geotek alaska, inc. v. jacobs engineering group, inc., alaska (2015)

7/25/2019 GeoTek Alaska, Inc. v. Jacobs Engineering Group, Inc., Alaska (2015)

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Notice: This opinion is subject to correction before publication in the PACIFICREPORTER.

Readers are requested to bring errors to the at tention of the Clerk of the Appel late Courts,

303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, em ail

[email protected].

THESUPREMECOURTOFTHESTATEOFALASKA

GEOTEKALASKA,INC.,

Appellant,

v.

JACOBSENGINEERINGGROUP,

INC.,andJACOBSFIELDSERVICESNORTHAMERICA,

INC.,

Appellees.

)

) SupremeCourtNo.S-15449

SuperiorCourtNo.3AN-12-05453

OPINION

No.7031-August14,2015

)

) CI

)

)

)

))

)

)

)

)

AppealfromtheSuperiorCourtoftheStateofAlaska,Third

JudicialDistrict,Anchorage,ErinB.Marston,Judge.

Appearances: Michael Jungreis and Jason Hartz, Davis

WrightTremaineLLP,Anchorage,forAppellant.RobertJ.

DicksonandChristopherJ.Slottee,Atkinson,Conway&

Gagnon,Anchorage,forAppellees.

Before:Fabe,ChiefJustice,Winfree,Stowers,Maassen,and

Bolger,Justices.

MAASSEN,Justice.

I. INTRODUCTION

Aninsolventsubcontractorfailedtopayitssub-subcontractorforwork

performed, and the sub-subcontractor sought payment directly from the general

contractor through a demand for arbitration. The general contractor declined to
mailto:[email protected]:[email protected]


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participate. Thearbitrator awarded damages to the sub-subcontractor,who filedan

actiontoconfirmtheawardinsuperiorcourt.Thesub-subcontractoralsobroughta

negligenceclaim,contendingthatthegeneralcontractorknewofitssubcontractors

financialinstabilityandnegligentlyfailedtoensurethatthesub-subcontractorwouldbe

paid.Thesuperiorcourtgrantedsummaryjudgmenttothegeneralcontractoronboth

theenforceabilityofthearbitrationawardandtheviabilityofthenegligenceclaim. The

sub-subcontractorappeals.

We affirm, concluding that whether the general contractor effectively

exerciseditscontractualrighttodeclinearbitrationisanissueofarbitrability,correctly

decidedbythesuperiorcourt,andthatthegeneralcontractorhadnoextra-contractual

dutyintorttoguaranteeitssubcontractorspaymentobligations.

II. FACTSANDPROCEEDINGS

A. Facts

JacobsEngineeringGroup,Inc.wasawardedacontractbytheUnited

StatesAirForceforenvironmentalremediation. Whilepreparingtobidontheproject,

JacobsEngineeringGroupanditssubsidiaryJacobsFieldServicesNorthAmerica,Inc.

(collectivelyJacobs)sentoutarequestforproposal(RFP)forsoilsamplingservices

atatankfarmnearNomeandattheNikolskiRadioStationonUmnakIsland.Included

in the RFP was a requirement that the subcontractor have bonding tocoverall its

payment and performance obligations. One of the recipients of Jacobss RFP was

PrecisionSampling, Inc.,doingbusinessasDirectSensing, Inc. (DSI). Ultimately

JacobsawardedthesubcontracttoDSI.DSIenteredintoasecond-tiersubcontractwith

GeoTek Alaska, Inc., to provide the required Ultra-Violet Optical Screening Tool(UVOST)equipment.

DSIsparentcorporationinCanadawasundergoingfinancialdifficulties

atthetimeofthebiddingprocess;thepartiesdisputewhatJacobskneworshouldhave

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knownaboutDSIssituation. TheyalsodisputetheextenttowhichJacobssawardof

the subcontract toDSIwasbecauseof Jacobssdesire to work withGeoTek. It is

undisputed,however,thatDSIwasunabletoobtainthepaymentandperformancebonds

requiredbytheRFPandaskedJacobstowaivetherequirement.Jacobsagreedtomove

forwardwiththeDSIsubcontract,butitdevelopedariskmanagementplanrequiringthat

15percentofJacobsspaymenttoDSIberetainedto assure thepaymentofDSIs

second-tiersubcontractorsandthatthosesecond-tiersubcontractorssubmitreleasesof

claims,certifyingtheyhadbeenpaid.

