Court Opinion

ID: 2643663
Source: CourtListenerOpinion
Date Created: 2013-11-22 18:05:19.511337+00
Date Added: 2024-06-11T09:01:32.634640
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
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               THE SUPREME COURT OF THE STATE OF ALASKA

CYNTHIA L. FERNANDE Z,                         )
                                               )        Supreme Court No. S-14679
              Appellant,                       )
                                               )        Superior Court No. 3AN-86-09323 CI
       v.                                      )
                                               )        OPINION
DAVID M. FERNANDEZ,                            )
                                               )        No. 6843 – November 22, 2013
              Appellee.                        )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, John Suddock, Judge.

              Appearances: Cynthia L. Fernandez, pro se, Chugiak,
              Appellant. David M. Fernandez, pro se, Clam Gulch,
              Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              STOWERS, Justice.

I.     INTRODUCTION
              Cynthia and David Fernandez married in 1979 and had two children
together. In 1986 the parties dissolved their marriage but continued to live together until
1997, when David left their home. David returned in 2001 and lived with Cynthia again
until 2007, when the parties separated a second and final time.
              In August 2010 David received a letter from the Child Support Services
Division (CSSD) advising him that he was required to pay child support in the amount
of $450 per month, based on a support order dating from November 1986, when the
parties dissolved their marriage. In September 2010 David filed a motion in the superior
court requesting “judicial relief from the actions of [CSSD] from seizure of funds.”
Cynthia opposed the motion. In May 2011 the parties attended a settlement conference
conducted by Superior Court Judge John Suddock, in which the parties sought to resolve
the child support issue as well as several property division issues. They reached an
agreement for Cynthia to pay David $33,000, based on the amount of equity David had
contributed to Cynthia’s home when they lived together. The parties agreed that Cynthia
would attempt to get a second mortgage to fund the settlement. They also agreed that if
Cynthia were unable to obtain the full $33,000 from a second mortgage, the parties
would “start negotiating on terms in good faith” on a payment plan. They agreed that
if they were unable to reach a deal after negotiations, then “all bets are off and they are
back to square one.”
              Cynthia was not able to obtain a second mortgage and immediately sought
to return to “square one.” The court ordered that she first negotiate terms with David in
good faith. After negotiations proved unsuccessful, the court set forth more detailed
guidelines for the negotiations. After further unsuccessful negotiations, the court set
terms for the settlement, requiring Cynthia to pay David $250 per month, plus her Alaska
Permanent Fund Dividend (PFD) each year, until the amount of $33,000 was paid in full.
              Cynthia appeals, arguing that the purported settlement agreement became
a mere “agreement to negotiate” after she was unable to obtain a second mortgage and
that the court lacked authority to set terms and enter a judgment of $33,000 against her.
We agree and reverse.

                                           -2-                                       6843

II.     FACTS AND PROCEEDINGS
        A.   Facts
             Cynthia and David Fernandez were married in March 1979. They had two
children together, born in 1983 and 1985. The parties dissolved their marriage in 1986.
The dissolution petition provided for a financial allocation of assets and required David
to pay $300 per month in child support. The court approved the terms of the parties’
petition and granted a dissolution. Despite the dissolution of their marriage, the parties
remained together in the same household. In 1987 a house on Thunderbird Drive in
Chugiak was purchased in Cynthia’s name only, and both parties resided there. In 1997
the parties separated and David left the house. David returned in 2001 and again lived
with Cynthia at the Thunderbird Drive house. In 2007 the parties separated for a final
time; Cynthia remained in the Thunderbird Drive house, while David departed.
        B.   Proceedings
             In August 2010 Cynthia filed an application for services with the Child
Support Services Division (CSSD) to update the amount of arrears owed by David.
CSSD sent David a letter advising him that he was required to pay child support in the
amount of $450 per month, based on the support order dating from November 1986,
when the parties dissolved their marriage.1 In September 2010 David filed a pro se
motion in the superior court seeking “judicial relief from the actions of [CSSD] from
seizure of funds and garnishment of pay.” Cynthia filed a pro se opposition in October
2010.
             The parties both retained counsel and attended a status hearing in January
2011 before Superior Court Judge John Suddock. Also present was a representative

