Court Opinion

ID: 9776201
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:23:29.592835+00
Date Added: 2024-06-11T09:09:04.810193
License: Public Domain

FABE, Justice,
with whom WINFREE, Justice, joins, dissenting in part.
Today the court directs the superior court to enforce the original settlement agreement between Chilkoot and Rainbow. I agree with the court that the parties entered into an enforceable settlement agreement during the April 2005 hearing and that the absence of Rainbow’s signature on the settlement documents prepared later by Chilkoot’s counsel did not render the oral settlement agreement unenforceable.1 But because the statements and conduct of counsel for the parties at the June 2006 enforcement hearing could be viewed as evidence of a mutual agreement to rescind the original settlement agreement, and because I would give Rainbow an opportunity to argue its claim that Chilkoot should be estopped from enforcing the original agreement, I disagree with the court’s instructions to the superior court on remand.
First, while the original settlement agreement was enforceable, it is not clear that either party sought enforcement of the original settlement agreement at the June 2006 hearing. According to the agreement, Chil-koot was to pay Rainbow $12,500 by June 1, 2005 if Rainbow substantially removed its equipment from Chilkoot’s property by May 15, 2005; any equipment not removed by May 15 was to be forfeited to Chilkoot without further payment by Chilkoot to Rainbow. But by the June 2006 hearing, the time for Rainbow to remove the equipment under the original agreement’s terms had passed. Thus the “default” provision, deeming Rainbow’s equipment forfeited to Chilkoot, would have been the only part of the agreement subject to enforcement at the June 2006 hearing.2 In other words, enforcing the original agreement would only have required the superior court to declare that the original oral settlement agreement was enforceable3 and to enter an order that Chilkoot owned Rainbow’s forfeited equipment without any further payment obligations.
But Chilkoot never asked the superior court to declare it the owner of Rainbow’s equipment.4 And the statements and conduct of counsel for the parties at the June 2006 hearing indicate that neither party wanted to enforce the “default” provision. Instead, both parties wanted to “re-key” the performance deadlines, presumably to allow Rainbow the opportunity to remove its equipment and be paid by Chilkoot. Rainbow’s counsel represented to the superior court that he was concerned about the “default” possibility and that Chilkoot’s counsel had assured him that Chilkoot did not want to *1019declare Rainbow in default for failure to meet the performance deadlines:
Rice [attorney for Rainbow]: First of all, our objection with the agreement is if it was strictly applied, because there are performance deadlines in the agreement.
Court: There were-
Rice: My client has not made it. And our concern is if the Court turned around and said the agreement is going to be enforceable, and since Rainbow did not meet the deadlines, they're automatically in default. Okay?
Court: Uh-huh.
Rice: I have spoken with Mr. Triem [counsel for Chilkoot] about this, and he said, "That's not our intent. Our intent is to re-key the performance deadlines{,]" e., start the performance deadlines over.
Chilkoot's counsel, Triem, later stated: "I agree with Mr. Rice that we should re-key the dates, but we cannot re-key them to allow them in there now." Both parties announced that they had no intent to enforce the default provision-yet this is precisely what the court holds them to today.
Despite the superior court's attempt to guide them in negotiations on "re-keying" the dates, the parties were not able to agree on new performance dates and so did not arrive at a modified settlement agreement at the June 2006 hearing.5 Nonetheless, the discussion at the hearing may have evidenced a mutual intent to rescind the original settlement agreement.6 Whether Chilkoot and Rainbow intended to rescind their agreement is a question of fact, resolved by looking "not only to the language of the parties, but to all of the surrounding cireumstances."7 Although an agreement to rescind a contract may be implied from the cireumstances and conduct of the parties, implied rescission must be based on positive and unequivocal actions.8 Thus, I would remand to the superior court for a determination whether Chil-koot and Rainbow's stated desires to "re-key" the dates, along with their conduct and the surrounding circumstances, evidenced mutual consent to rescind the settlement agreement. The court faults Rainbow for failing to make this argument on appeal. But Rainbow does maintain that Chilkoot did not ask for "strict enforcement" of the original settlement agreement at the June 2006 hearing and that both parties agreed to "enforcement of the original settlement agreement with re-keying the performance dates." 9
Second, I disagree with the court's decision to remand for enforcement of the original settlement agreement without allowing Rainbow to argue an estoppel defense to enforcement. Although Rainbow ordinarily would have been obligated to raise such a defense in response to any attempt by Chilkoot to enforce the original oral agreement during the June 2006 hearing, here, at the June 2006 *1020hearing the parties indicated their interest in setting new dates and "re-keying" the agreement. Because this was the focus of the enforcement hearing, which functioned in large part as a settlement conference on the record, if the superior court were to find no mutual agreement to rescind the original settlement agreement, it should next consider whether Rainbow has a valid estoppel defense to enforcement of the original settlement agreement.
Indeed, the court recognizes that "the parties did not argue the enforceability of the settlement agreement" at the June 2006 hearing.10 At the beginning of the hearing, Rainbow seemed to explain to the superior court that it had failed to perform because the parties had agreed to "start[ ] negotiating a different agreement." Counsel for Rainbow added that "the concept of collateral estoppel, et cetera, would stop the agreement from being strictly enforced." It appears that Rainbow was actually arguing that the doctrine of equitable estoppel should have prevented Chilkoot from seeking enforcement of the settlement agreement. Under Alaska law, if Rainbow reasonably relied on Chilkoot's conduct to its detriment, Chilkoot could be estopped from proceeding with its enforcement action.11
If permitted to flesh out this estoppel argument, Rainbow could have claimed that it missed the original performance deadline because it relied on Chilkoot's conduct in initiating negotiations for a new agreement during the time for performance of the first. It is hard to fault Rainbow for its failure to fully develop its estoppel argument at the June 2006 hearing when that hearing was conducted as a negotiation session to "re-key" the agreement by setting new dates for performance. And, contrary to the court's implication that Rainbow was required to develop its estoppel defense in the superior court, Rainbow had no incentive to do so once it received the relief it sought from the superior court at the conclusion of the June 2006 hearing. Similarly, there was no reason for Rainbow to argue its estoppel defense on appeal because Rainbow apparently had no objection to enforcement of the agreement with the new performance dates. Thus, Rainbow would have had no motive to argue on appeal against enforcement of the agreement with the new dates. Nor is the court's concern that Chilkoot will not have a fair opportunity to respond to Rainbow's estoppel argument justified. Chilkoot may certainly respond to Rainbow's fully developed estop-pel defense on remand should Rainbow choose to present one.
In sum, although I agree with the court's decision to reverse the superior court's judgment, I would remand to the superior court to determine first whether there was a mutual agreement to rescind the original settlement agreement, and if not, whether Rainbow has a valid estoppel defense to enforcement of the original settlement agreement.
Therefore, I respectfully dissent.

