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Rohaley v. Compere

Supreme Court of Alaska
Oct 6, 2004
Supreme Court No. S-11004 (Alaska Oct. 6, 2004)

Opinion

Supreme Court No. S-11004.

October 6, 2004.

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Sen K. Tan, Judge, Superior Court No. 3AN-00-8994 CI.

Reginald J. Christie, Jr., Christie Associates, and Michael Cohn, Attorney at Law, Anchorage, for Appellant.

Lynn M. Allingham, Allingham Law Offices, PC, Anchorage, for Appellee.

Before: Bryner, Chief Justice, Matthews, Eastaugh, Fabe, and Carpeneti, Justices.


MEMORANDUM OPINION AND JUDGMENT

Entered pursuant to Alaska Appellate Rule 214.

I. INTRODUCTION

Donald Rohaley entered into a settlement agreement which he later sought to vacate because it was entered into due to the parties' mutual mistake and because it failed to include essential terms. The superior court denied Rohaley's motion. Finding no adequate legal grounds that justify relief from the settlement agreement, we affirm the decision of the superior court.

I. FACTS AND PROCEEDINGS

On April 8, 1954 Donald Rohaley filed a homestead entry for a parcel of land south of Anchorage, comprising approximately 140 acres. Rohaley filed a notice of occupancy with the Bureau of Land Management (BLM), which was recorded on May 24, 1954. In May 1998 Sally Compere purchased forty acres of land adjacent to Rohaley's property.

Compere asked Robert Kean, a surveyor, to investigate the existence of a section line easement on Rohaley's property. On October 22, 1998 Kean reported to Compere that based on BLM records and policy "there is every indication that there is NOT a section line easement between Sections 30 and 31 to your property from Canyon Rd." In May 1999 Compere obtained a permit from the Municipality of Anchorage to construct a 450-foot drive along the section line. On July 27, 1999, after contacting Rohaley and learning that there was probably not a valid section line easement over his property, the Municipality revoked the permit and issued a stop work order. Two days later Thomas Knox, a surveyor for the Municipality of Anchorage, issued a memorandum based on Kean's research opining that there was no section line easement. Rohaley sued Compere in July 2000 for trespass and for trespass by cutting or injuring trees and shrubs, a tort governed by AS 09.45.730, which provides that a person who commits trespass by cutting down or injuring trees or shrubs can be held liable to the land's owner for treble damages. Rohaley alleged that Compere caused significant damage to his property by "digging deep gouges through the land and destroying numerous trees and shrubs."

The case was heard before Superior Court Judge Sen K. Tan. Compere moved for summary judgment, asking that the court find that there is a valid public use easement running over Rohaley's property. Judge Tan denied Compere's motion on September 4, 2001, finding that there were genuine issues of material fact surrounding the existence and location of the alleged section line easement.

On September 5, 2001 the parties entered into a settlement agreement in open court providing that Compere would restore Rohaley's property to its previous condition at her own expense and pay Rohaley $16,000. This settlement was supplemented by the parties' April 10, 2002 agreement that Rohaley would provide Compere with an easement over the eastern edge of his property in exchange for an additional $5,000. The parties also discussed what would constitute a reasonable restoration of Rohaley's property. This arrangement was intended to be the "final complete agreement between the parties" and was agreed to by Compere's counsel and Rohaley in open court.

Compere's attorney prepared a written agreement designed to memorialize the parties' oral agreement. In addition to Compere's pledge to pay Rohaley $21,000 and to restore his property, and Rohaley's pledge to grant Compere an easement, the written agreement contained several additional provisions which Rohaley found objectionable. The parties were represented by counsel during both court-mediated settlement conferences.

On October 14, 2002, Rohaley moved to vacate the settlement agreement. First, he argued that the settlement agreement did not contain all of the material terms of the agreement and that the parties did not agree to certain material terms that were included in the written agreement. Second, he argued that the settlement agreement was based on the parties' mutually mistaken assumption that a section line easement already existed over Rohaley's property. Rohaley also expressed his concern that he might have trouble enforcing the agreement against Compere. To support his motion, Rohaley relied on a report by attorney Thomas Meacham which stated that "a valid argument may be advanced" that there was no easement over the section line to Rohaley's property.

Judge Tan denied Rohaley's motion on February 7, 2003. Judge Tan found that Rohaley's argument that the court was led to believe that a section line existed was "patently false." He noted that since the terms of the April 10 settlement granted Compere the easement in exchange for $21,000, it was clear that the parties did not assume that the easement already existed. The court deemed it irrelevant that Rohaley discovered an expert witness to support his claim that no section line easement existed, because the court never made a definitive ruling on whether the section line easement existed. Judge Tan also ruled that the parties had come to an agreement on all terms that were material to their settlement agreement. Rohaley appeals.

