affirmed the trial court’s determination that these claims were untimely and could not be pursued.

See id. at 460. 

37 852 P.2d 1173.

38 Pratt & Whitney, 852 P.2d at 1175. In East River S.S. Corp. v. Transamerica Delaval, Inc., the 

U.S. Supreme Court held that economic loss is not recoverable in strict products liability under 

general maritime law, because a claim for a nonworking product can be brought as a breach-ofwarranty action. 476 U.S. 858, 872 (1986); see also St. Denis v. Dep’t of Hous. and Urban Dev., 

900 F. Supp. 1194, 1200 (D. Alaska 1995) (citing East River, 476 U.S. at 870). 

39 Pratt & Whitney, 852 P.2d at 1179. 

40 Id. at 1181. 

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paradigmatic example of a ‘potentially dangerous’ situation,” the plaintiff’s economic 

losses in that case were recoverable in tort.41

Here, MOA has not presented sufficient evidence upon which a reasonable trier of 

fact could conclude that the alleged design defect related to the OCSP system has 

created a potentially dangerous risk to persons or property. For unlike the immediate 

danger that was present both with the toxic fumes in Shooshanian and the mid-air engine 

failure in Pratt & Whitney, MOA has not demonstrated that there is a triable issue of fact 

that the asserted damage at the Port Expansion is dangerously defective. 

The Court acknowledges that MOA has demonstrated that there is a genuine 

dispute as to whether, in the event of a major earthquake, the Port Expansion presents a 

significant risk to persons and property. But in the Court’s view, that risk is too speculative

to permit recovery for economic loss under Alaska law. The most frequent of these

seismic events is the Operational Level Earthquake, which the parties agree has an 

average expected occurrence of once every 72 years.42 Given that the projected designlife of the OCSP system is 50 years, there is no certainty that such an event will even 

occur during the Port Expansion’s projected lifetime.43 And even if a high-magnitude 

seismic event is likely to occur at some unspecified time during the Project’s anticipated

design-life, for economic losses to be recoverable, Alaska law requires that those losses 

occur under dangerous circumstances—not that there might be a dangerous 

 41 Id. at 1175. 

42 Docket 281-25 (Suitability Study) at 3.

43 Docket 281-27 (ICRC Task Order 3105) at 1.

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circumstance at some indeterminate future time. In sum, the Court concludes that 

allowing economic loss recovery solely on proof that a design defect in the Project could 

endanger persons or property during a major earthquake at some point in the future is 

too speculative.

44 Accordingly, MOA cannot recover its losses under this theory.

4. MOA’s Negligence Cause of Action Against CH2M Hill Alaska 

The Court’s March 2015 Order recognized two possible theories under which MOA 

might recover economic losses in tort: as a particularly foreseeable plaintiff or based on 

professional negligence. For the particularly foreseeable plaintiff exception, the Court 

cited Mattingly v. Sheldon Jackson College.

45 In its March 2015 Order, the Court found 

that CH2M Hill Alaska had not demonstrated the absence of a material factual dispute as 

to whether MOA was a particularly foreseeable plaintiff to that defendant. 

But after the Court’s March 2015 Order, the Alaska Supreme Court revisited the 

particularly foreseeable plaintiff exception in Geotek Alaska, Inc. v. Jacobs Engineering 

Group, Inc.46 There, the Alaska Supreme Court clarified that foreseeability alone is not 

sufficient to create an actionable duty in tort law. Rather, the analysis involves a multistep process. In Geotek, an insolvent subcontractor failed to pay its sub-subcontractor, 

Geotek, who then sought payment from the general contractor, Jacobs. When Jacobs 

refused to pay, Geotek sued Jacobs, alleging negligence, among other claims. The state 

 44 N. Power, 623 P.2d at 329 n.11 (“The requirement that the loss occur under dangerous 

circumstances is necessary because, in our view, allowing recovery solely on proof that a defect 

could endanger persons or property is too speculative.”).

45 743 P.2d 356 (Alaska 1987). 

46 354 P.3d 368, 377 (Alaska 2015) (clarifying that “Mattingly simply expanded liability in tort to 

include purely economic losses”). 