.See Mullins v. Oates, 179 P.3d 930, 939 (Alaska 2008) (agreeing that a settlement “as originally articulated at the settlement conference [] remained in effect despite the flawed attempt to insert a new term into the final settlement documents”) (citing 1 Joseph M. Perillo, Corbin on Contracts § 2.9 (1993) (noting that when parties intend a writing to merely memorialize a prior contract, "the contract is valid even though they try and fail to agree upon the form and terms of the memorial”)).

. See Op. at 1016.

. Indeed, Chilkoot’s motion was actually to enforce the stipulation of settlement, i.e., to request a declaration that Rainbow was bound by the terms of the oral settlement agreement even though it had not signed the written stipulation prepared later by counsel for Chilkoot.

. Chilkoot did not ask for Rainbow’s equipment in its motion to enforce the agreement.

. I agree with the court that the parties' failed attempt to "re-key" the performance dates did not "abrogate the original contract'' by replacing the original agreement with a modified contract-the parties did not successfully reach a modified agreement.

. E.g., Knight v. TCB Const. & Design, LLC, 248 P.3d 178, 181 (Wyo.2011) ("Generally, contracts-even fully executed ones-can be can-celled or rescinded by the mutual consent of the parties." (quoting 29 Samuzt A Treatise on tee Law or Contracts § 73:15, at 49 (Richard A. Lord ed., 4th ed. 2003))); see also Restatement (SEconp) or Contracts § 283(1) (1981) ("An agreement of rescission is an agreement under which each party agrees to discharge all of the other party's remaining duties of performance under an existing contract.").

. 29 Wiruston, supra note 6, at 49, 52.

. Id. at 50, 52.

. I note that agreeing to "enforcement of the original settlement agreement with re-keying the performance dates" would have been a contract modification, not a rescission. Because Chilkoot and Rainbow were unable to agree upon new performance dates, they did not arrive at a modified agreement that would have replaced the original agreement. See supra note 5. But it is not clear what the parties would have done if the superior court had presented them with the option of either enforcing the original deadlines and default provision or rescinding and walking away from their agreement. I conclude that both parties' express statements made at the outset of the hearing that it was "not [their] intent" to place Rainbow "automatically in default" but rather to "re-key the dates" at least creates a question of fact as to whether they intended to rescind the original agreement and re-negotiate a new one.

. Op. at 1014.

. E.g., Osterkamp v. Stiles, 235 P.3d 193, 196 (Alaska 2010) ('The general elements required for the application of the doctrine of equitable estoppel are the assertion of a position by conduct or word, reasonable reliance thereon by another party, and resulting prejudice." (quoting Jamison v. Consol. Utils., Inc., 576 P.2d 97, 102 (Alaska 1978))); Sowinski v. Walker, 198 P.3d 1134, 1147 (Alaska 2008) (explaining that the doctrine of equitable estoppel "bars a speaker from taking a position inconsistent with a prior statement when another person has reasonably and detrimentally relied on the earlier statement" and that the doctrine's purpose is to "protect parties' reasonable expectations").