        1
             This elevated figure accounted for David’s principal and interest arrearages
due to non-payment.

                                           -3-                                      6843
from CSSD, who stated that CSSD did not have a financial interest in the case and did
not need to attend the hearing. Following the hearing Judge Suddock issued an order
staying CSSD’s enforcement of the child support order, stating that CSSD shall cease
action in the case “pending further order of the court.”
               In February 2011 David filed a Motion to Amend Child Support Arrearage
and Equitably Divide Domestic Partnership Property. David argued that he did not owe
back child support. He also argued that the parties had entered into a domestic
partnership by living together after the dissolution and that the court should equally
divide the equity in the assets acquired by the parties during the partnership, including
the Thunderbird Drive house. Cynthia filed an opposition to David’s motion, contending
that support was owed for both children from 1997 to 2003 in the amount of $25,650.
With respect to the property division, Cynthia argued that after the dissolution the parties
had largely maintained separate finances and that when they separated in 2007 they
divided all property; thus, there was “nothing more for the court to do” concerning the
property.
               In March 2011 the parties’ attorneys attended a status hearing before Judge
Suddock. Both attorneys agreed that they wanted to have a settlement conference.
Although Judge Suddock suggested several other judges who could be available to
conduct the conference, David’s attorney asked that Judge Suddock do so for the sake
of convenience, and Judge Suddock agreed. Cynthia’s attorney also agreed to this
arrangement.
               The settlement conference occurred in May 2011. At the close of the
conference the court stated that it would “recite what I believe your settlement is and
then either lawyer can correct me or amend.” The court summarized the agreed-upon
settlement as an agreement “to negotiate for a cash payment from [Cynthia] to [David]
based on the fact that there is quite a bit of equity now built up in the Thunderbird

                                            -4-                                       6843

[Drive] house.” According to the court, the parties agreed that Cynthia would “go to the
bank and try to get a second mortgage to fund a settlement of $33,000,” which David
would accept “in full and final settlement of all his rights arising out of this relationship.”
However, the parties also recognized that Cynthia’s creditworthiness might not allow her
to obtain a $33,000 second mortgage. If Cynthia were not able to obtain the full $33,000
from the bank “she [was] going to negotiate for the highest amount in good faith that she
[could] get.” The court stated that if Cynthia were able to obtain only $20,000, for
example, then there would be a $13,000 deficiency. “At that point the parties are going
to start negotiating on terms in good faith.” The parties would discuss, for example, if
there is “a deal to be made where [David] takes $20,000 plus a $13,000 note for a
negotiated duration at a negotiated interest rate.” The court stated, “If they can make that
deal at that time in light of the circumstances which I can’t know at this moment, they
have a settlement; if they can’t, all bets are off and they are back to square one.” The
court observed, “I think we all suspect that [Cynthia] may not be able to [get the full
$33,000] and there’s going to have to be further discussions on terms at that point, and
you’ll either work that out or you won’t.” The court also stated that as part of the
settlement “the parties determined that no child support is due and that would be part of
the order to CSSD.” Following the court’s recitation of the settlement agreement, both
parties affirmed that they assented to the agreement and understood it was binding.
              Several months later, in August 2011, Cynthia filed a motion stating that
she had “made a good faith and timely effort to obtain a home equity loan without
success.” She argued that the “agreement . . . stated that if [Cynthia] cannot get funding,
that there was no deal and negotiations have to start anew. We are now at that point. It
is now time to start over.”
              In September 2011 the court held a motion hearing. After reviewing the
results of the previous settlement conference, the court stated, “I think you have a

