Dennis S. Josephson, Inc. v. Alaska Intern. Const., Inc.
| Citation | 888 F.2d 130 |
| Decision Date | 06 October 1989 |
| Docket Number | No. 88-4220,88-4220 |
| Parties | Unpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. DENNIS S. JOSEPHSON, INC., Plaintiff-Appellee, v. ALASKA INTERNATIONAL CONSTRUCTION, INC., Ensearch Alaska Construction, Inc., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Before O'SCANNLAIN, LEAVY, and TROTT, Circuit Judges.
Defendant-appellant Enserch Alaska Construction, Inc. ("Enserch Alaska") 1 appeals the denial of its motions for a directed verdict and judgment notwithstanding the verdict, contending the evidence was insufficient to support a damage award to Dennis S. Josephson, Inc. ("Josephson, Inc."). The award was based on royalties for sandbags produced after December 31, 1982, by machines Dennis S. Josephson ("Josephson") designed. Enserch Alaska contends that Josephson, Inc. had no contractual right to royalties after December 31, 1982, and that Enserch Alaska was not bound by any contract that might have existed between Josephson, Inc. and Enserch Alaska's predecessor corporation, Alaska International Contractors ("the old AIC"). Enserch Alaska also appeals the denial of its motion for a new trial based on inconsistent jury verdicts. Finally, Enserch Alaska appeals the district court's award of prejudgment interest and its award of attorney's fees to Josephson, Inc. Alaska International Construction, Inc. ("AIC-Enserch"), a related corporation also named as a defendant, appeals the district court's denial of its request for attorney's fees. Josephson, Inc. seeks attorney's fees on appeal. We affirm the district court, but decline to award attorney's fees on appeal.
A. Contract Formation. Josephson testified that he and Fowler, the president of both the old AIC and of AIC-Enserch, orally agreed Josephson, Inc. would be paid royalties for sandbags manufactured after December 31, 1982. Josephson's June 12 letter refers to a previous agreement to pay royalties after December 31, 1982. While Josephson's July 31 letter requests "completing and finalizing" of the agreement, it also requests confirmation of the agreement. Josephson and Fowler testified that Josephson was unwilling to show the plans until a definite agreement between the parties had been reached. Josephson and Fowler testified that the plans were delivered and an agreement reached before the June 12 letter was sent. Josephson, Inc. had completely performed its side of the agreement, i.e., furnished the plans and Josephson's services as a consultant, before Josephson sent the July letter. AIC-Enserch, in its 1983 bid to Sohio Construction, Inc., listed among its costs $2.75 per sandbag for royalties.
All of this evidence supports the conclusion that under Alaska law the parties formed a contract for royalties after December 31, 1982. See Hall v. Add-Ventures, Ltd., 695 P.2d 1081, 1087 n. 9 (Alaska 1985) (). Such a contract could not be modified absent additional consideration, and Josephson, Inc. was under no obligation to correct AIC as to any subsequent correspondence setting forth terms differing from the previously formed contract. Holiday Inns of America, Inc. v. Peck, 520 P.2d 87, 95 n. 19 (Alaska 1974).
Paragraph three of the June 12 letter states that payment of royalties is to be made to Josephson, Inc. Correspondence between the parties dated June 12, July 20, and October 20 refer to Josephson, Inc. as the entity to whom royalties are to be paid.
Because Enserch Alaska failed to renew its motion for directed verdict at the close of all the evidence, we must uphold denial of both a directed verdict and a motion for judgment notwithstanding the verdict if the record contains any evidence, irrespective of its sufficiency, that supports the verdict, absent manifest injustice. Herrington v. Sonoma County, 834 F.2d 1488, 1500 & n. 11 (9th Cir.1987), amended on other grounds, 857 F.2d 567 (1988), cert. denied, 109 S.Ct. 1557 (1989). The testimony and documentary evidence contained in the record support the jury's verdict that Josephson, Inc. and the old AIC entered into a contract whereby royalties would be paid to Josephson, Inc. after December 31, 1982. Accordingly, we affirm the denial of the motion for directed verdict and judgment notwithstanding the verdict on this issue.