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superior court granted summary judgment to Jacobs on the negligence claim and the 

Alaska Supreme Court affirmed. The Court explained that in deciding whether tort liability 

is appropriate, a court should determine if a defendant owes a plaintiff a duty of 

reasonable care. In making that inquiry, a court should “first determine whether a duty is 

imposed by statute, regulation, contract, undertaking, the parties’ pre-existing 

relationship, or existing case law.” If those sources do not resolve the issue, then a court 

should apply the multi-factor approach the Court set forth in D.S.W. v. Fairbanks North 

Star Borough Sch. Dist. to determine whether an actionable duty exists.47 

Here, as in Geotek, the parties are not in contractual privity, nor is there an 

applicable statute or regulation that imposes a duty on CH2M Hill Alaska to MOA. Thus,

the Court will apply the D.S.W. factors to determine whether a duty of care under a 

negligence theory exists. The D.S.W. factors include: (1) the foreseeability of harm to the 

plaintiff; (2) the degree of certainty that the plaintiff suffered injury; (3) the closeness of 

the connection between the defendant’s conduct and plaintiff’s injury; (4) the moral blame 

attached to the defendant’s conduct; (5) the policy of preventing future harm; (6) the 

extent of the burden to the defendant and consequences to the community of imposing a 

duty; and (7) the availability, cost, and prevalence of insurance for the risk involved.

The first factor, foreseeability, is considered “the single most important criterion for 

imposing a duty of care.”48 MOA alleges, and the Court agrees, that at all times “it was 

clear to all parties involved that MOA was the owner of the Project and the customer for 

 47 Geotek, 354 P.3d at 376 (citing D.S.W. v. Fairbanks North Star Borough Sch. Dist., 628 P.2d 

554, 555 (Alaska 1981)).

48 Id. at 378 (citing R.E. v. State, 878 P.2d 1341, 1346 (Alaska 1994)).

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whom work was being performed.”49 But CH2M Hill Alaska argues that MOA’s alleged 

injury was not foreseeable to CH2M Hill Alaska due to its limited role in the Project. It 

created a preliminary report when the design was only 35% complete; the final design 

was then independently reviewed and approved before construction without its 

involvement. It adds that it “was never informed that its preliminary analysis would be 

provided to the Port or attached as an appendix to PND and GeoEngineers’ final 

design.”50 CH2M Hill Alaska may have played a limited role in the Project, but the Court 

finds that it knew, or should have known, that if it performed its tasks negligently, a 

reasonable jury could find that its action could likely have an impact on MOA. 

The second factor assesses the degree of certainty of a plaintiff’s injury. MOA and 

CH2M Hill Alaska disagree as to whether MOA has suffered any harm at all. CH2M Hill 

Alaska cites Terracon’s preliminary stability assessment in 2004, CH2M Hill Alaska’s 

assessment in 2007, the final stability assessment in 2008, and CH2M Hill’s Suitability 

Study from 2013 in support of its position that “the design provides a stable site in all 

circumstances that do not involve an intervening earthquake.”51 MOA relies heavily on 

CH2M Hill’s Suitability Study and asserts that neither the Wet Barge Berth nor the North 

Extension meet the factors of safety established for the Project.52 The degree of 

uncertainty regarding MOA’s damages weighs in CH2M Hill Alaska’s favor. 

 49 Docket 303 at 17.

50 Docket 280 at 25.

51 Id. at 19. 

52 Docket 303 at 16.

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Factor three assesses the closeness of the connection between MOA’s asserted 

damages and CH2M Hill Alaska’s alleged negligence. MOA contends that CH2M Hill 

Alaska was part of a design team tasked with reviewing the geotechnical work. In that 

capacity, CH2M Hill Alaska reviewed and validated Terracon’s geotechnical work, and 

independently assessed the global stability of the OCSP design. CH2M Hill Alaska 

contends that its validation work has little, if any, relationship to the alleged design defect 

as it “never ended any discussion about data collection, and no one treated it as the final 

word on that subject.”53 As for the 2007 Report, CH2M Hill Alaska contends that it was

based on the 35% design draft and was not relied on for the final design. Given the

multiple intervening actors and CH2M Hill Alaska’s limited role in the Project, the Court 

finds that there is not a “close connection” between CH2M Hill Alaska’s alleged 

negligence and MOA’s asserted damages. Thus, this factor weighs in CH2M Hill Alaska’s 

favor.