                                             -5-                                         6843

binding settlement, you have to negotiate in good faith on a payment plan, and you don’t
get to your do-over unless you can convince me there is no payment plan you can come
up with in good faith.” The court asked Cynthia if the parties had begun to negotiate in
good faith, and she replied that they had not. The court stated that the parties first would
have to negotiate in good faith on a payment plan and, after that, would go back to
“square one” only if they were unable to agree on a plan. The court observed that
because at the time of the settlement conference Cynthia agreed to refinance her home
to obtain $33,000, she must have thought she could absorb an increased mortgage
payment somewhere in the area of $300 to $400 per month; the court suggested that
range of figures as a starting point for negotiations. The court further stated that “[i]f I
became convinced you hadn’t negotiated in good faith, I think my next step would just
be to impose terms on you.”
              A week later the court held a telephonic status hearing.               David
acknowledged that following the previous hearing Cynthia had made several settlement
offers. However, he stated that Cynthia’s offers were dependent on renegotiating the
values of the assets and argued this was contrary to the initial agreement that had fixed
the amount Cynthia was to pay David. Cynthia stated that she had made a good faith
offer, but acknowledged the offer was based on a revaluation of some of the assets. The
court stated that there was nothing that precluded Cynthia from making a settlement offer
based on any amount; however, Cynthia was required to negotiate in good faith the terms
of the settlement contract, which is “an entirely different and more constrained matter.”
The court found that the principal amount Cynthia owed David had already been decided
($33,000) and the only variables were interest and the amount of the monthly payment.
The court reiterated that the starting point of the negotiations should be the amount
Cynthia had envisioned paying each month if she had been able to obtain the second

                                            -6-                                       6843

mortgage.2 The court ordered the parties to conduct further negotiations according to
these guidelines and stated that if either of the parties failed to negotiate in good faith the
court would impose a payment plan. As the hearing drew to a close, Cynthia argued that
according to the initial settlement she was entitled to a “do-over” if they could not agree
on a payment. The court replied that if Cynthia wanted to overturn the settlement
agreement she would have to file an Alaska Civil Rule 60 motion for relief from
judgment.
              Following the hearing the court signed Findings of Fact and Conclusions
of Law prepared by David. The court found that “[t]he parties reached a settlement
which was placed on the record,” according to which Cynthia was to keep the
Thunderbird Drive house and pay David $33,000. The court also found that the parties
agreed “that there is no child support arrearage or any prospective child support owed”
by David to Cynthia. With respect to the terms of the $33,000 payment owed by Cynthia
to David, the court found that “[t]his matter remains unresolved at the date of this order,
and will be resolved in the future.”
              In October 2011 Cynthia filed a Rule 60(b) motion requesting that the court
set aside the settlement. She argued that: (1) Judge Suddock should not have presided
over the settlement conference because she had “a clear and strong perception of bias by
virtue of the dual role that the court played in this proceeding”; (2) the agreement was
not in compliance with the guidelines for maintenance set forth in AS 25.24.160; (3) the
child support judgment should not have been removed from the settlement equation; (4)

       2
             The court explained that if, for example, Cynthia were to offer only $75 per
month, the court would likely find that she had breached her obligation to negotiate in
good faith; by contrast, the court would likely find an offer of $500 per month to be a
good faith offer.

                                             -7-                                         6843
lack of research regarding valuation adversely affected the negotiation at the settlement
conference; and (5) there were errors in the court’s findings of fact.
              In December 2011 the court held a hearing at which it denied Cynthia’s
Rule 60(b) motion for relief, finding: (1) in this jurisdiction, judges are permitted to
conduct settlement conferences in their own cases, and in this case both parties agreed
the court would conduct the settlement conference;3 (2) the court did not believe
Cynthia’s claim that she had been intimidated at the settlement conference; and (3) with
respect to Cynthia’s argument that the settlement was unfair, the court did not see in
Cynthia’s brief an argument that the case fell under any of the subsections of Rule 60(b).
              At that same hearing, the parties further discussed the settlement
negotiations. David stated that the parties had been unable to come to an agreement for
a reasonable payment plan; he asked that the court establish such a plan. Cynthia
responded that she had negotiated in good faith but was unable to pay the $300 to $400
per month suggested by the court; rather, she could afford only a $250 per month
payment at most. She requested the court find that good faith efforts had been made and
that because her good faith offer of $250 per month had not been accepted, “there is
officially no deal.” The court stated that the parties should continue to negotiate and that
if they could not arrive at a number, the court would “break the tie.” David suggested

