Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co.

• Decision Date: 25 August 1978
• Docket Number: No. 3288,3288
• Citation: 9 A.L.R.4th 928,584 P.2d 15
• Parties: TOTEM MARINE TUG & BARGE, INC., an Alaskan Corporation, Pacific, Inc., an Alaska Corporation, and Richard Stair, an Individual, Appellants, v. ALYESKA PIPELINE SERVICE COMPANY, a corporation, et al., Appellees.
• Court: Alaska Supreme Court

Page 15

584 P.2d 15

9 A.L.R.4th 928

TOTEM MARINE TUG & BARGE, INC., an Alaskan Corporation Pacific, Inc., an Alaska Corporation, and Richard Stair, an Individual, Appellants, v. ALYESKA PIPELINE SERVICE COMPANY, a corporation, et al., Appellees.

No. 3288.

Supreme Court of Alaska.

Aug. 25, 1978.

Edgar Paul Boyko, Edgar Paul Boyko & Associates, P. C., Anchorage, Robert K. Schraner, San Diego, Cal., for appellants.

Allen McGrath, Graham & James, Anchorage, for appellees.

OPINION

Before BOOCHEVER, C. J., and RABINOWITZ, CONNOR, BURKE and MATTHEWS, JJ.

BURKE, Justice.

This appeal arises from the superior court's granting of summary judgment in favor of defendants-appellees Alyeska Pipeline Services, et al., in a contract action brought by plaintiffs-appellants Totem Marine Tug & Barge, Inc., Pacific, Inc., and Richard Stair.

The following summary of events is derived from the materials submitted in the summary judgment proceedings below.

Totem is a closely held Alaska corporation which began operations in March of 1975. Richard Stair, at all times relevant to this case, was vice-president of Totem. In June of 1975, Totem entered into a contract with Alyeska under which Totem was to transport pipeline construction materials from Houston, Texas, to a designated port in southern Alaska, with the possibility of one or two cargo stops along the way. In order to carry out this contract, which was Totem's first, Totem chartered a barge (The "Marine Flasher") and an ocean-going tug (the "Kirt Chouest"). These charters and other initial operations costs were made possible by loans to Totem from Richard Stair individually and Pacific, Inc., a corporation of which Stair was principal stockholder and officer, as well as by guarantees by Stair and Pacific.

By the terms of the contract, Totem was to have completed performance by approximately August 15, 1975. From the start, however, there were numerous problems which impeded Totem's performance of the contract. For example, according to Totem, Alyeska represented that approximately 1,800 to 2,100 tons of regular uncoated pipe were to be loaded in Houston, and that perhaps another 6,000 or 7,000 tons of materials would be put on the barge at later stops along the west coast. Upon the arrival of the tug and barge in Houston, however, Totem found that about 6,700 to 7,200 tons of coated pipe, steel beams and valves, haphazardly and improperly piled, were in the yard to be loaded. This situation called for remodeling of the barge and extra cranes and stevedores, and resulted in the loading taking thirty days rather than the three days which Totem had anticipated it would take to load 2,000 tons. The lengthy loading period was also caused in part by Alyeska's delay in assuring Totem that it would pay for the additional expenses, bad weather and other administrative problems.

The difficulties continued after the tug and barge left Houston. It soon became apparent that the vessels were travelling more slowly than anticipated because of the extra load. In response to Alyeska's complaints and with its verbal consent, on August 13, 1975, Totem chartered a second tug, the "N. Joseph Guidry." When the "Guidry" reached the Panama Canal, however, Alyeska had not yet furnished the written amendment to the parties' contract. Afraid that Alyeska would not agree to cover the cost of the second tug, Stair notified the "Guidry" not to go through the Canal. After some discussions in which Alyeska complained of the delays and accused Totem of lying about the horsepower of the first tug, Alyeska executed the amendment on August 21, 1975.

By this time the "Guidry" had lost its preferred passage through the Canal and had to wait two or three additional days before it could go through. Upon finally meeting, the three vessels encountered the tail of a hurricane which lasted for about eight or nine days and which substantially impeded their progress.

The three vessels finally arrived in the vicinity of San Pedro, California, where Totem planned to change crews and refuel. On Alyeska's orders, however, the vessels instead pulled into port at Long Beach, California. At this point, Alyeska's agents commenced off-loading the barge, without Totem's consent, without the necessary load survey, and without a marine survey, the absence of which voided Totem's insurance. After much wrangling and some concessions by Alyeska, the freight was off-loaded. Thereafter, on or about September 14, 1975, Alyeska terminated the contract. Although there was talk by an Alyeska official of reinstating the contract, the termination was affirmed a few days later at a meeting at which Alyeska officials refused to give a reason for the termination.