As for the next factor, moral blame, the Alaska Supreme Court has stated that in

contrast to negligence that creates a risk of death or physical injury, ordinary negligence 

that only causes economic harm is ascribed “little blameworthiness.”54 Here, as 

discussed above, the Court has found that the risk of personal injury is not significant, so 

this factor weighs in CH2M Hill Alaska’s favor. 

The next factor considers the policy of preventing future harm. In Geotek, the

Alaska Supreme Court held that where there are multiple subcontractors, the policy of 

 53 Docket 325 at 8.

54 Geotek, 354 P.3d at 379.

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preventing future harm “does not require recognition of a novel duty in tort.”55 Rather, in

such situations, the “contracting parties have the ability to protect themselves either by 

refusing to enter into relationships they consider financially fraught or by negotiating for 

more protective provisions in their contracts before signing them.”56 Accordingly, this 

factor weighs in CH2M Hill Alaska’s favor. 

The next factor considers the burden on the defendant and consequences to the

community from imposing a duty. In Geotek, the Alaska Supreme Court held that 

“”[i]mposing a duty in cases like this one would subject contractors to the added burden 

of protecting the purely economic interests of parties with whom they have no privity.”57

Accordingly, this factor also weighs in CH2M Hill Alaska’s favor.

Finally, on the topic of insurance, MOA rejected several proposals to obtain 

additional insurance. In 2006, MarAd directed ICRC to explore and potentially procure 

an Owner’s Controlled Insurance Plan (OCIP) for the Project, which would have provided 

liability coverage for the Project participants. But the Port Director cancelled further 

analysis and procurement of an OCIP because he decided to direct those funds toward 

design and construction activities. Again in 2007, MOA rejected proposals by ICRC to 

increase insurance coverage for PND Engineers.58 Insurance that could have insulated 

 55 Geotek, 354 P.3d at 379 (citing Mesiar v. Heckman, 964 P.2d 445, 451 (Alaska 1998)). 

56 Id. at 379 (citing Alaska Pac. Assurance Co. v. Collins, 794 P.2d 936, 946 (Alaska 1990)); see 

also St. Denis v. Dep’t of Hous. and Urban Dev., 900 F. Supp. 1194, 1206 (D. Alaska 1995) 

(“Contracts permit the parties to determine for themselves what duties will be assumed and to 

whom and how risk will be distributed.”).

57 Geotek, 354 P.3d at 379. 

58 Docket 302-14 (Carlson Depo.) at 2-5.

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MOA from its alleged losses was clearly available. This factor weighs in CH2M Hill 

Alaska’s favor. 

Aside from foreseeability, all the other D.S.W. factors weigh against imposing a 

tort duty on CH2M Hill Alaska for its alleged negligence. While the Alaska Supreme Court 

has identified foreseeability as the most important consideration, it alone is not enough to 

create an actionable duty in negligence.

59 Accordingly, CH2M Hill is entitled to summary 

judgment on MOA’s negligence claim against it. 

5. Claims Exempt from the Application of the Economic Loss Doctrine

a. Professional Negligence 

The Court’s March 2015 Order did not determine whether CH2M Hill Alaska owed 

MOA a duty of professional care. The Court observed that the cases that address 

professional negligence under Alaska law are significantly fact-dependent. And while the 

parties argued that the risk allocation provision in their contracts should control, those 

provisions were not provided with the earlier briefing.60 The parties have now provided 

the relevant contractual language and the record is now sufficiently developed for the 

Court to determine whether MOA’s claim for professional negligence against CH2M Hill 

Alaska may proceed. 