ShortlybeforeGeoTekdeployedtotheNomeprojectlocation,itlearned

thatJacobshadwaiveditsrequirementthatDSIbebonded.GeoTeknonethelesssigned

itssecond-tiersubcontractwithDSIafewdayslater. Accordingtoitsvicepresidents

affidavit,[a]tthatpointGeoTekwascommitted,andhadnootherworkavailableon

shortnotice;andadditionallywasreassuredbyJacobsspolicyofensuringthatitslower

tiersubcontractorsarepaid.

DSIandGeoTeksatisfactorilycompletedtheNomeproject. Jacobspaid

DSIand DSIsigneda release inSeptember2009,certifying that ithad paid forall

servicesfurnishedinconnectionwiththecontract.Jacobsdidnotretainanyamountsor

require a release from GeoTek, ascontemplated by the riskmanagement plan. In

September2009,DSIandGeoTekattempteddeploymenttoNikolskibutweredelayed

inDutchHarborbecauseofweather. Theprojectwaseventuallyputoffuntil2010but,

forreasonsnotrelevanttothisappeal,DSIandGeoTekneverreachedNikolskiand

neverdidanyworkthere.

DSIdidnotpayGeoTekforitsworkontheNomeprojectorforits2009mobilizationforNikolski.

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B. Proceedings

JacobsscontractwithDSIincludedanarbitrationprovisionthatiscentral

tothisappeal. Theprovisionslanguagewillbedissectedlaterinthisopinion,butin

summaryitgivesJacobstheunilateralrighttoacceptorrejectarbitrationonceademand

hasbeenmade. JacobsdidnothaveacontractwithGeoTek,butJacobsscontractwith

DSIincludedaprovisionthatrequiredDSItoflowdownalltermsandconditionsof

thesubcontractintoanysub-subcontract.TheJacobs-DSIcontractalsohadaprovision

onassignment,whichprovides:

Neither thisSubcontract noranyinterest therein including

anyclaimthereundershallbeassignedortransferredbythe

Subcontractor to another entity, except as expresslyauthorized in writing by the Subcontract Manager. The

Company reserves the exclusive right to assign this

Subcontractandallrightsandinteresttherein.

InademandforarbitrationdatedApril28,2010,GeoTekassertedaclaim

againstJacobsfortheamountsDSIhadfailedtopayit.1 Thedemandwasapparently

forwardedtoJacobsbytheAmericanArbitrationAssociation(AAA).Jacobsresponded

toGeoTeksdemandforarbitrationonMay13,assertinginalettertotheAAAthat

JacobsdoesnothaveacontractwithGeoTekandtherefore,GeoTekhasnobonafide

contract claim against Jacobs and it would be inappropriate for Jacobs to engage

GeoTekinanarbitrationproceeding. JacobsstatedthatitrejectsGeoTeksdemand

forarbitrationandrecommendsthatGeoTekpursueitscontractualrightsandclaims

againstitscustomer,[DSI].

GeoTekproceededalonewitharbitrationundertheaegisoftheAAA. On

January20,2011,DSIandGeoTekexecutedanagreementinwhichtheyassertedthat

GeoTeksarbitrationdemandisnotintherecord,butneitherpartydisputes

thatitwasmade;itsdateisreferencedinJacobssresponse.

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[n]eitherDSI[norGeoTekhas]beenpaidinfullbyJacobsfortheworkdoneonthe

WestNomeorNicolski[sic]ProjectsandDSIassigneditsclaimsagainstJacobsto

GeoTek,retainingarightto30percentofanyamountscollected. OnGeoTeksmotion,

thearbitratorthenruledonthearbitrabilityoftheseclaims,decidingthatbothGeoTeks

originalclaimsagainstJacobsandDSIsassignedclaimswerearbitrable.Thearbitrator

allowedGeoTektoamenditsdemandforarbitrationtoincludebothsetsofclaimsand

gaveJacobs14daystorespondtotheamendeddemand. Therecordshowsnofurther

writtenresponsefromJacobs.

ThearbitratorheldanevidentiaryhearinginAugust2011,whichwas

attendedonlybyrepresentativesofGeoTekandDSI;thearbitratorsfindingsoffactand

conclusionsoflawnotethatJacobswasagaincontactedbutdeclinedtoparticipate. The

arbitratorawardedGeoTek$257,687.62onbehalfofworkdonebyGeoTekAlaskaand

[DSI],withinterestcontinuingtoaccrueat10.5percentperannum.

