Opinion ID: 1174822
Heading Depth: 2
Heading Rank: 3

Heading: issues of fact re: an oral contract.

Text: The issues remaining to be discussed concern the propriety of the trial court's grant of summary judgment. When reviewing a grant of summary judgment, this court must determine whether there was a genuine issue of material fact and whether the moving party was entitled to judgment on the law applicable to the established facts. Brock v. Alaska International Industries, 645 P.2d 188, 190 n. 6 (Alaska 1982). All reasonable inferences of fact from proffered materials must be drawn against Lufthansa, the moving party, and in favor of Zeman, the non-moving party. Howarth v. First National Bank, 540 P.2d 486, 490 (Alaska 1975), aff'd, 551 P.2d 934 (1976). To bring into focus the problem posed by this appeal, it is helpful to know precisely what the trial court determined in its order granting summary judgment. Relative to the existence or non-existence of an oral contract, the trial court made three key findings:
2. That Zeman's letter of January 23, 1979 and all the other correspondence leave no doubt that defendant merely expressed a willingness to enter into a lease at a future date while expressing a simultaneous unwillingness to be bound contractually until the apartments had been finished and a formal lease signed. 3. Based on #1 and #2, that the manifestation of mutual assent required for the formation of a binding contract was absent....
The trial court found that the tangible and testimonial evidence yielded only one reasonable conclusion: no mutual assent. Mutual assent is an elementary requirement for a binding contract. State v. Fairbanks North Star Borough School District, 621 P.2d 1329, 1331 n. 3 (Alaska 1981). It is equally elementary that mutual assent can be found in the objective meaning of words used. Howarth v. First National Bank of Anchorage, 596 P.2d 1164, 1167 (Alaska 1979). A party cannot rely on its subjective intent to defeat the existence of a contract if its words and actions objectively and reasonably led another to believe a contract had been entered. We turn to the documentary evidence in the record. To affirm the grant of summary judgment, we must conclude that the letters exchanged by the parties in January 1979 have only one reasonable interpretation: the parties were still negotiating and any reasonable person in Zeman's position would have understood that. Ten days after the dinner discussion Kisling sent Zeman a letter stating: [Lufthansa] cannot risk a situation on the one hand of having a binding contract ... Taken alone, this phrase would be persuasive evidence that Lufthansa intended there be no contract at this time. The same letter, however, contains other statements reasonably open to different interpretation. The first paragraph begins: This is to inform you of Lufthansa's intention to accommodate our inflight crews at Anchorage in your appartments [sic] ... The second paragraph begins: As the appartments [sic] in question are in the very beginning of construction and not yet finished, we are not in the position of signing right now an agreement we have in mind. The trial court concluded that statements such as these were evidence only of a nonbinding agreement to agree. But the language Lufthansa's intention to accommodate and an agreement we have in mind constitutes evidence from which a reasonable person could infer mutual assent. Zeman's reply letter of January 23 contains similar conflicting passages. He begins by parroting Lufthansa's opening words: I am in receipt of your letter dated January 19, 1979, expressing your intention to accomodate [sic] your flight crews in my new apartment ... By itself, this phrase could signal Zeman's state of mind that a contract had been formed. But other language employed by Zeman undermines any easy reading of the contents. He concludes by remarking: I look forward to entering into an agreement with you. Lufthansa, of course, emphasizes this sentence in arguing no mutual assent. If Lufthansa could point only to the most favorable phrases in these letters as evidence of the parties' intentions its case for summary judgment would be more tenable. We cannot ignore, however, the ambiguous language that favors Zeman's argument. Because the writings are ambiguous, interpreting them can best be achieved by considering them in light of what was said and promised, if anything, during the dinner on January 9. Resorting to evidence extrinsic to the letters can be helpful, similar to using extrinsic evidence to interpret ambiguous written contracts. Interpretation of these letters depends on knowledge of surrounding circumstances, i.e., what was said at the previous meetings between Zeman and Lufthansa's representatives. It presents a question of fact which should not have been resolved in a motion for summary judgment. [1] See, e.g., Smalley v. Juneau Clinic Building, 493 P.2d 1296, 1305 (Alaska 1972); Walsh v. Walsh, 18 Cal.2d 439, 116 P.2d 62, 65 (1941). Lufthansa's efforts to characterize the evidence of mutual assent only as tentative and conditional are not convincing. Lufthansa argues it would be inconceivable for a major international airline to make an oral lease for its crews over a dinner in Anchorage. Whatever the usual business practices of a major air carrier might be, they are not the issue before us. The conversations, writings and conduct of Lufthansa's representatives could have indicated to a reasonable person in Zeman's situation the existence of an agreement arrived at over dinner and memorialized in later letters. Lufthansa also argues that Kisling's statement of intent not to be legally bound in his letter of January 19 is impervious to interpretation. However, taken in context, the language could indicate a condition subsequent to an oral agreement: if the building, when completed, does not meet Lufthansa's requirements, then the airline will be discharged from obligation under the agreement. Moreover, Lufthansa cannot in fairness isolate this one phrase and exclude from the court's consideration other language in the same document which can reasonably be interpreted in Zeman's favor. Review of a summary judgment demands that all evidence in the record be interpreted reasonably in favor of the non-moving party.