 59 See Geotek Alaska, Inc. v. Jacobs Engineering Group, Inc., 354 P.3d at 377 (Alaska 2015) 

(holding that foreseeability without more is not enough to create a duty in tort); Mesiar v. Heckman, 

964 P.2d 445, 450 (Alaska 1998) (finding no duty despite plaintiff’s injury being foreseeable); see 

also State for Use of Smith v. Tyonek Timber, Inc., 680 P.2d 1148, 1153 (Alaska 1984) (finding 

that special relationship between the parties not sufficient to allow recovery under negligence 

theory).

60 Docket 188 (Order) at 12. 

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The District Court of Alaska has previously addressed the viability under Alaska 

law of a professional negligence claim that seeks only recovery for economic losses. In 

St. Denis v. Dep’t of Hous. and Urban Dev., the plaintiff purchased a duplex from the U.S. 

Department of Housing.61 The plaintiff later discovered the duplex’s roof was faulty and 

incurred costs to repair it. The plaintiff asserted that the government had inspected the 

roof but did not repair or disclose the problem to her before the sale. In its analysis, the 

district court acknowledged that Alaska law would recognize a duty sounding in tort 

between parties to a real estate contract, but queried whether such negligence was 

actionable by a purchaser who had only suffered economic loss. The district court looked 

at two lines of Alaska cases: tort claims for defective products and cases addressing the 

applicable statute of limitations for professional malpractice.

62 Citing to Pedersen v. 

Flannery, the district court concluded that in any action for professional negligence, “when 

the damages sought are for economic loss, the action must be on the contract.”63

In St. Denis, the district court also relied extensively on another Alaska Supreme 

Court decision, Lee Houston & Assoc., Ltd. v. Racine.64 In that case, the Alaska Supreme 

Court held that Alaska’s six-year statute of limitations applied to a vendor’s action seeking 

economic losses, specifically lost profits, against her real estate agent and real estate 

 61 900 F. Supp. 1194, 1995 (D. Alaska 1995).

62 Id. at 1201-2. 

63 Id. at 1202 (citing Pederson v. Flannery, 863 P.2d 856 (Alaska 1993)). In Pedersen, the Alaska 

Supreme Court held that the two-year tort statute of limitations applied to a patient’s claim for 

damages for physical injuries allegedly caused by his doctors’ medical malpractice. The case 

did not specifically address whether or when economic losses are recoverable in tort under Alaska 

law.

64 806 P.2d 848, 853-54 (Alaska 1991).

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agency. On appeal, the defendant argued that the two-year tort statute of limitations 

should have applied because the plaintiff’s claim was a tort-based claim that was not 

based on the contract. However, the Court noted that Alaska’s six-year statute applied 

not only to contract actions, but to actions “upon a contract or liability.”65 Relying on that 

language, the Court interpreted the six-year statute “as applying to a category of actions 

broader than those based only on contract principles,” so as to include a malpractice claim 

arising from a professional service relationship that primarily involves economic injury.66

In St. Denis, the district court accorded little weight to another Alaska Supreme 

Court case that had been decided two years earlier, State v. Transamerica Premier

Insurance Co.67 In Transamerica, the surety for a contractor of a construction project 

brought a claim against the State seeking tort damages for business destruction. The 

State was the owner of the project, and was alleged to have negligently reviewed the 

project plans. There, the Court declined to find an actionable claim against the State. 

The Court distinguished between “design professionals” that the Court found owe a duty 

in tort “to exercise reasonable care, or the ordinary skill of the profession” and “project 

 65 Lee Houston, 806 P.2d at 854 (citing AS 09.10.050) (emphasis in original). 

66 Id. 

67 856 P.2d at 769. The district court in St. Denis declined to follow Transamerica, addressing it 

in a footnote, in which it found that in Transamerica, “the [Alaska Supreme] court apparently 

overlooked the fact that where. . . the claim was for economic damages, the gravamen test had 

been abandoned in favor of a nature of the damages test in Lee Houston.” 900 F. Supp. at 1203 

n.12. See also Cape Fox Corporation v. Jackson, 2010 WL 3951988 *4 (D. Alaska 2010) (relying, 

“in the interests of continuity,” upon St. Denis while acknowledging its tension with Transamerica). 