GeoTek filed a complaint in superior court seeking to confirm the

arbitration award and asserting several other theories of recovery against Jacobs,

includingbreachofcontract,unjustenrichment,quantummeruit,andbreachofthe

covenantofgoodfaithandfairdealing.Jacobsansweredandmovedforsummary

judgment,arguingthatithadnocontractwithGeoTekand,ifitdid,ithadeffectively

exercised itscontractualrighttorefusetoarbitrate. GeoTekfileda cross-motionto

confirmthearbitrationaward.ThesuperiorcourtgrantedJacobsssummaryjudgment

motion,concludingthatJacobstimelyrejectedGeoTeksdemandtoarbitrate...[and

that]Jacobswasnotlegallyobligatedtoparticipateinthearbitration.

Whilethecourtsdecisionofthesemotionswaspending,GeoTekamendeditscomplainttoassertanegligenceclaim. Jacobsmovedforsummaryjudgmentonthat

claimaswell,andthesuperiorcourtgrantedsummaryjudgmentonthegroundthat

JacobsdidnotoweGeoTekadutyofcareintorttoensureitwaspaidbyDSI.

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OnappealGeoTekarguesthatthesuperiorcourterredingrantingJacobss

motionsforsummaryjudgment. GeoTekarguesthat(1)ithadanagreementtoarbitrate

withJacobs,anditwasuptothearbitratortodecidewhetherJacobshadexercisedits

right to reject arbitration; and (2) Jacobs had an actionable duty in tort to protect

GeoTeksfinancialinterests.

III. STANDARDSOFREVIEW

Asuperiorcourtsdecisionreviewinganarbitrationawardissubjectto

denovoreview.2 Whether[a]claimisarbitrableisaquestionoflawsubjecttode

novoreview.3Theexistenceandextentofadutyofcarealsopresentsaquestionof

law,whichwereviewdenovo.4

IV. DISCUSSION

A. TheSuperiorCourtDidNotErrInGrantingSummaryJudgmentTo

JacobsOnTheArbitrabilityIssue.

ThesuperiorcourtcorrectlydecidedthatwhetherJacobshadagreedto

arbitratethisdisputewasaquestionforthecourtratherthanthearbitrator.Thesuperior

courtthenreliedonthespecificlanguageofthearbitrationprovisionatissuetoconclude,

againcorrectly,thatJacobsdidnotagreetoarbitratethisdisputeandthat theawardthereforecouldnotbeconfirmed.

2 Johnson v. Aleut Corp.,307P.3d942,947(Alaska2013).

3 Lexington Mktg. Grp., Inc. v. Goldbelt Eagle, LLC,157P.3d470,472

(Alaska2007).

4 Hurn v. Greenway,293P.3d480,483(Alaska2013).

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Forpurposesofargumentweassume,asthesuperiorcourtapparentlydid, 5

thatthearbitrationprovisionintheJacobsscontractwithDSIfloweddownandby

flowingdowngovernedtherelationshipbetweenJacobsandGeoTekaswell.

1. WhetherJacobsagreedtoarbitratethedisputewasaquestionforthecourt,notthearbitrator.

6TheFederalArbitrationAct andAlaskasUniformandRevisedUniform

7 8ArbitrationActs allreflectastrongpolicyinfavorofthearbitrationofdisputes. Like

federal law, Alaskas statutes provide that [a]n arbitrator shall decide whether a

conditionprecedenttoarbitrabilityhasbeenfulfilled. 9Alaskasstatutesalsoprovide,

however,that[t]hecourtshalldecidewhetheranagreementto arbitrateexistsora

5 Atoral argumenton Jacobss first motion for summary judgment, the

superiorcourtaskedcounselforJacobswhetheritwasJacobsspositionthatevenif

therewasaflow-down,aforcibleflow-downprovision,...thatitdoesntreallymatter,

becausewithin30daystheyhavethesolerighttoacceptorreject[,][a]nd,inthiscase,

theyunequivocallyrejectedthearbitration.ThecourtlateraskedcounselforGeoTek

whetheritwashispositionthateveniftherewasanassignmentoraflowdown,thatdoesntchangethetermsofthearbitrationclause...thatJacobswouldstillhavethe

right toarbitrate ornot, at their discretion. Both counsel agreed with the courts

characterizationsoftheirclientspositions.