Following termination of the contract, Totem submitted termination invoices to Alyeska and began pressing the latter for payment. The invoices came to something between $260,000 and $300,000. An official from Alyeska told Totem that they would look over the invoices but that they were not sure when payment would be made perhaps in a day or perhaps in six to eight months. Totem was in urgent need of cash as the invoices represented debts which the company had incurred on 10-30 day payment schedules. Totem's creditors were demanding payment and according to Stair, without immediate cash, Totem would go bankrupt. Totem then turned over the collection to its attorney, Roy Bell, directing him to advise Alyeska of Totem's financial straits. Thereafter, Bell met with Alyeska officials in Seattle, and after some negotiations, Totem received a settlement offer from Alyeska for $97,500. On November 6, 1975, Totem, through its president Stair signed an agreement releasing Alyeska from all claims by Totem in exchange for $97,500.

On March 26, 1976, Totem, Richard Stair, and Pacific filed a complaint against Alyeska, which was subsequently amended. In the amended complaint, the plaintiffs sought to rescind the settlement and release on the ground of economic duress and to recover the balance allegedly due on the original contract. In addition, they alleged that Alyeska had wrongfully terminated the contract and sought miscellaneous other compensatory and punitive damages.

Before filing an answer, Alyeska moved for summary judgment against the plaintiffs on the ground that Totem had executed a binding release of all claims against Alyeska and that as a matter of law, Totem could not prevail on its claim of economic duress. In opposition, plaintiffs contended that the purported release was executed under duress in that Alyeska wrongfully terminated the contract; that Alyeska knew that Totem was faced with large debts and impending bankruptcy; that Alyeska withheld funds admittedly owed knowing the effect this would have on plaintiffs and that plaintiffs had no alternative but to involuntarily accept the $97,500 in order to avoid bankruptcy. Plaintiffs maintained that they had thus raised genuine issues of material fact such that trial was necessary, and that Alyeska was not entitled to judgment as a matter of law. Alyeska disputed the plaintiffs' assertions.

On November 30, 1976, the superior court granted the defendant's motion for summary judgment. This appeal followed.

I

At the outset, this case presents a procedural issue which we must resolve before reaching the major questions on appeal.

Where a party to an action has filed a motion for summary judgment, pursuant to Rule 56, Alaska R.Civ.P., the trial court's initial task is to determine whether there exist genuine issues of material fact such that trial on these issues is necessary. Ordinarily, the parties submit affidavits, depositions, sworn admissions, answers to interrogatories or similar material in order to show the existence or non-existence of those facts material to the case. Civil Rule 56(c) and (e); ¹ See 10 C. Wright and A. Miller, Federal Practice and Procedure: Civil, § 2721 at 475-76 (1973). On the basis of these materials together with the pleadings, the trial court then decides whether genuine issues of material fact exist. If such issues do exist, summary judgment is denied; if not, the court enters judgment for the party prevailing as a matter of law. Civil Rule 56(c).

In the instant case, most of the facts bearing on summary judgment were contained in a deposition taken by Alyeska of appellant Richard Stair. With the exception of Alyeska's submission of the release executed by Totem, both Alyeska's motion for summary judgment and Totem's opposing memorandum and statement of genuine issues were based almost solely on testimony contained in the Stair deposition. The memoranda of both parties included numerous references to and quoted excerpts from the deposition.

Following entry of summary judgment in Alyeska's favor and commencement of this appeal by Totem, Totem submitted a motion to the superior court requesting it to publish Stair's deposition ² so that it could become part of the record on appeal. Despite the extensive use of this deposition, it apparently had not been formally opened and presented to the court during the proceedings below. The superior court denied the motion on the ground that the deposition was not before it during the proceedings and thus was not part of the record before the court.

Thereafter, Alyeska filed a motion in this court to strike portions of Totem's reply brief for the reason that these portions contained references to the Stair deposition which were not before the superior court. Specifically, Alyeska sought to strike all references to those parts of the deposition to which reference had not been made in the memoranda filed below. We denied the motion.

We believe that the lower court erred in refusing to publish the Stair deposition and in ruling that the deposition was not part of the record before it. In Jennings v. State, 566 P.2d 1304 (Alaska 1977), the trial court had ruled on a motion for summary judgment by referring only to the pleadings. We...