While this Court has carefully considered the need for continuity within the District Court of Alaska, 

the Court has determined that Transamerica is directly controlling Alaska Supreme Court 

precedent, and should be applied in this case in which Alaska substantive law controls. 

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owners” that owe “purely contractual duties as to the accuracy of the designs.”68 The

Alaska Supreme Court concluded that a contractor that suffers economic loss because

the owner negligently provides defective plans must sue on the contract, and has no claim

in tort. But the Alaska Supreme Court then expressly held that “a project owner may sue 

a design professional in tort for economic losses arising from the professional’s 

malpractice.”69 Transamerica has not been overruled by the Alaska Supreme Court; 

rather, it has been cited on occasion by that Court.

70

Thus under Alaska law, CH2M Hill Alaska, as a professional engineering company 

hired for its expertise, owed a professional duty of care to exercise the ordinary skill of a 

professional in the field to foreseeable plaintiffs. The Court finds that CH2M Hill Alaska 

knew or reasonably should have known that MOA, as the ultimate customer of the project, 

was a foreseeable plaintiff. And under Transamerica, MOA, as the project owner, may 

sue a design professional in tort for economic losses arising from the professional’s 

malpractice. Accordingly, CH2M Hill Alaska owed an actionable duty to MOA under 

Alaska tort law.

CH2M Hill Alaska argues that imposing a duty of professional care would uproot 

the specific allocation of risk negotiated by the parties and delineated in its contract.71 

 68 Transamerica, 856 P.2d at 772.

69 Id. (emphasis added).

70 See John’s Heating Service v. Lamb, 46 P.3d 1024 (Alaska 2002); Anchorage v. Gentile, 922 

P.2d 248 (Alaska 1996). And in Geotek, the Alaska Supreme Court did not look to the nature of 

the damages to determine if a negligence cause of action for economic losses was viable, but 

rather turned to the D.S.W. factors. 354 P.3d at 376.

71 Docket 280 at 15-16.

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But there appears to be no specific provision limiting or allocating the risk of professional 

negligence in the PND-CH2M Hill Alaska contract.72 The only provision that discusses 

liability in that contract references PND’s obligations to ICRC, and holds CH2M Hill Alaska 

to the same agreement.73 The provision is an indemnification clause that essentially 

reproduces the indemnification requirement imposed by Alaskan law that mandates that 

subcontractors be held responsible for losses or damages caused by their sole

negligence or willful misconduct.74 This contractual provision does not show that the 

parties carefully allocated the risks of professional negligence. Accordingly, the claim for 

professional negligence can properly stand.

But the existence of a duty is not the sole element of a claim for professional 

negligence. The Alaska Supreme Court has articulated the following elements for the 

claim: 

(1) the duty of the professional to use such skill, prudence, and diligence as 

other members of the profession commonly possess and exercise; (2) a 

breach of that duty; (3) a proximate causal connection between the 

negligent conduct and the resulting injury; and (4) actual loss or damage 

resulting from the professional’s negligence.75

 72 At Docket 303 at 37-38, MOA cites to the June 9, 2006 contract between ICRC and PND, which 

contains an indemnification clause. See Docket 306-36 (ICRC-PND Subcontract). MOA also 

cites the 2006 PND-CH2M Hill Alaska contract, which contains one sentence that relates to risk 

allocation: “[CH2M Hill Alaska] will be required to meet the same Owner conditions and 

contractual commitments the PND is obligated to meet.” Docket 306-18 at 1 (PND-VECO 

Subcontract). 

73 Docket 306-36 (ICRC-PND Subcontract); Docket 306-18 (PND-VECO Subcontract). 

74 See Alaska Statute 45.45.900.

75 Breck v. Moore, 910 P.2d 599, 604 (Alaska 1996) (citing Linck v. Barokas & Martin, 667 P.2d 

171, 174 n.4 (Alaska 1983)); cf. Restatement (Third) of Torts: Liability for Economic Harm § 6

(Am. Law Inst., Tentative Draft 2014) (limiting loss for claim of negligent performance of services 

that causes economic to person or “persons for whose benefit the actor performs the service; and 

through reliance upon it in a transaction that the actor intends to influence”).