       3
               Canon 3(B)(7)(e) of the Alaska Code of Judicial Conduct states that “[a]
judge may, with the consent of the parties, confer separately with the parties and their
lawyers in an effort to mediate or settle matters pending before the judge.” On
October 30, 2006 the Alaska Commission on Judicial Conduct adopted Advisory
Opinion 2006-01, which affirms the ability of judges to conduct settlement conferences
in their own cases and sets guidelines for such conferences. One of these guidelines
provides that “the judge should be aware that recusal may be required if the case fails to
settle and the judge has learned information during the conference that might undermine
objectivity or create the appearance of impropriety.”

                                            -8-                                       6843

that instead of re-negotiating, the court should review Cynthia’s DR-250 financial
affidavit and determine a fair payment. The court agreed to do so.
             In February 2012 the court and the parties conferred in a telephonic
hearing. The court stated that it had reviewed Cynthia’s DR-250 financial affidavit and
had concluded that Cynthia would be required to pay David $250 per month and turn
over her PFD to him each year. Cynthia filed a motion for reconsideration from the
court’s denial of her Rule 60(b) motion. In March 2012 the court signed an Order
Granting Judgment and Payment Schedule. The order stated that Cynthia owed David
a judgment of $33,000, which would accrue interest at the statutory rate of 3.75% until
paid in full. The order also established a payment plan, according to which Cynthia was
required to pay David $250 each month until the judgment was paid in full. Further,
David was entitled to garnish Cynthia’s PFD and apply whatever funds he received to
the outstanding balance.
             Cynthia appeals from the court’s order denying her Rule 60(b) motion and
the judgment entered in March 2012. Both parties proceed pro se.
III.   STANDARD OF REVIEW
             We “analyze settlement agreements using traditional contract principles.”4
We review the interpretation of a contract de novo.5 “Whether a party intends to be
bound by an agreement is a factual question determined by looking at ‘the surrounding
facts and circumstances of each case, and is reviewed under the clearly erroneous

       4
            Lewis v. Lewis, 285 P.3d 273, 275 (Alaska 2012) (citing Crane v. Crane,
986 P.2d 881, 885 (Alaska 1999)).
       5
            Villars v. Villars, 277 P.3d 763, 768 (Alaska 2012) (citing Burns v. Burns,
157 P.3d 1037, 1039 (Alaska 2007)).

                                          -9-                                     6843
standard.’ ”6 We will find clear error only when “left with a definite and firm conviction
that the trial court has made a mistake.”7
             “A party may seek relief from a final judgment by filing a timely motion
under Rule 60 of the Alaska Rules of Civil Procedure.”8 We review denial of a motion
for relief from judgment for an abuse of discretion.9
IV.	   DISCUSSION
       A.	   The Settlement Agreement Entitled Cynthia To Return To “Square
             One” After Negotiations Failed.
               Cynthia argues that according to the terms of the settlement agreement,
in the event that she could not obtain a loan, the parties were to return to “square one”
to begin their settlement negotiations anew. She observes that we have held we will
enforce “agreements to negotiate” only if they contain “ ‘a more specific way to resolve
. . . differences’ such that we are able to discern when the agreement has been
breached.”10 Cynthia contends that any “agreement to negotiate” to which the parties
might have agreed was unenforceable because the agreement did not provide a “specific
way to resolve differences” between them. Finally, she argues that the settlement
agreement is unenforceable because the court “added terms” to the agreement to which
she did not consent.

       6
            Lewis, 285 P.3d at 275 (quoting Juliano v. Angelini, 708 P.2d 1289, 1291
(Alaska 1985)).
       7	
             Id. (quoting Ford v. Ford, 68 P.3d 1258, 1263 (Alaska 2003)).
       8
             Powell v. Powell, 194 P.3d 364, 368 (Alaska 2008). 