III. STANDARD OF REVIEW

We review the denial of a request for relief from a settlement agreement for abuse of discretion. We review the superior court's findings of fact under the clearly erroneous standard and will reverse only when, "after a review of the entire record, we are left with a definite and firm conviction that a mistake has been made." We review de novo the superior court's interpretation of civil rules.

See Dickerson v. Williams, 956 P.2d 458, 462 (Alaska 1998) (applying abuse of discretion standard to review court's response to motion to enforce settlement agreement).

Demoski v. New, 737 P.2d 780, 784 (Alaska 1987).

Duffus v. Duffus, 72 P.3d 313, 316 (Alaska 2003).

IV. DISCUSSION

A settlement agreement is a contract, and its construction and enforcement are governed by the legal principles generally applied to contracts. "Generally, `[s]ound judicial policy indicates that private settlements and stipulations between the parties are to be favored and should not be lightly set aside.'" "The formation of an express contract requires an offer encompassing its essential terms, an unequivocal acceptance of the terms by the offeree, consideration and an intent to be bound." A settlement agreement satisfying these requirements forms a binding agreement between the parties. When the parties to a case, either individually or through their attorneys, orally agree to settle a claim in open court and there is no dispute as to the material terms of the settlement, the settlement is enforceable against both parties.

See Wyatt v. Wyatt, 65 P.3d 825, 828 (Alaska 2003) (holding that settlement agreement is contract under traditional contract analysis).

DeSalvo v. Bryant, 42 P.3d 525, 528 (Alaska 2002) (quoting Henash v. Ipalook, 985 P.2d 442, 450 (Alaska 1999)).

Young v. Hobbs, 916 P.2d 485, 488 (Alaska 1996) (quoting Childs v. Kalgin Island Lodge, 799 P.2d 310, 314 (Alaska 1989)).

Wyatt, 65 P.3d at 828.

See Crane v. Crane, 986 P.2d 881, 885 (Alaska 1999) (holding that settlement agreed upon in open court is enforceable absent fraud, duress, or concealment of facts showing agreement involuntary or made without full understanding).

Rohaley advances several arguments as to why the settlement agreement should be vacated. First, he argues that the parties entered into the agreement while laboring under a mutual mistake of fact. Second, he argues that he possesses newly discovered evidence concerning the subject matter of the original litigation. Third, he argues that the settlement agreement did not contain all of the material and essential terms of the parties' agreement. Finally, he argues that enforcement of the settlement agreement would result in manifest injustice. We reject each of these arguments in turn.

A. The Superior Court Did Not Abuse Its Discretion in Refusing To Vacate the Settlement Agreement on the Grounds of Mutual Mistake.

Rohaley seeks to avoid the settlement agreement on the grounds of mutual mistake under common law principles and under Alaska Civil Rule 60(b). We have previously held that "[w]hen the parties to an agreement share a mistaken belief about a material fact, the agreement may be voidable." Civil Rule 60(b) provides for similar relief when the parties enter into a settlement agreement under a mutual mistake and the mistake destroys a "fundamental, underlying assumption" of the agreement.

Rohaley argues on appeal that Judge Tan erred by not granting relief "using the principles underlying Rule 60(b) as guidelines." Rohaley's motion before the superior court sought to vacate the settlement on the grounds of mutual mistake, and he sought to introduce new evidence to prove his claim. Although Rohaley never explicitly moved for relief under Rule 60(b) in the superior court, we conclude that his argument under that rule is not waived on appeal. Generally we will not consider issues that were not submitted to the lower court. Baxley v. State, 958 P.2d 422, 430 (Alaska 1998). However, we have sometimes considered arguments raised for the first time on appeal if the issue was closely related to the party's arguments in the court below, could have been gleaned from the pleadings, and does not rely upon any new or controverted facts. See McConnell v. State, Dep't of Health Soc. Servs., Div. of Med. Assistance, 991 P.2d 178, 183 (Alaska 1999); Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985). We have previously held that a party can raise an issue on appeal under Rule 60(b) when the party has implicitly raised those issues below. Clauson v. Clauson, 831 P.2d 1257, 1260 n. 5 (Alaska 1992). In Clauson, a party filed a motion to modify a judgment in superior court but did not classify her motion as a Rule 60(b) motion, and the trial court did not mention Rule 60(b) in its ruling. Id. We allowed the party to raise the issue on appeal under Rule 60(b), finding that the motion to vacate the judgment could, "at least implicitly, be considered a 60(b) motion as it provides a `reason justifying relief from the operation of the judgment.'" Id. (quoting Alaska R. Civ. P. 60(b)). Because the arguments Rohaley raises on appeal are similar to those he raised in the trial court, we find that he has not waived his right to argue for relief under Rule 60(b).