6 9U.S.C.1etseq.(2012).

7 AS09.43.010 .180 (UniformArbitration Act); AS09.43.300 .595

(RevisedUniformArbitrationAct).

8

Gibson v. Nye Frontier Ford, Inc.,205P.3d1091,1096(Alaska2009).9 AS09.43.330(d);see BG Grp., PLC v. Republic of Argentina,134S.Ct.

1198,1207(2014)(citationsomitted)(explainingthatcourtspresumethattheparties

intendarbitrators,notcourts,todecidedisputesaboutthemeaningandapplicationof

particularproceduralpreconditionsfortheuseofarbitration).

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controversyissubjecttoanagreementtoarbitrate,10mirroringfederallawthatcourts

aretheproperforumtodeterminewhetheradisputeisarbitrable. 11Onereasonforthis

divisionofauthorityis[that][b]ecausearbitratorshavesuchbroaddiscretion,itisoften

problematicforthemtodecidetheirownjurisdiction,foriftheyarewrong,theremay

beessentiallynoreviewbecauseoftheextremedeference[thatacourtwillgive]to

thearbitrator.12

The first question wemust answer in thiscase,therefore, iswhether

Jacobssconsentwasnecessarybeforeaparticulardisputecouldbesubjectto[the]

agreement to arbitrate in which case the issue is one of arbitrability under

AS09.43.330(c),andthequestionofconsentwasforthesuperiorcourttodecide;or,on

theotherhand,whetherJacobssconsentwasaconditionprecedenttoarbitrability

inwhichcasethequestionofconsentwasuptothearbitratorunderAS09.43.330(d).

The United States Supreme Court recently described this dichotomy in terms of

presumptionsthathelpcourtsdeterminepartiesintentifthecontractissilentonthe

matter of who primarily is to decide threshold questions about arbitration.13

According to the Court, parties are presumed to intend that courts will decide

arbitrabilityissuessuchaswhetherthepartiesareboundbyagivenarbitration

clause,orwhetheranarbitrationclauseinaconcededlybindingcontractappliestoa

10 AS09.43.330(c).


(Alaska2007).

12 Classified Emps. Assn v. Matanuska-Susitna Borough Sch. Dist.,204P.3d

347,353(Alaska2009)(quotingFairbanks Fire Fighters Assn, Local 1324 v. City of

Fairbanks,48P.3d1165,1169(Alaska2002))(internalquotationmarksomitted).

13 BG Grp., PLC,134S.Ct.at1206.

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particulartypeofcontroversy.14 Ontheotherhand,partiesarepresumedtointendthat

arbitratorswilldecidedisputesaboutparticularproceduralpreconditionsfortheuseof

arbitration,whichmayincludewhetherprerequisitessuchastimelimits,notice,laches,

estoppel, and other conditions precedent to an obligation to arbitrate have been

satisfied.15

Werecognizethatsomeconditionsprecedentcanreadilyberecharacterized

asquestionsofarbitrability;apartycouldargue,forexample,thatithasagreedto

arbitrateonlythosedisputesthataresubmittedtoarbitrationbyacertaintime,orona

certainform,oratacertainaddressraisingissuesofarbitrabilitythatclearlyhinge

on the determination of what are actually procedural preconditions. For a cogent

explanationofhow todifferentiatethetwo,Jacobsdirectsus toRockland County v.

Primiano Construction Co.16 In that case the Court of Appeals of New York,

recognizingthat[w]hethertheparticularrequirementfallswithinthejurisdictionofthe

courtsorofthearbitratorscouldbereducedtoagameofsemantics,explainedthatthe

realdifferencedependson[therequirements]substanceandthefunctionitisproperly

perceivedasplayingwhetheritisinessenceaprerequisitetoentryintothearbitration

processoraproceduralprescriptionforthemanagementofthatprocess.17Thecourt

notedthattheparties,bycontract,mayhaveerectedaprerequisitetothesubmissionof

anydisputetoarbitration,ineffectapreconditiontoaccesstothearbitralforum,and

14 Id. (quotingHowsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84

(2002)).

15 Id.at1206-07(internalfootnotes,citations,andinternalquotationmarksomitted).

16 409N.E.2d951(N.Y.1980).