Lufthansa attacks the possibility of an oral contract contemplating a future written lease by contending that the parties did not agree to all material terms. An oral agreement to lease which contemplates a later writing is legally enforceable only if the parties agree on the terms to be incorporated in the later writing. Thrift Shop v. Alaska Mutual Savings Bank, 398 P.2d 657, 658-59 (Alaska 1965). Although the trial judge made no mention of material terms in his order, the judgment can be affirmed if the record reveals no issues of fact regarding the failure to assent to all material terms. There is evidence in the record that after the dinner in January 1979 the parties had reached an understanding regarding rental costs, the number of units needed, the length of the lease and various special details requested by Lufthansa. Lufthansa places particular emphasis on the indefiniteness of the number of units to be rented, and of the completion and occupancy dates. There is evidence in the record that Lufthansa would yield on its request for April 1 occupancy, and that an exact date would not be crucial because Lufthansa could move out of its other accommodations on short notice. There is also evidence in the record that once Zeman could satisfy Lufthansa's minimal requirement of 28 units the extra units Zeman planned to build were not material to the parties' agreement. Lufthansa argues vigorously that as a matter of law the negotiations between the parties constituted no more than an unenforceable agreement to agree. Lufthansa points to several cases to bolster its position. Western Airlines v. Lathrop Co., 499 P.2d 1013 (Alaska 1972), involved a lease extension allegedly agreed to by the parties. Correspondence between the parties indicated that the land on which the leased building sat might be claimed by the state for an airport improvement plan. If the state did use the area, the parties allegedly agreed to move the building to a suitable area. The court held the agreement to find a suitable area did not contain a sufficiently definite offer to create a contract upon its acceptance... . Id. at 1020. Instead, the parties merely agreed to agree. Western Airlines did not involve an appeal from a summary judgment. In Malone Construction v. Westbrook, 127 Ga. App. 709, 194 S.E.2d 619 (1972), the court affirmed a grant of summary judgment dismissing a claim for breach of contract to build a shopping center. At one point, the parties both signed a letter of intent which stated, inter alia, If a lease can be consummated at this above referenced price, then we will enter into a contract with above referenced price as the guaranteed maximum... . Id. 194 S.E.2d at 620. Explaining its affirmance, the court stated that [t]hese letters all show nothing more than a continuing negotiation process with at most an agreement to contract in the future when and if all terms and conditions have been assented to by the parties. Id. 194 S.E.2d at 621. The last case cited by Lufthansa relative to agreements to agree is Opdyke Investment v. Norris Grain, 94 Mich. App. 770, 288 N.W.2d 362 (1979). Opdyke was reversed on appeal to the Michigan Supreme Court. Opdyke Investment v. Norris Grain, 413 Mich. 354, 320 N.W.2d 836 (1982). In Opdyke, plaintiff alleged breach of a contract to build a sports arena. The trial court granted defendants' motion for summary judgment, holding that a key letter indicated no more than an unenforceable agreement to agree. [2] The court of appeals affirmed, finding that a number of essential terms were expressly left to future agreement, or were simply lacking. 288 N.W.2d at 363. The supreme court reversed, noting that [w]hether the parties intend to be bound only by a formally written and executed final document is a question of fact... . 320 N.W.2d at 838. The court acknowledged the letter's tentative language, but indulged reasonable inferences favorable to the non-moving party and suggested that perhaps the parties had intended a series of increasingly detailed contracts... . Id. Additionally, the court referred to evidence extrinsic to the letter to help justify its interpretation in the plaintiff's favor. Id. 320 N.W.2d at 839. Finally, the court criticized the trial and appellate courts' careful scrutiny of the letter to discern the parties' intent, emphasizing that such a factual inquiry should have been made only by a trial court fact-finder after consideration of all of the relevant evidence to be produced at trial on the point. Id. The case before this court more closely resembles Opdyke than Western Airlines or Malone. The record in this case contains evidence which can reasonably be interpreted to indicate definiteness as to mutual assent and material terms. We reverse the grant of summary judgment as to these issues and remand for trial.