Stormont v. Astoria Ltd., 889 P.2d 1059, 1061 (Alaska 1995) (citing RESTATEMENT (SECOND) OF CONTRACTS § 152 (1981)).

Williams v. Crawford, 982 P.2d 250, 255 (Alaska 1999). Rohaley raises this argument under Civil Rule 60(b)(1). Because Rohaley alleges a mutual mistake of fact rather than a unilateral mistake of fact, this argument falls under Rule 60(b)(6). See id.

Rohaley alleges two mutual mistakes. First, he argues that both parties mistakenly assumed that there was a section line easement over Rohaley's property. This assertion is completely contradicted by the parties' in-court settlement agreement and evidence in the court record. Rohaley clearly did not believe that a section line easement already existed because he sued Compere for trespass. And the record shows that Compere received an expert opinion from surveyor Robert Kean in 1998 which stated almost definitively that there was no section line easement over Rohaley's property. In addition, the agreement provides that Compere would pay Rohaley an additional $5,000 in exchange for an easement over his property. Had the parties believed that a section line easement already existed, this agreement would have been unnecessary. Finally, Judge Tan denied Compere's motion for summary judgment precisely because there were numerous unresolved factual issues concerning the existence of the section line. There is no indication that either party or the court was under the impression that a section line easement existed on Rohaley's property as a matter of law.

Second, Rohaley argues that the parties entered into a settlement agreement under the shared mistaken belief that a trial on the issue of a section line easement would have been lengthy and costly. Rohaley claims that Judge Tan was similarly mistaken. He argues that this assumption was mistaken because Thomas Meacham's affidavit definitively settled the issue of whether an easement existed. This argument is flawed. Meacham's affidavit was quite equivocal, noting that a determination whether an easement exists on homestead land involves complicated legal and factual questions which confound even experienced real estate law practitioners in Alaska. And a party's mistaken assessment of the merits of his case or the likely length and complexity of trial cannot serve as a basis for setting aside an otherwise valid settlement agreement. The superior court was correct in refusing to vacate the settlement agreement on the grounds of mutual mistake.

Rohaley also argues that the settlement should be voided because Judge Tan's order denying Rohaley's motion to void the settlement was based on the erroneous conclusion that the outcome of the litigation was uncertain and the parties would have had to spend considerable time and money litigating the action. Rohaley's interpretation of the order is incorrect. The settlement was upheld because it was found to be valid and binding on both parties. Judge Tan simply pointed out that the parties were able to avoid the expense of a trial by settling the case. The court did not rule on the existence of a section line easement.

B. Thomas Meacham's Affidavit Does Not Justify Vacating the Settlement Agreement.

Rohaley argues that the settlement should be vacated under Alaska Civil Rule 60(b)(2) because he presented the court with newly discovered evidence. Rule 60(b)(2) allows the superior court to relieve a party from a final judgment if the party moves for such relief due to "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." The evidence to which Rohaley refers is the affidavit by attorney Thomas Meacham setting forth the basis for Meacham's legal opinion that there was no section line easement over Rohaley's property.

Rohaley did not move for relief in the superior court on the grounds that he had new evidence. Rather, Meacham's affidavit was introduced to support Rohaley's contention that the parties had entered into the agreement laboring under a mutual mistake of fact that Meacham's affidavit tentatively resolved. Rohaley's failure to move for relief in the superior court on the basis of new evidence constitutes waiver of that argument on appeal. Moreover, we note that there is no competent evidence to support Rohaley's contention that Meacham's affidavit was evidence that either party was unaware of before settlement, or that Rohaley or his counsel, exercising the due diligence required by Rule 60(b)(2), could not have discovered during litigation or settlement negotiations. Finally, even if Rohaley had sought relief before the superior court on the grounds of new evidence, we concur with that court's ruling that its failure to definitively resolve the issue of whether a section line easement existed renders Meacham's affidavit irrelevant.

Absent plain error, we generally will not consider issues not raised below. Anchorage Nissan, Inc. v. State, 941 P.2d 1229, 1239-40 (Alaska 1997).