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A defendant’s malfeasance constitutes a proximate cause when it is more likely 

than not a substantial factor in bringing about the plaintiff’s injury.76 At summary 

judgment, MOA needs to present sufficient evidence from which a reasonable trier of fact 

could find that CH2M Hill Alaska’s alleged negligence played an important role in bringing 

about MOA’s injury.77 Here, CH2M Hill Alaska was assigned two tasks: conduct a global 

stability analysis of the OCSP system and review and verify Terracon’s geotechnical 

work.78 The Court will address each task separately. 

i. March 2007 Global Stability Report 

CH2M Hill Alaska prepared a stability report in 2007 that was attached as an 

appendix to the April 2008 Geotechnical Analysis Report prepared by PND and 

GeoEngineers (the Design Team).

79 Despite its attachment to the 2008 Report, CH2M 

Hill Alaska argues that there is no evidence that anyone relied on its 2007 report. CH2M 

Hill Alaska presents evidence that the Design Team disregarded the information

contained in the 2007 Report. For example, the representative for GeoEngineers, Dan 

Mageau, testified at deposition, “I don’t believe we used [CH2M Hill Alaska] at all, no.”80 

Terracon’s expert, Dr. Youseff Hashash, reviewed CH2M Hill Alaska’s analysis and

concluded that CH2M Hill Alaska’s report should be “updated,” or “excluded and not 

 76 Dura Corp. v. Harned, 703 P.2d 396, 406 (Alaska 1985). 

77 State v. Abbott, 498 P.2d 712, 727 (Alaska 1972).

78 Docket 303 at 4-8. 

79 The 2008 Geotechnical Analysis Report refers to PND and GeoEngineers as the “Design 

Team.” Docket 328-13 (2008 Report) at 21.

80 Docket 281-17 (Mageau Depo.) at 3-4.

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referenced.”81 Dr. Hashash’s opinion was then attached to the 2008 Report, along with 

CH2M Hill Alaska’s 2007 Report. 

There is some limited evidence that the Design Team considered CH2M Hill 

Alaska’s 2007 Report. PND representative Dennis Nottingham testified that the report

was used as “quality control” for the 2008 Report.82 Also, in response to Dr. Hashash’s 

recommendation to exclude the report, the Design Team disagreed, and stated that the 

VECO (CH2M Hill Alaska) engineer had “stated his assumptions using available data and 

came to his own conclusions.”83 In the Court’s view, this limited evidence is insufficient 

to demonstrate that a reasonable jury could find that CH2M Hill Alaska’s 2007 Report was 

a substantial factor in bringing about MOA’s alleged injury. Accordingly, summary 

judgment is granted to CH2M Hill Alaska with respect to its March 2007 Report and MOA’s 

professional negligence claim. 

ii. Verifying Terracon’s Geotechnical Findings

CH2M Hill Alaska was also tasked with confirming Terracon’s geotechnical work—

work that was then relied upon by PND and GeoEngineers as a basis for the OCSP 

design. Both parties agree that the validation is reflected in a May 2006 letter from CH2M 

Hill Alaska engineer Kurt Stangl to PND engineer Alan Christopherson. In the letter, Mr. 

Stangl confirmed that VECO (now CH2M Hill Alaska) had reviewed “all aspects of the 

geotechnical exploration program,” and that all testing was “consistent and appeared to 

 81 Docket 281-23 (Hashash Review) at 6. 

82 Docket 280 at 13 (citing 281-10 (Nottingham Depo.) at 5).

83 Docket 306-30 at 17. 

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be valid.”84 Based on its review of the techniques and results, CH2M Hill Alaska’s 

engineer opined that the geotechnical data is “acceptable for use in the design of the Port 

Expansion Project.”85 

CH2M Hill Alaska argues that MOA has not presented any evidence “that might 

provide a jury with a basis for reasonably concluding that the May 30, 2006 contains 

negligent statements.”86 In support, CH2M Hill Alaska notes that both the Army Corp of 

Engineers and CH2M Hill Inc. agree with the contents of the 2006 letter, as their 

independent reviews respectively affirm Terracon’s sampling and testing procedures87

and the amount of information collected.88 But MOA’s expert report concludes that CH2M 

Hill Alaska “failed to adequately evaluate whether Terracon’s geotechnical data was 

sufficient for use” in OCSP design.89 In the Court’s view, this conclusion is sufficient to 

create a genuine dispute of fact as to whether the 2006 letter contains negligent 

statements.

