Opinion ID: 2628010
Heading Depth: 4
Heading Rank: 1

Heading: Rathke's contract claim against CCA

Text: The superior court ruled that Alaska inmates in Florence may not sue CCA for breach of its contract with the state since the inmates are not intended third-party beneficiaries of the contract. On appeal, Rathke argues that he is an intended third-party beneficiary by virtue of the Cleary FSA and its incorporation into the state's contract with CCA. In determining whether a third party is an intended beneficiary of a contract, we refer to the Restatement (Second) of Contracts. [22] According to § 302: (1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.[ [23] ] When applying these provisions, we have declared that the motives of the parties in executing a contract  especially the promisee [24]  are determinative. [25] A court looks to the parties' objective motive or intent, rather than their subjective motives. [26] As a general rule, if the promised performance is rendered directly to the beneficiary, the intent to benefit the third party will be clearly manifested. [27] For instance, with regard to a promise to pay money, where a contract exists between a debtor and a lender to pay the debtor's debt to a creditor, if the loan contract calls for the lender to pay a sum directly to the creditor, then the creditor is presumed to be the intended beneficiary of the contract, and thus the creditor may enforce that contract against the lender. [28] This general rule also applies in other contexts where the promisor has promised to perform a duty which the promisee owes to the beneficiary. The Restatement provides the following illustration for § 302: B promises A to furnish support for A's minor child C, whom A is bound by law to support. C is an intended beneficiary under Subsection (1)(a). The state owes legal duties to all Alaska inmates, including those housed like Rathke at the CCA's Florence, Arizona, facility. These duties are detailed in the Cleary FSA, which is an enforceable contract between Alaska inmates and the state. [29] In dismissing Rathke's claim, the superior court conceded that the Cleary FSA gives certain rights to prisoners, but it denied third-party beneficiary status to the prisoners with regard to the state/CCA contract. The court noted that the Cleary FSA duties run only from the state to the inmates, while the duties in the contract between the state and CCA run only between the state and CCA. On this basis, the court concluded that state prisoners are not third-party beneficiaries of the state/CCA contract. We disagree with the superior court's analysis. First, the Cleary settlement is incorporated by reference into the state/CCA contract. Even more, many of its provisions are repeated virtually word for word in the CCA contract. For example, portions of the discipline section of the state/CCA contract, allegedly breached in Rathke's case, are virtually identical to the Cleary FSA. The Cleary FSA states: An inmate must be given a copy of any disciplinary report regarding him or her not more than five working days after the alleged infraction, or the date the prisoner is identified as a suspect in the infraction, whichever occurs later, unless the action is likely to jeopardize an ongoing investigation by the Department or a law enforcement agency. If an investigation is likely to be jeopardized, a copy of the report must be given to the inmate upon completion of the investigation. [30] The state/CCA contract states: A Prisoner must be given a copy of a disciplinary report not more than five working days after the infraction or the date the Prisoner is identified as a suspect in the infraction, which ever occurs later. If the investigation is likely to jeopardize an ongoing investigation by the Alaska DOC, CADC, or a law enforcement agency, the report must be given to the Prisoner upon completion of the investigation. Additionally, the Cleary FSA states: An inmate is presumed innocent of an infraction until proven guilty, and the Department has the burden of establishing guilt by a preponderance of evidence. . . . The determination of the inmate's guilt must be based only on evidence presented at the hearing. [31] The state/CCA contract states: A prisoner is presumed innocent until proven guilty by a preponderance of the evidence presented at the hearing. Given this identity of provisions between the FSA and the state/CCA contract, we conclude that the prisoners are intended third-party beneficiaries of the portions of the contract which are taken directly from the FSA. [32] The result of the superior court's order is that, although Rathke may sue the state under the Cleary FSA, he may not sue the state or CCA under identical provisions contained in the state/CCA contract. Such an interpretation denies Florence inmates direct redress against the very institution charged with their day-to-day care and discipline. Accordingly, we hold that Florence inmates also have the right to sue CCA for violations of the Cleary FSA provisions contained in the CCA's contract with the state. [33]