Alaska R. Civ. P. 60(b)(2); see Sengupta v. Univ. of Alaska, 21 P.3d 1240, 1261 (Alaska 2001) (discussing requirements for relief under Rule 60(b)(2)); Babinec v. Yabuki, 799 P.2d 1325, 1332-33 (Alaska 1990) (same). Meacham reached the conclusion that an easement probably did not exist based upon a review of Rohaley's case file and his knowledge of these issues. This information was available throughout the course of the settlement negotiations.

C. The Settlement Agreement Contained All of the Material and Essential Terms of the Parties' Agreement.

Rohaley argues that the settlement agreement is unenforceable because the written agreement contained several material terms that were not orally agreed to, specifically: a confidentiality clause, a provision for interest on any late payments, and an agreement to restore Rohaley's property. Judge Tan ruled that these terms were not material to the parties' agreement and, with the exception of the restoration claim, were not brought to the court's attention during the in-court proceedings. To be enforceable an agreement must include all material terms, though the parties need not address every possible contingency that may arise because courts can "`fill gaps in contracts to ensure fairness where the reasonable expectations of the parties are clear.'" Because we agree that Rohaley and Compere came to an agreement on all terms material to their settlement, we affirm the decision of the superior court.

Interior Credit Bureau, Inc. v. Bussing, 559 P.2d 104, 106 (Alaska 1997).

See Magill v. Nelbro Packing Co., 43 P.3d 140, 142 (Alaska 2001) (quoting Rego v. Decker, 482 P.2d 834, 837 (Alaska 1971)).

1. The confidentiality clause

The written agreement proposed by Compere's counsel contained the following language: "It is understood that the Parties shall keep the terms of this Agreement confidential except as otherwise required by law and shall neither disclose nor discuss its contents with any third party except those persons necessary to carry out the terms of this Agreement." Because the parties did not discuss such a clause in their in-court settlement negotiations, Rohaley argues that the judgment should be vacated, arguing that "Compere sought to add new terms such as confidentiality" to the agreement. He also argues that the confidentiality clause was an essential term of the agreement on which the parties failed to agree.

Though there is no one test to determine what makes a term essential to an agreement, courts in other jurisdictions have characterized a term as essential when the parties "regard [it], at the time of contracting, as a vitally important ingredient in their bargain," when its rejection could have affected the negotiation of other contractual terms, or when it is necessary to determine the rights and duties of each party. One might also discern the subjective importance of a term by considering the actions and words of each party throughout the course of the parties' interactions.

Neeley v. Bankers Trust Co. of Texas, 757 F.2d 621, 628 (5th Cir. 1985).

Conner v. Lavaca Hosp. Dist., 267 F.3d 426, 433 (5th Cir. 2001).

Family Snacks of North Carolina, Inc. v. Prepared Prods. Co., 295 F.3d 864, 869 (8th Cir. 2002) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 204).

The issue of confidentiality was not essential to the parties' agreement in this case. Neither party raised this issue before the court during settlement negotiations, nor does settlement of a trespass claim or the grant of an easement implicitly raise any issues of confidentiality. Finally, the general intent of the settlement agreement — to restore Rohaley's property, provide Rohaley with payment, and grant Compere an easement — could be achieved regardless of the confidentiality clause. The parties' failure to agree on the necessity of a confidentiality clause does not void their agreement.

2. Interest on the installment payments

At the settlement conference, both parties agreed that Compere would pay $10,500 upon the grant of an easement over Rohaley's property and make a second payment of $10,500 ten months later. Neither party raised the issue of what would happen if Compere was late in making either of these payments. Compere's proposed written settlement agreement provided that if "payments are made pursuant to this schedule, no interest shall accrue on the sums due, but if payments are not made in accordance with this schedule, interest at the rate of 4.25% shall accrue on the unpaid balance from the date any sum came due." Rohaley now claims that he should be allowed to avoid the settlement agreement because "[t]here was no agreement reached as to interest in the installment payments."

The parties clearly agreed that Compere would pay a total of $21,000 in two installments, assuming that payments were timely. The parties' failure to specifically provide for interest charges for late payment does not bar enforcement of the settlement agreement. That the parties have left some issues to be determined in the future does not prevent courts from enforcing an otherwise valid agreement "if some method of determination independent of a party's mere `wish, will, and desire' exists, either by virtue of the agreement itself or by commercial practice or other usage or custom." Alaska Statute 09.30.070 governs the rate of interest applicable to past-due judgments, and the applicable statutory interest rate could apply in the absence of any agreement to the contrary. If Compere failed to pay the $21,000 according to the agreed schedule, Rohaley could obtain a judgment for the past due amount, including prejudgment interest. The failure to specifically provide for this situation during the settlement agreement does not void the agreement.

