U.S. ex rel. North Star Terminal v. Nugget Const.

• Decision Date: 28 July 2006
• Docket Number: No. 3:98-CV-9 TMB.,3:98-CV-9 TMB.
• Citation: 445 F.Supp.2d 1063
• Court: U.S. District Court — District of Alaska
• Parties: UNITED STATES of America for the use of NORTH STAR TERMINAL & STEVEDORE COMPANY, d/b/a Northern Stevedoring & Handling, and North Star Terminal & Stevedore Company, d/b/a Northern Stevedoring & Handling, on its own behalf, Plaintiffs, and United States of America for the use of Shoreside Petroleum, Inc., d/b/a Marathon Fuel Service, and Shoreside Petroleum, Inc., d/b/a Marathon Fuel Service, on its own behalf, Intervening Plaintiffs, and Metco, Inc. Intervening Plaintiff, v. NUGGET CONSTRUCTION, INC., Spencer Rock Products, Inc., United States Fidelity and Guaranty Company, and Robert A. Lapore, Defendants.

445 F.Supp.2d 1063

UNITED STATES of America for the use of NORTH STAR TERMINAL & STEVEDORE COMPANY, d/b/a Northern Stevedoring & Handling, and North Star Terminal & Stevedore Company, d/b/a Northern Stevedoring & Handling, on its own behalf, Plaintiffs, and United States of America for the use of Shoreside Petroleum, Inc., d/b/a Marathon Fuel Service, and Shoreside Petroleum, Inc., d/b/a Marathon Fuel Service, on its own behalf, Intervening Plaintiffs, and Metco, Inc. Intervening Plaintiff, v. NUGGET CONSTRUCTION, INC., Spencer Rock Products, Inc., United States Fidelity and Guaranty Company, and Robert A. Lapore, Defendants.

No. 3:98-CV-9 TMB.

United States District Court, D. Alaska.

July 28, 2006.

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David W. Pease, Michael W. Sweright, Burr Pease & Kurtx, Anchorage, AK, for Plaintiffs.

Steven J. Shamburek, Law Office of Steve J. Shamburek, Anchorage, AK, for Intervenor Plaintiff.

Thomas R. Krider, Oles Morrison Rinker & Baker, LLP, Seattle, WA, Traeger Machetanz, Oles Morrison Rinker & Baker LLP, Anchorage, AK, C. Patrick Stoll, Herrig, Vogt & Stoll, Granite Bay, CA, Paul D. Stockler, Law Office of Paul D. Stockler, Herbert A. Viergutz, Barokas Martin & Tomlinson, William K. Renno, Oles Morrison & Rinker, Anchorage, AK, for Defendants.

ORDER DISPOSING OF PARTIES' STATE LAW SUMMARY JUDGMENT MOTIONS

BURGESS, District Judge.

Motions Presented

Defendants Nugget Construction, Inc. ("Nugget") and United States Fidelity & Guaranty Company ("USF & G") have moved for summary judgment on the state law claims asserted by Plaintiffs North Star Terminal & Stevedore Company ("North Star"), Shoreside Petroleum, Inc. ("Shoreside") and Metco, Inc. ("Metco").¹ Each Plaintiff has opposed.² Defendants have replied.³

North Star has cross-moved for summary judgment on some of its state law claims.⁴ Defendants have opposed.⁵ North Star has replied.⁶

Shoreside and Metco have moved for what appears to be summary judgment on all their claims.⁷ North Star has joined that motion.⁸ Defendants have opposed.⁹ Plaintiffs have replied.¹⁰

North Star, joined by Shoreside and Metco, has also moved for summary judgment against Defendants on the issue of contract by agency.¹¹ Defendants have opposed.¹² Plaintiffs have replied.¹³ USF & G has requested oral argument on this summary judgment motion¹⁴ North Star has requested that, if oral argument is granted on this motion, issues raised in the numerous other motions filed by the parties be heard at the same time.¹⁵ Shoreside and Metco have separately requested that oral argument be heard on all issues raised in the parties' many motions.¹⁶

Applicable Standard

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party always bears the burden of demonstrating the absence of a material issue of fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party need not present evidence; it need only point out the lack of any genuine dispute as to material fact. Id. at 323-325, 106 S.Ct. 2548. Once the moving party meets this burden, the non-moving party must set forth evidence of specific facts showing the existence of a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). All evidence presented by the non-movant must be believed for purposes of summary judgment, and all justifiable inferences must be drawn in favor of the non-movant. Id. When the parties submit cross-motions for summary judgment on the same claim, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them. Fair Housing Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1135 (9th Cir.2001).

Facts

The facts underlying this protracted litigation are thoroughly laid out in this Court's prior summary judgment order at Docket No. 310 and in North Star Terminal & Stevedore, Co. et al. v. Nugget Construction, Inc. et al., 126 Fed.Appx. 348, 351, 2005 WL 487313 (9th Cir.2005) (the "Ninth Circuit Opinion"). Briefly, the following facts relative to these motions are undisputed:

• On or about September 28, 1996, Nugget contracted with the U.S. Army Corps of Engineers to extend a rock revetment along the Homer Spit Road in Homer, Alaska.

