Title: Martech Const. v. Ogden Env. Services
Citation: 852 P.2d 1146
Docket Number: 
State: Alaska
Issuer: Alaska Supreme Court
Date: May 21, 1993

Martech Const. v. Ogden Env. Services Annotate this Case 852 P.2d 1146 (1993) MARTECH CONSTRUCTION COMPANY, INC., a Texas corporation, Appellant, v. OGDEN ENVIRONMENTAL SERVICES, INC., a Delaware Corporation, Appellee. No. S-4484. Supreme Court of Alaska. May 21, 1993. *1147 Marc G. Wilhelm, Richmond & Quinn, Anchorage, for appellant. Michael E. Kreger, Perkins Coie, Anchorage, for appellee. Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ. OPINION COMPTON, Justice. 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: 2. The parties agree that all claims, demands, rights, and causes of action that each other has or may have against the other with respect to the above-described dispute or contract are hereby satisfied, discharged, and settled. The parties also agree to stipulate to the dissolution of the TRO, to discharge the injunction bond, and to seek, obtain and *1148 be bound by a dismissal with prejudice in the above-described action. Except as herein set forth, no party shall have any further obligation to pay any sum pursuant to the contract whether now or hereafter due, whether contingent or uncontingent, whether liquidated or unliquidated. Paragraph 18, a comprehensive mutual release, provides: 18. The parties agree that this settlement is the compromise of their disputed claims referred to above and hereby agree and acknowledge that any other claims against each other, known or unknown, which arose on or prior to November 4, 1988, or arose pursuant to the contract for past or future losses, expenses or 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) are forever abandoned, and any right to assert such additional claims for any damages whatsoever are hereby forever waived and barred. It is hereby declared and acknowledged that the undersigned are familiar with the decision of the Alaska Supreme Court in the case of Witt v. Watkins, 579 P.2d 1065 (Alaska, 1978),[1] and that it is still the true intent and desire to fully release all individuals, agents, firms or corporations who could at any future date be possible defendants in any action arising out of the matters described herein. The parties acknowledge and assume all risk, chance, or hazard that the alleged damages arising out of this dispute, if any, may be different, greater, or more extensive than is now known by any of the parties hereto. By this agreement the parties intend to discharge any liability which may be discovered now or hereafter, and specifically understand and agree that each has given the consideration herein mentioned in order to be released fully, finally, and completely from all liability for whatever damage, known or unknown, arising from or relating to the subject contract. The parties specifically release and renounce any right they may now or hereafter have to reform, rescind, modify, or set aside this Settlement Agreement, Mutual Release and waiver because of mutual or unilateral mistake. The risk of mistake is hereby assumed by the parties in consideration of the dismissal of the action described above. It is declared and acknowledged that no promise or inducement which is not herein expressed is made to secure this release. It is represented that this settlement release was not secured in haste by the instigation of the parties released, the undersigned were not (in agreeing to this settlement and to this release) at a bargaining disadvantage because of the nature of the action or the injuries or damages or for any other reason, and that all parties have been represented by legal counsel throughout the course of negotiations which have led to this release. 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 *1149 purchase the switchgear for $54,183.75. The letter noted that the switchgear would be ready for delivery by December 15 if Ogden accepted the bid by November 18. The letter also noted that Martech was being assessed a cancellation charge of at least $44,000 on the initial order. Ogden, however, purchased an automatic switchgear from another supplier.[2] 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.[3] Martech then moved to join Ogden as a necessary party under Civil Rule 19 and to reconsider its denial of the motion to file the third party complaint.[4]See Alaska R.Civil P. 19(a) (1991-92). The court joined Ogden under Civil Rule 19 and ordered that Martech's complaint against Ogden be filed. 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.[5] Martech sought clarification whether Ogden was still a party to the lawsuit. The trial court, finding that there were no other claims against Ogden, noted that Ogden was no longer a party to the lawsuit. Martech appeals the grant of summary judgment on its third party complaint, the removal of Ogden as a joined party,[6] and the award of attorney's fees. II. DISCUSSIONA. SCOPE OF THE SETTLEMENT1. 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).[7] *1150 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.[8] Martech contends that the release does not apply because Ogden's refusal to purchase the switchgear occurred after the settlement was executed, and therefore was not anticipated at the time of execution. Ogden contends that even if it had a duty to purchase the switchgear, the dispute over the switchgear "arises out of" the settled transaction and the duty was thus discharged by the settlement. 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 *1151 settled and a settlement and release was executed which covered "any and all claims, equitable and legal, known or unknown, which they presently have ... and each covenant not to sue [the other] based on any such claims existing as of this date." Id. at 926 (alteration, omission in original). Two years later, the distributors again sued Mapco for antitrust violations. The suit claimed that price increases instituted after the settlement were unlawfully exploitive. Id. 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.[9]Id. at 928-29. We rejected the blanket contention that the settlement should not cover post-settlement damages from post-settlement conduct, because the damages were too uncertain at the time of the settlement. We held that the release would cover "all claims reasonably ascertainable at the date of its execution." Id. at 930. 