JOSEPH M. PERILLO, CORBIN ON CONTRACTS § 4.1 at 536 (1993) (citations omitted).

AS 09.30.070(a) (interest rate on judgments is three percentage points above the 12th Federal Reserve District discount rate in effect on January 2 of year in which judgment or decree is entered).

Id.

3. Restoration of Rohaley's property

Restoration of Rohaley's property was a material term of the agreement. Rohaley originally sued for trespass to prevent Compere from cutting down trees and shrubbery on his property and to recover treble damages for the injury that she had already done to his property. Restoration of Rohaley's property was discussed during both open court settlement agreements, and the record indicates that the parties did, in fact, come to a complete agreement concerning Compere's obligations in this regard.

At the first settlement conference, the parties agreed that Compere would restore Rohaley's property to its condition prior to her trespass, and that she would pay him $16,000 in damages. At the second settlement conference, the parties agreed that the restoration would be completed by June 30, 2002, and that it would be "reasonable," which Rohaley defined as filling holes and planting vegetation to prevent further erosion. Because the parties' agreement specifically addressed the restoration of Rohaley's property, his argument that no agreement was reached on this essential term is without merit.

Rohaley also argues that the settlement agreement is void because it did not include provisions for enforcing its terms. But the risk of breach is present in any contract; moreover, Rohaley could take legal action against Compere if she failed to honor the terms of their agreement. Rohaley's remedies for Compere's potential breach of the contract were not essential terms.

D. There Is No Other Justifiable Reason To Relieve Rohaley from His Obligations Under the Settlement Agreement.

Rohaley argues that relief from the settlement agreement is also available under Civil Rule 60(b)(6), which allows a court to relieve a party from a settlement agreement for "any other reason justifying relief from the operation of the judgment." Rohaley contends that Rule 60(b)(6) applies because Compere caused him to incur large litigation expenses and because he was somehow coerced into the settlement agreement. He also contends, as sort of a quid pro quo, that since Compere was allowed to amend the original settlement agreement, he should be entitled to amend or avoid the second agreement.

Rule 60(b)(6) applies only in extraordinary circumstances. We have found "extraordinary circumstances" for the purpose of the rule when the parties to a divorce settlement had a mutual misunderstanding about one spouse's eligibility for survivorship benefits and federal regulations rendered enforcement of the settlement impossible; when a paternity judgment was based on a mother's knowing misrepresentation of the paternity of her child to the purported father; and when the mutual intent underlying a judgment, order, or property settlement was destroyed by a subsequent event.

Bauman v. Day, 892 P.2d 817, 829 (Alaska 1995) (citing Village of Chefornak v. Hooper Bay Constr. Co., 758 P.2d 1266, 1270 (Alaska 1988)).

Williams v. Crawford, 982 P.2d 250, 255-56 (Alaska 1999).

Atcherian v. State, Dep't of Revenue, Child Support Enforcement Div., 14 P.3d 970, 975 (Alaska 2000).

See, e.g., McGee v. McGee, 974 P.2d 983, 990 (Alaska 1999) (holding that creation of entirely new federal entitlement program that created for parties wealth of comparatively enormous amount justified relief under Rule 60(b)(6)); Foster v. Foster, 684 P.2d 869, 871-72 (Alaska 1984) (holding that destruction of parties' fundamental assumption concerning their living arrangement justified relief under Rule 60(b)(6)).

Rohaley alleges no inequity in the settlement that would justify relief under Rule 60(b)(6). The fact that Rohaley incurred legal expenses due to his prosecution of Compere's trespass is not an extraordinary circumstance justifying relief. And Rohaley's argument that he was coerced into settlement by Judge Tan's order denying Compere's summary judgment motion is completely unfounded. The record shows that Rohaley entered into the settlement agreement under his own will. "Relief under Civil Rule 60(b)(6) is inappropriate when a party takes a deliberate action that he later regrets as a mistake."

Dewey v. Dewey, 969 P.2d 1154, 1159 (Alaska 1999).

V. CONCLUSION

Because Rohaley has provided no valid reason to vacate the settlement agreement, we AFFIRM the decision of the superior court.


Summaries of

Rohaley v. Compere

Supreme Court of Alaska
Oct 6, 2004
Supreme Court No. S-11004 (Alaska Oct. 6, 2004)
Case details for

Rohaley v. Compere

Case Details

Full title:DONALD L. ROHALEY, Appellant v. SALLY J. COMPERE, Appellee

Court:Supreme Court of Alaska

Date published: Oct 6, 2004

Citations

Supreme Court No. S-11004 (Alaska Oct. 6, 2004)

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