Opinion ID: 2633276
Heading Depth: 3
Heading Rank: 3

Heading: The Wasilla Letter of Intent

Text: In the days leading up to the May 28, 1999 agreement, the parties negotiated over the terms of a letter of intent by which ACC would obtain the right to open a dealership in Wasilla. DCMC sent a draft to ACC in March 1999 and then another draft on May 21, 1999. The parties did not sign either draft, although the May 21 draft appears to be a document in final form, without blanks or brackets. On May 28, 1999, ACC signed the short letter agreement that gave rise to this litigation. The letter agreement said that DCMC will provide ACC with its standard five year Letter of Intent to give ACC a dealership in Wasilla. The agreement further stated that [t]he Letter of Intent will be drafted to become effective as of the date of the standard Jeep Sales and Service Agreement referenced above. But DCMC did not send a letter of intent at any point after May 26, the day the letter agreement was dated, either in the May 21 version or in any other version. Similarly, ACC never signed the May 21 draft it had already received and it never asked DCMC to send a new one. In its complaint, ACC claimed by implication that DCMC's failure to send a new letter of intent was a breach of contract. The court rejected this claim, on the ground that ACC had a duty to sign the May 21 draft or ask for a new one: ACC might have read the May 1999 agreement to require that DCMC send a proposed LOI [letter of intent] after Udd signed on 28 May (whether different from the 21 May LOI or not). But ACC never made that demand to DCMC. ACC never demanded that the draft LOI be modified. Instead ACC did nothing to implement the May 1999 agreement concerning Wasilla. After ACC filed its lawsuit ... objecting to DCMC's demands concerning the transformation of the ACC sales complex, ACC and DCMC met without counsel to resolve their disagreements. They appeared to have made progress toward understanding and/or compromise. Nonetheless, ACC never signed the LOI. That was a breach of the 28 May 1999 agreement. (Citations omitted.) ACC argues that the superior court's ruling was erroneous for several reasons. First, ACC points out that the May 28 letter agreement says DCMC will provide a letter of intent, and DCMC never did so; there is no requirement that ACC make a demand. ACC also argues the May 21 letter of intent cannot be the agreement contemplated by the May 28 letter agreement, because it requires ACC to take certain actions as soon as June 2002 and was therefore not the five year Letter of Intent referred to in the contract. We do not agree with ACC that, merely because the May 21 letter of intent requires that some deadlines be met in less than five years, it cannot possibly be the five year Letter of Intent contemplated by the agreement. But we do think ACC is entitled to a remand on this issue. ACC is correct that there is nothing in the May 28 letter agreement that required ACC to demand that DCMC provide the letter of intent; DCMC's obligation to provide the letter of intent was unconditional. It is possible that ACC's failure to insist on this right could be an implied waiver of its right to be offered a letter of intent. But the standard for an implied waiver is high and factual findings are required. [35] The superior court in its opinion did not make findings on this subject. But what about the May 21 letter of intent? If the May 21 letter of intent was in form and substance the standard five year Letter of Intent described in the May 28 agreement, the case would be simpler. Then DCMC's breach, if any, would merely be its failure to re-send this letter of intent to ACC. And the damages flowing from such a picayune breach would probably be nominal, inasmuch as ACC essentially concedes that it ultimately refused to sign the agreement in this form. Yet the superior court did not make a finding as to whether the words standard five year Letter of Intent referred to the May 21 letter of intent or to an agreement having different terms. It explicitly refrained from deciding this question. [36] And there is at least some evidence suggesting that ACC was not satisfied with the May 21 letter of intent because it required ACC to meet some deadlines in less than five years, and that DCMC knew the May 21 letter of intent would have to be changed when the parties signed the May 28 letter agreement. [37] If it were the case that ACC understood the letter agreement to refer to a letter of intent with terms different from those in the May 21 letter of intent, and if DCMC knew this, ACC's understanding of standard five year Letter of Intent should prevail over DCMC's. [38] Alternatively, it may be that both parties understood standard five year Letter of Intent to mean different things, in which case the result may be there was no contract at all. [39] Or it may be that both parties understood the May 21 letter of intent was the one being referred to in the May 28 agreement, in which case the court's dismissal would prove to be the proper course after all. We therefore remand the case to the superior court for additional findings, with directions to the court as follows. If it determines that both parties understood that the May 28 agreement referred to the May 21 letter of intent, then it should reject ACC's breach claim because it seems clear ACC never would have signed that letter of intent. If it believes that ACC had in mind a different letter of intent, and that DCMC was aware of this, then it should consider whether ACC implicitly waived its right to receive this letter of intent by failing to complain when DCMC did not send a revised letter of intent. This would require a consideration of the circumstances surrounding the contentious period that followed the signing of the letter agreement under the standards for an implied waiver described above. If there was no waiver by ACC, then DCMC's failure to send a revised letter of intent would amount to a breach of its obligation under the letter agreement to supply a letter of intent. Finally, if the court concludes that the parties did not have a meeting of the minds on what constituted the letter of intent so vaguely identified in the May 28 letter agreement, then the court may choose to take briefing on what remedy should issue. [40]