       9
             Id. 

       10

             Valdez Fisheries Dev. Ass’n Inc. v. Alyeska Pipeline Serv. Co., 45 P.3d 657,
667 (Alaska 2002) (quoting Davis v. Dykman, 938 P.2d 1002, 1008-09 (Alaska 1997)).

                                             -10-	                                  6843

              David argues that the settlement agreement “meets all requirements of a
legally binding contract.” He cites precedent stating that Alaska “recognizes a ‘strong
public policy in favor of the settlement of disputes’ ”11 and that settlement agreements
“should not be lightly set aside.”12
              1.     Agreements to negotiate in Alaska law
              We have held that “[a]s a general rule, agreements to negotiate are
unenforceable because they do not provide a basis for determining the existence of a
breach or for giving an appropriate remedy.”13 Although “[i]n theory, an agreement to
negotiate is an enforceable contract in the sense that the parties can be made to
participate in negotiations,”14 such participation “does not necessarily mean that the
parties will be able to agree to mutually-acceptable terms.”15 Similarly, we have stated
that “parties who have merely agreed to negotiate necessarily have retained the ability
to say ‘no’ to the terms proposed by the other party; that means that it is not inevitable
that the parties will be able to agree.”16 In short, “an agreement to negotiate is not an
agreement to agree.”17

       11
             Colton v. Colton, 244 P.3d 1121, 1127 (Alaska 2010) (quoting Mullins v.
Oates, 179 P.3d 930, 937 (Alaska 2008)).
       12
              Id.
       13
              Davis, 938 P.2d at 1002, 1008.
       14
              Id.
       15
              Id. at 1008-09.
       16
              Id. at 1009.
       17
             Valdez Fisheries Dev. Ass’n Inc. v. Alyeska Pipeline Serv. Co., 45 P.3d 657,

667 (Alaska 2002); see also Brady v. State, 965 P.2d 1, 8 (Alaska 1998) (stating that “a

                                                                           (continued...)

                                          -11-                                      6843

              A “duty to negotiate in good faith arises out of an agreement to negotiate.”18
However, the duty to negotiate in good faith “is defined by the scope of [the underlying]
agreement.”19 In Brady v. State, we considered and rejected a claim for breach of an
agreement to negotiate in good faith, holding that the plaintiffs’ claim failed because they
could “allege no broken promise about a specific process of negotiation, for the State
made none.”20 More recently, in Sea Hawk Seafoods, Inc. v. City of Valdez, we held that
an agreement to negotiate in good faith was unenforceable when “the parties simply
agreed to negotiate an agreement in the future without establishing a specific process of
negotiation or a method for resolving disputes.”21
              2.     The parties’ agreement and negotiations
              Here the parties agreed that if Cynthia were unable to obtain a $33,000
loan, she would then “negotiate [with her bank] for the highest amount in good faith that
she can get” and “[a]t that point the parties will start negotiating on terms in good faith.”
“If they can make that deal at that time . . . they have a settlement; if they can’t, all bets
are off and they’re back to square one.” The parties’ agreement did not define “good
faith,” nor did it spell out “a specific process of negotiation or a method for resolving

         17
        (...continued)
court can never enforce an agreement to negotiate so as to bind one party to the ultimate
agreement that the parties sought, but failed, to negotiate”).
         18
              Sea Hawk Seafoods, Inc. v. City of Valdez, 282 P.3d 359, 368 (Alaska
2012).
         19
              Id.
         20
              Brady, 965 P.2d at 11, 13.
         21
282 P.3d at 369.