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,[10] we are not persuaded that this agreement was wholly independent from the principal subcontract discharged by the settlement. Delivery of and payment for the switchgear were not resolved at the time the settlement was executed. Thus, the failure of Ogden to accept the switchgear does not stand as a cause of action without the background of the dispute addressed by the settlement agreement. Therefore, existing questions of fact regarding the possible agreement by Ogden to pay for the switchgear will not defeat the summary judgment. 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.[11] The claim regarding the switchgear was an issue which was "reasonably ascertainable" at *1152 the time of executing the settlement. See Mapco, 687 P.2d at 930. Even if Martech justifiably believed that Ogden would pay for and own the switchgear, Martech signed the purchase order and was contractually bound to Cummins. Martech should have anticipated that the switchgear issue would be resolved by the settlement along with the entirety of the contractual relationship. 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.[12] Third, if an agreement did exist for Ogden to purchase the switchgear, it arose pursuant to the contractual relationship as it could have been one of the items for which an invoice was to be submitted to arbitration.[13] B. RULE 19 JOINDER1. Standard of Review This court has before reversed a trial court's order of joinder under Civil *1153 Rule 19 when it found that the trial court abused its discretion. See Farmer v. State, 788 P.2d 43 , 51 (Alaska 1990). Questions regarding the interpretation of Rule 19 are subject to de novo review by this court. Zsupnik v. State, 789 P.2d 357 , 359 (Alaska 1990). In such cases, this court will "adopt the rule of law which is most persuasive in light of precedent, policy and reason." Id. 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).[14] Martech is appealing this first order. The second order only serves to elucidate the effect of the first order. Thus Martech is appealing a final judgment.[15] 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.[16] It argues that whether *1154 Ogden was properly joined as a party under Civil Rule 19(a) is not an issue in this appeal. 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.[17] Martech contends that the trial court's adoption of Ogden's reasoning is evidenced by the fact that the trial court signed Ogden's lodged order without modification. 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).[18] "[I]t must be noted that complete relief refers to relief as between the parties already parties, and not as between a party and the absent person whose joinder is sought." 3A Moore's Federal Practice ¶ 19.07-1[1], at 19-93-96 (2d ed. 1991). 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 *1155 are jointly liable.[19]But see Japan Petroleum Co. v. Ashland Oil, Inc., 456 F. Supp. 831 , 836-37 (D.Del. 1978) (assuming that an absent party which could alone be liable for plaintiff's damages was a necessary party). Because the settlement agreement settles all liability between Ogden and Martech, there cannot be the situation where those two parties share liability for the switchgear. Thus, contrary to Martech's arguments, Martech and Ogden cannot be joint obligors.[20] 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.[21] III. CONCLUSION 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. AFFIRMED. 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 *1156 pay for the automatic switchgear. This dispute continued through August and into September of 1988. Meanwhile Ogden's engineers were working directly with Cummins to design automatic switchgear. After the design was finalized, the parties resolved the dispute. Ogden agreed to pay for the automatic switchgear and directed Martech to place an order for it.[1] 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.[2] An important aspect of the settlement agreement is that it contemplates certain *1157 ongoing contractual obligations for both parties. The settlement agreement is, therefore, much more than merely a release of all claims. An agreement which both creates or confirms ongoing obligations and purports to release all past and future claims would, without more, be a contradiction in terms, because the parties would be left without any remedy for future breaches. The settlement agreement addresses this problem in two ways. 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: The parties agree that this settlement is the compromise of their disputed claims referred to above and hereby agree and acknowledge that any other claims against each other, known or unknown, which arose on or prior to November 4, 1988, or which arose pursuant to the contract for past or future losses, expenses or 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) are forever abandoned, and any right to assert such additional claims for any damages whatsoever are hereby forever waived and barred. (Emphasis added.)[3] 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.[4] Instead, under paragraph 5 of the agreement, payment for the automatic switchgear was uninvoiced work for which Ogden was required to pay or, in the event of a dispute, to submit to arbitration. 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. *1158 On remand there are various courses of action which might be taken to resolve the critical question of whether there was an agreement by Ogden to purchase the switchgear. The trial court could order the parties to arbitrate this question.[5] Alternatively, since neither party has asked for arbitration, the question might be resolved after a trial by the court, either with or without a jury. As these options have not been briefed, I express no opinion on them. It seems plain, however, that the release provisions of the settlement agreement do not cover Ogden's alleged agreement to pay for the automatic switchgear and that summary judgment on this basis was erroneously entered. 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.[6] For the above reasons, the judgment of the superior court should be reversed and this case should be remanded for further proceedings.