17 Id.at954.

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that[i]nsucheventthereluctantpartymaybeforcedtoarbitrationonlyifthecourt

determinesthatthisportionoftheagreementhasbeencompliedwith. 18Itcitedanother

casewithparallelstothisone:Opan Realty Corp. v. Pedrone,inwhichapartnership

agreementstipulatedthatanydisputewouldbedecidedbytheAmericanArbitration

Associationbutthatadisputeshallnotbedeterminedtoexistthereunderuntilthe

matterisfirstsubmittedfordeterminationtothepartnership,whichcouldresolvethe

matterbyan80percentvote.19 ThecourtinOpan Realty heldthatwhetherthiscondition

hadbeenfulfilledwasaquestionatleastinitiallyforthecourt,notthearbitrator. 20

AndthecourtinRockland Countyconcluded: Beyondthatitistoberememberedthat

inasmuchastheentirearbitrationprocessisacreatureofcontract,thepartiesbyexplicit

provisionoftheiragreementhavetheabilitytoplaceanyparticularrequirementinone

categoryortheother. 21

TheUnitedStatesSupremeCourtundertookasimilaranalysisinHowsam

v. Dean Witter Reynolds, Inc., in which it categorized all threshold questions as

gatewayquestionsthatcanbesortedintoquestionsofarbitrabilitydecidedbythecourt

andproceduralquestionsdecidedbythearbitrator.22 LikethecourtinRockland County,

theSupremeCourtrecognizedthatthesemanticdifficultyindrawingtheboundary

betweenthetwotypesofgatewayquestionsisbestresolvedbydeterminingwhetherthe

18 Id.(footnoteomitted).

19 335N.E.2d854,855(N.Y.1975).

20 Id.

21 409N.E.2dat955. Notably,theNew YorkCourtofAppealsusedan

earlierformulationoftherelevantdichotomy,inwhichquestionsofarbitrability,rather

thanproceduralpreconditions,weretermedconditionsprecedent. Id.at954-55.

22 537U.S.79,83-85(2002).

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particularquestionatissueisofatypethatthepartieswouldlikelyexpecttobedecided

byanarbitratororajudge:

TheCourthasfoundthephrase[questionofarbitrability]

applicable in the kind of narrow circumstance where

contractingpartieswouldlikelyhaveexpectedacourttohave

decidedthegatewaymatter,wheretheyarenotlikelytohave

thoughtthattheyhadagreedthatanarbitratorwoulddoso,

and,consequently,wherereferenceofthegatewaydisputeto

the court avoids the risk of forcing parties to arbitrate a

matterthattheymaywellnothaveagreedtoarbitrate.

....

At the same time the Court has found the phrase

questionofarbitrabilitynotapplicableinotherkindsofgeneralcircumstancewherethepartieswouldlikelyexpect

thatanarbitratorwoulddecidethegatewaymatter. Thus

proceduralquestionswhichgrowoutofthedisputeand

bearon its final disposition arepresumptivelynotforthe[ ]judge,butforanarbitrator,todecide.23

Withinthisgeneralframeworkweseektodeterminewhatthepartiestothe

Jacobs-DSIcontractcouldreasonablyhaveexpectedfromthespecificlanguagethey

usedtodescribethearbitrationoption.Weresolveambiguitiesinfavorofarbitrability

where such construction is not obviously contrary to the parties intent.24 But

[b]ecausearbitrationisacreatureofcontract,partiescanonlybecompelledtoarbitrate

amatterwhentheyhaveagreedtodoso.25Accordingly,ifadisputeisnot,undera

plausible interpretation,coveredunderthearbitrationclauseofa[n] ...agreement,it

23 Id.at83-84(emphasisinoriginal)(internalfootnotesandcitationsomitted).


(Alaska2007)(quotingUniv. of Alaska v. Modern Constr., Inc.,522P.2d1132,1138

(Alaska1974)).