• On or about September 28, 1996, USF & G executed and delivered to the United States a Miller Act bond for the protection of all persons and companies supplying labor and materials in connection with the Homer Spit project.

• On or about January 15, 1997, Nugget entered into a contract with Spencer to provide stone material for the project.

• In the winter of 1996/97, Spencer entered into (i) a contract with North Star to perform stevedoring operations in loading the rock onto Nugget's barges and (ii) a contract with Shoreside to provide fuel and lubricant for Spencer's quarrying operation.

• In May 1997 Spencer entered into a contract with Metco to assist with unloading and stacking the rock at the dock so that North Star could load it onto the barges.

• On or about April 23, 1997, Nugget and Spencer entered into a support agreement wherein Nugget agreed to provide labor and equipment to Spencer to assist Spencer in meeting its obligations under its original contract with Nugget in exchange for monetary deductions from amounts Nugget owed Spencer for performance under the original contract.

• Nugget instructed Spencer to keep the support agreement secret, and North Star, Shoreside and Metco were not told about its existence.

• Nugget's employee, Lynn D. Randolph, directed the loading of rock onto Nugget's barges. Nugget also started performing some of Spencer's functions in operating Spencer's quarry.

• Spencer was not paid for any services to Nugget after April 19, 1997. Nugget withheld payments from Spencer in order to pay itself under the support agreement (these withholdings are known as "back charges").

• Spencer did not pay North Star, Shoreside or Metco for the material and labor they supplied on the Homer Spit project.

• Nugget did not pay North Star, Shoreside or Metco for the material and labor they supplied on the Homer Spit project.

Facts concerning the extent to which Nugget interacted directly with the Plaintiffs and the extent to which Nugget took over the operations of the Spencer quarry are disputed. The Ninth Circuit has ruled that the facts in dispute prevent summary judgment on Plaintiffs' Miller Act claims. Ninth Circuit Opinion at 6.

Discussion

The Court addresses below (i) Defendants' motion for summary judgment on Plaintiffs' state law causes of action; (ii) North Star's cross-motion for summary judgment on its unjust enrichment, quasicontract and quantum meruit claims; (iii) Plaintiffs' motion for summary judgment on their contract by agency claim; and (iv) Plaintiffs' motion for summary judgment on all claims.

Express Contract:

Plaintiffs contend that an express contractual relationship existed between them and Nugget because of Nugget's alleged take-over of Spencer, with which Plaintiffs contracted.¹⁷ Plaintiffs make this argument in a number of different pleadings. They move for summary judgment based on contract by agency¹⁸ and oppose Defendants' motion for summary judgment on their agency and express contract claims.¹⁹ Defendants' principal argument in support of their motion for summary judgment is that the Ninth Circuit has held that Plaintiffs "never entered into express contracts with Nugget." Ninth Circuit Opinion at 4.²⁰ Defendants make their argument in a number of pleadings. They themselves move for summary judgment on Plaintiffs' express contract and agency claims²¹ and oppose Plaintiffs' separate contract by agency summary judgment motion.²²

When read in context, the Ninth Circuit holding upon which Defendants' rely is simply that Plaintiffs never expressly contracted directly with Nugget. Plaintiffs' contention, however, is that Spencer became an agent or extension of Nugget, and thus assumed Spencer's express contractual obligations to third parties, including to Plaintiffs. Although the issue appears not to have been directly addressed by the Alaska Supreme Court, Alaska law, following the Restatement (Second) of Agency, holds that an undisclosed principal is generally liable to third parties with which its agent contracts.²³ Thus, the viability of Plaintiffs express contract claim against Nugget depends upon Nugget's relationship with Spencer.

"[I]n order for an agency relationship to exist, an agent must have a power to alter the legal relations between the principal and third parties. The principal, in turn, must have the right to control the conduct of the agent with respect to matters entrusted to him." Manes v. Coats, 941 P.2d 120, 123 (Alaska 1997) (citations and quotations omitted). "Under Alaska law, an agency relation exists only if there has been a manifestation of the principal to the agent that the agent may act on his account and consent by the agent to so act." Harris v. Keys, 948 P.2d 460, 464 (Alaska 1997). The question of whether an agency relationship exists is a question of fact. Id. at 465; Manes, 941 P.2d at 123. Here, material facts necessary to determine the existence of an agency relationship, namely the extent to which Nugget assumed control over Spencer, are in dispute. See, Ninth Circuit Opinion at 6. Summary judgment is thus precluded.²⁴

Implied-in-Fact Contract:

Plaintiffs contend that an implied-in-fact contract exists between them and Nugget, either because of their direct interactions with Nugget or through Nugget's alleged take-over of Spencer, which had explicit contracts with each of the plaintiffs.²⁵ Defendants'...