B. Statute of Frauds. Enforcement of the parties' contract is not barred by lack of a writing. AIC was able to quit manufacturing sandbags at any time after entering into the contract. Alaska's statute of frauds, which renders unenforceable any oral agreement "that by its terms is not to be performed within a year from the making of it[,]" AS 09.25.010(a)(1), does not apply unless the contract "contains a negation of the right or capability of performance within the year." Howarth v. First Nat'l Bank of Anchorage, 540 P.2d 486, 491 (Alaska 1975). Contracts fully performable within one year do not fall within the statute "even though the time of its performance is uncertain, and may probably extend, be expected by the parties to extend, and in fact does extend, beyond the year." Id.
The jury found Enserch Alaska liable for the entire amount of post-1982 royalties claimed. Josephson, Inc. argued below and on appeal that it had a contract with the old AIC which AIC-Enserch assumed, and that Enserch Alaska became liable because it was essentially the same corporation as AIC-Enserch. 2
A. AIC-Enserch and the Old AIC. A corporation buying the assets of another corporation may assume the latter's liabilities through either express or implied agreement. 15 Fletcher, Cyclopedia Corporations Sec. 7122, at 189 (rev. perm. ed 1983). The transferee corporation can assume an obligation where it "purchases the property and franchises of another company, including property for which the latter was under obligation to pay, and to which it could acquire no right without payment." Id. at Sec. 7124, at 211. This type of implied assumption is based on intent, which is determined by the facts and circumstances of each case. Id.
AIC-Enserch paid royalties for sandbags placed by old AIC after the corporate changeover. In November of 1982, AIC-Enserch referred to "our agreement" to pay royalties. In 1983, AIC-Enserch listed sandbag royalties as a cost in its bid to Sohio Construction, Inc., which indicates that it was liable for royalties to Josephson, Inc. This evidence is sufficient to show that AIC-Enserch intended to assume the old AIC's royalty obligation.
B. Relationship of Enserch Alaska to AIC-Enserch. When two corporations are so closely intertwined that it is inequitable to treat them as separate entities, they are considered as one for purposes of corporate liability. See Husky Oil N.P.R. Operations, Inc. v. Sea Airmotive, Inc., 724 P.2d 531, 534 (Alaska 1986). Alaska applies the alter ego doctrine to corporate entities related other than as parent and subsidiary. Id.
Enserch Alaska is wholly owned by AIC-Enserch. Ellsworth is both vice president of AIC-Enserch and president of Enserch Alaska. Fowler, president of AIC-Enserch, is also a director of Enserch Alaska. Enserch Alaska, although it did millions of dollars worth of construction business, was financed with only $1,000. Enserch Alaska owned no significant construction equipment. All corporate functions other than actual construction were performed by AIC-Enserch. As of 1984, all sandbag construction was performed by Enserch Alaska. AIC-Enserch is now dormant. Under Alaska law each of these facts is relevant to the application of the doctrine of corporate disregard. See McKibben v. Mohawk Oil Co., Ltd., 667 P.2d 1223, 1230 (Alaska 1983), disavowed on other grounds, Wien Air Alaska v. Bubbel, 723 P.2d 627, 631 n. 4 (Alaska 1986).
Enserch Alaska did not renew its motion for directed verdict at the close of all the evidence. Accordingly, the verdict must be affirmed if there is any evidence, irrespective of its sufficiency, to support the verdict. Herrington, 834 F.2d at 1500. The record contains significant evidence that AIC-Enserch assumed the old AIC's royalty obligation to Josephson, Inc., and that Enserch Alaska should be treated as the same corporate entity as AIC-Enserch. Accordingly, we affirm the jury's verdict on this issue.
Before discharging the jury, the trial judge asked counsel whether there was any objection to the form of the verdict. No objection was made. Accordingly, the defendants waived their right to a new trial on the grounds of an inconsistent verdict. See Philippine Nat'l Oil Co. v. Garrett Corp., 724 F.2d 803, 806 (9th Cir.1984) (). Nor was the verdict necessarily inconsistent: the jury may have believed that AIC-Enserch was dormant and Enserch Alaska had taken over the business and assumed its obligations for royalties. The district court did not abuse its discretion in denying the motion for new trial on the ground that the verdict was inconsistent. See Robins v. Harum, 773 F.2d 1004, 1006 (9th Cir.1985).
Enserch Alaska requested that the jury be instructed that Alaska's statute of frauds requires that an assignment of contract obligations be in writing. AS 09.25.010(a)(3) provides in...
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