As for causation, PND witness Dennis Nottingham testified that CH2M Hill Alaska’s 

affirmation of Terracon’s findings was one of many approvals that led PND to use 

Terracon’s geotechnical data as a basis for the final OCSP design. Mr. Nottingham

confirmed that Terracon’s 2004 geotechnical report was “used by PND as the basis for 

 84 Docket 306-11 (Stangl 2006 Letter) at 1-2.

85 Id. at 2.

86 Docket 325 at 8.

87 Docket 326-2 (Army Corp Letter) at 2.

88 Docket 326-3 (Suitability Study) at 5.

89 Docket 394-1 (MOA Expert Report) at 153-54. 

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its design.”90 Mr. Nottingham also testified that CH2M Hill Alaska’s verification of 

Terracon’s findings led PND to believe that the “geotechnical work was sufficient.”91 

CH2M Hill Alaska responds that its 2006 letter verifying Terracon’s findings was 

not a substantial factor in bringing about MOA’s harm. It contends that (1) the letter was 

not mentioned in the final geotechnical report; (2) the letter never suggested that no 

further data would be useful; and (3) the letter only validated the procedures Terracon 

had used to complete its soil assessment.92 In the Court’s view, the fact that the letter 

was not mentioned in the final report is not dispositive. And even if the letter did not end 

the discussion as to whether more data might help, it still could have reasonably induced 

PND to move forward with the design. Last, while most of the letter addresses Terracon’s 

soil assessment, the last line of the letter states, “it is our opinion that this data is 

acceptable for use in design of the Port Expansion Project,” which suggests a general 

validation of Terracon’s findings. All that is required of MOA at this stage in litigation is to 

show a genuine dispute of fact, and the Court finds that the May 2006 letter, in conjunction 

with Mr. Nottingham’s deposition testimony, establishes a triable issue of fact as to 

whether the requisite proximate causal connection exists. Accordingly, CH2M Hill Alaska’ 

motion for summary judgment with respect to MOA’s professional negligence claim 

against it, insofar as it relates to the 2006 Stangl letter, is denied. 

 90 Docket 306-17 (Nottingham Depo.) at 4.

91 Id. at 7.

92 Docket 325 at 7-8.

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b. Negligent Misrepresentation

The Court’s March 2015 Order did not address MOA’s then recently added claim 

for negligent misrepresentation. But the claim has now been fully briefed and is included 

in CH2M Hill Alaska’s current motion for summary judgment. 

The economic loss doctrine does not apply to claims for negligent 

misrepresentation, as under Alaska law the cause of action is “complete when the injured 

party has suffered a pecuniary loss as a result of the misrepresentation.”93 The tort of 

negligent misrepresentation consists of four elements: first, the defendant made the 

statement in the course of business or any activity in which he has a pecuniary gain; 

second, the statement was false at the time it was made; third, the plaintiff justifiably relied 

on the statement; and fourth, the defendant failed to exercise reasonable care in making 

the statement.94

Although the alleged misrepresentation need not have been made directly to MOA 

for the cause of action to apply, there must nonetheless being a showing that the 

statement was communicated to MOA and it actually relied upon it. In Selden v. Burnett, 

investors sought to sue an accountant who had negligently recommended a bad 

investment. The accountant had advised his clients to invest. His client then 

communicated this bad recommendation to outside investors.