                                            -12-                                        6843

disputes” if they were unable to agree on a payment plan.22 The parties clearly did not
agree that the court would determine the terms of the agreement if the parties were
unable to do so. Although the agreement perhaps required Cynthia to “participate in
negotiations,” it did not require her to make or accept any particular offer.23 In other
words, Cynthia never relinquished her “ability to say ‘no’ to the terms proposed by the
other party.”24
              Both parties acknowledge that after Cynthia was unable to obtain a second
mortgage they subsequently engaged in negotiations that proved unsuccessful. At that
point, if Cynthia had fulfilled her duty to negotiate in good faith under the terms of the
parties’ agreement, she would have been entitled to start negotiations back at “square
one” with “all bets [being] off.” Accordingly, from September to December 2011,
Cynthia attempted to return the negotiations back to “square one” several times, but in
each instance was prevented from doing so by the court. At the September 26th hearing,
for example, Cynthia stated that according to the initial settlement, she was entitled to
a “do-over” if she and David could not agree on a payment. The court disagreed and
stated that Cynthia should file a Rule 60(b) motion if she wanted a “do-over.” At that
same hearing, the court set forth “more constrained” guidelines for what it would
consider good faith negotiations — setting a range of values that would constitute “good
faith” — that were not part of the original agreement. Similarly in December the court
stated that it would “break a tie” if the two parties could not find a meeting point between
the two figures — a term that, again, does not appear in the initial agreement. At that
time Cynthia again asserted that she had made a good faith offer, and she argued that

       22
              Id.
       23
              See Davis v. Dykman, 938 P.2d 1002, 1008 (Alaska 1997).
       24
              See id. at 1009.

                                           -13­                                       6843
because the offer had not been accepted “there is officially no deal.” The court
disagreed, again refused to permit Cynthia to return to “square one,” and ultimately
imposed a payment plan on her.
              3.     Cynthia was entitled to return to “square one.”
              We conclude that the parties failed to reach a valid settlement agreement
that bound Cynthia to any particular course of action after Cynthia was unable to obtain
a second mortgage and then engaged in negotiations with David. Cynthia initially agreed
that (1) she would attempt to obtain a second mortgage for $33,000 and (2) if she were
unable to do so, she would negotiate in good faith on a payment plan. After she was
unable to obtain the mortgage, she participated in negotiations with David. Having done
so, and in the absence of any express finding that Cynthia had failed to negotiate in
“good faith” as that term was contemplated in the original agreement, Cynthia was
entitled to start over at “square one” under the terms of the initial agreement. When the
court prevented Cynthia from starting over, when the court proceeded to define good
faith in narrower terms than the initial agreement had done, and when the court then
imposed terms on the parties, the court erroneously interpreted the initial agreement and
acted beyond the authority granted to it by that agreement.
       B.     Cynthia’s Request For Reassignment
              In her opening brief on appeal, Cynthia argues that Judge Suddock “should
not have sat [that is, served as the deciding judge] on the Rule 60(b) motion” and
requests that “if the case need be set for further proceedings, the remand be to a different
judge.” In Cynthia’s reply brief she clarifies that “at this point the issue is not whether
the judge should have declined to hear the case after presiding at the settlement
conference. Rather, the issue is whether there should be a new assignment on remand.”

                                           -14-                                       6843

             We have previously addressed a party’s request for reassignment on remand
in Deivert v. Oseira.25 There the plaintiff argued that on remand the supreme court
“should require that the case be assigned to a different judge, invoking
[AS 22.20.020(a)(9)], which provides for the disqualification of a judge who cannot give
a ‘fair and impartial decision.’ ”26     We held that the plaintiff’s argument was
“premature,” explaining that the plaintiff had “not sought the removal of [the judge] in
the superior court prior to his contention here. He may pursue this question on
remand.”27 Similarly, Cynthia’s request is premature because she can seek to disqualify
the assigned judge on remand pursuant to AS 22.20.020.28
V.    CONCLUSION
             For the foregoing reasons, we REVERSE the judgment of the superior court
and REMAND for further proceedings.

      25
             628 P.2d 575 (Alaska 1981). 

      26
             Id. at 579. 

      27
             Id.

      28
                As noted above, Advisory Opinion 2006-1(2) from the Alaska Commission

on Judicial Conduct suggests that a settlement judge should consider recusal if a case
fails to settle following a settlement conference.

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