95 On appeal, the Alaska 

 93 Bubbel v. Wien Air Alaska, 682 P.2d 374, 381 (Alaska 1984).

94 Willard v. Khotol Services Corp., 171 P.3d 108, 118 (Alaska 2007) (citing Restatement (Second) 

of Torts § 552 (1977)); see also Restatement (Second) of Torts § 552 cmt. g (1977) (“direct 

communication of the information to the person acting in reliance upon it is not necessary”).

95 Selden v. Burnett, 754 P.2d 256, 261 (Alaska 1988).

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Supreme Court affirmed summary judgment for the accountant, finding that he never 

intended for the outside investors to rely on his advice. But in Selden, there was evidence 

that the statement had actually been communicated to the investors, although that 

communication was made indirectly through the client. Thus, to maintain its claims of 

negligent misrepresentation against CH2M Hill Alaska, MOA must demonstrate that 

CH2M Hill Alaska made a misrepresentation that was communicated, either directly or 

indirectly, to MOA upon which MOA actually and justifiably relied.96

i. 2007 Global Stability Report.

To show that it actually relied on CH2M Hill Alaska’s 2007 report, MOA cites to 

George Vakalis’s deposition, in which he testified, “the municipality relied on the total 

[2008 PND] report.”97 CH2M Hill Alaska responds that Todd Cowles, the only MOA 

employee that reviewed CH2M Hill Alaska’s report, testified at deposition that he did not 

use the report for anything and understood that the report contained assumptions and 

statements that were “inconsistent with the main body” of PND’s report.98 Based on the 

Court’s review of the record, and even when all reasonable inferences are drawn in favor 

of MOA on this point, MOA has failed to present evidence from which a reasonable trier 

of fact could conclude that MOA actually and justifiably relied, either directly or indirectly, 

on the contents of CH2M Hill Alaska’s 2007 report. Mr. Vakalis’s testimony that MOA 

 96 See Anchorage Chrysler Center, Inc. v. DaimlerChrysler Corp., 129 P.3d 905, 915 (Alaska 2006) 

(finding that actual reliance and justifiable reliance are both prerequisites to claims of negligent 

misrepresentation).

97 Docket 306-34 (Vakalis Depo.) at 3.

98 Docket 281-5 (Cowles Depo.) at 10. 

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relied upon the entirety of the March 2008 PND Geotechnical Report, including the 

attached report by CH2M Hill Alaska, is insufficient to show that there was a 

misrepresentation made by that entity upon which MOA actually relied. 

ii. Verification of Terracon’s Conclusions 

MOA has demonstrated a triable issue as to whether PND and the rest of the 

Design Team may have relied on Mr. Stangl’s 2006 letter, and hence the Court denied 

CH2M Hill Alaska’s motion for summary judgment as to the professional negligence claim

associated with that letter, as explained above. But MOA has not pointed to any evidence 

that anyone at MOA, either directly or indirectly, actually or justifiably relied on the 

statements in Mr. Stangl’s 2006 letter. Accordingly, summary judgment on this claim to 

CH2M Hill Alaska is warranted. 

CONCLUSION

Based on the foregoing, IT IS ORDERED that CH2M Hill Alaska, Inc.’s Motion for 

Summary Judgment at Docket 280 is GRANTED in part and DENIED in part as follows:

99

(1) Any alleged damage to the land under the OCSP system or to the waters of 

Cook Inlet is not damage to “other property”;

(2) Any risk of personal injury or property damage created by the OCSP design is 

too speculative to constitute a significant risk;

(3) CH2M Hill Alaska’s motion for summary judgment on MOA’s negligence claim 

is granted;

(4) CH2M Hill Alaska’s motion for summary judgment on MOA’s claim for 

 99 Based on this order, Terracon’s Joinder to Motion for Summary Judgment at Docket 302 is 

rendered moot. 

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professional negligence is granted with regard to the March 2007 Report and

denied with regard to the 2006 Stangl letter; and

(5) CH2M Hill Alaska’s motion for summary judgment on MOA’s claim for negligent 

misrepresentation is granted. 

DATED this 31st day of October, 2016 at Anchorage, Alaska.

 /s/ Sharon L. Gleason

 UNITED STATES DISTRICT JUDGE

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