25 Id.at477.

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shouldnotbearbitratedbecauseapartycannotberequiredtosubmittoarbitrationany

disputewhichhehadnotagreedsotosubmit. 26Wearethereforerequiredtovacate

anarbitrationawardifwefindthattherewasnotanagreementtoarbitrate. 27

TheDisputesonClaimssectionoftheJacobs-DSIcontractbeginswith

thesubcontractorsagreementtofirstsubmitanyclaimordisputearisingunder,related

toor inconnectionwith theWork, thisSubcontract,or theProject, toCompany in

writingpriortoinitiatinganylegalorotherdisputeprocedure.Afewparagraphslater

thearbitrationprovisionreads,inrelevantpart:

All claims, disputes and other matters in question

betweenSubcontractorandCompanyarisingoutoforrelated

totheWork,thisSubcontractortheProject...shall, at thesole option of the Company,bedecidedbyarbitration.In the

event the Company elects to have the matter resolved through

arbitration,then atCompanysdirection,Subcontractorshall

submitthemattertotheAmericanArbitrationAssociationfor

processing under the appropriate Industry Rules of the

AmericanArbitrationAssociationthenineffect.Ifaclaim

is made, or a demand for arbitration is filed, by

Subcontractor,Company will adviseSubcontractorwithin

thirty30days[sic]afterthereceiptofsuchademandfor

arbitration...,if Company exercises the option to arbitrate

or rejects arbitration; such election, once made, shall be[ ]binding. 28

Weconcludethatthisprovisionisunambiguous.TheonlyclaimsJacobshasagreedto

arbitrateare those itelects,on acase-by-casebasis, tohavedecidedby arbitration.


347,353(Alaska2009)(quotingAT & T Techs., Inc. v. Commcns Workers of Am.,475U.S.643,648(1986)).

27 AS09.43.500(a)(5).

28 Emphasisadded.

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ArbitrationofanyclaimwilloccuratJacobsssoleoption,whichJacobswillexercise

within30daysofreceivingademand.Jacobsselection,oncemade,isbinding.And

it isonly [i]n the event [that] [Jacobs]elects tohave the matter resolved through

arbitration that the matter will then be referred to the American Arbitration

AssociationforprocessingundertheAAArules.

Jacobssconsenttoarbitrateanyparticulardisputeisnotamereprocedural

preconditionto arbitrability, such as time limits, notice, laches, estoppel, andother

conditionsprecedenttoanobligationtoarbitrate.29Jacobsagreedtoarbitratealimited

categoryofdisputes:thoseitidentified,onacase-by-casebasis,asdisputesitwas

willingtosubmittoarbitration. TheissueofJacobssconsentthereforepresenteda

questionofarbitrabilitywhether[the]controversyissubjectto[the]agreementto

arbitrateandwasproperlyforthecourttodecide. 30

2. ThesuperiorcourtcorrectlyheldthatJacobsdidnotagreeto

arbitrateGeoTeksclaim.

GeoTekapparentlydemandedarbitrationonApril28,2010.31Although

it is not apparentfromtherecordwhenJacobs receivedGeoTeks demand,Jacobs

respondedon May 13,2010,wellwithin 30days of the demandsdate. Jacobss

response was unequivocal: Jacobs rejects Geo Teks demand for arbitration and

recommendsthatGeoTekpursueit[s]contractualrightsandclaimsagainstitscustomer,

[DSI]. Jacobssresponsecouldnotreasonablyhavebeenmisunderstood.Itsclearand

29 See BG Grp., PLC v. Republic of Argentina,134S.Ct.1198,1207(2014)

(internalquotationmarksandcitationomitted).

30 AS09.43.330(c).

31 Asnotedabove,JacobssresponsetotheAmericanArbitrationAssociation

referencedtheAssociationsMay5,2010letterandGeoTeksApril28,2010demand.

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unequivocaldecision nottoarbitratewas,accordingtothecontract,bindingonthe

parties.

3. GeoTeksargumentsareunpersuasive.

GeoTekcontendsthattherequirementofJacobssconsenttoarbitrationis

notadeterminantofarbitrabilitybutratheraconditionprecedenttoarbitration,likethe

others time limits, notice, laches, and estoppel that courts have left for the

arbitratorsdetermination. GeoTekalsoassertsthatthesuperiorcourtfailedtoengage

in the limited arbitrability inquiry allowed under Alaska law because the courts

decisionwasnotlimitedtowhetherthepartieshadanarbitrationagreementorwhether

itcoveredthepartiesdispute.GeoTekarguesthatJacobssletter[rejectingarbitration]

didnotabsolveitofanyobligationtoparticipateinthearbitrationbecauseitwas

necessaryforJacobs toparticipatein thearbitrationto theextentitobjectedto the

arbitrators exercise of jurisdiction. Finally, GeoTek argues that even if Jacobss

rejectionpresentedanissueofarbitrability,thesuperiorcourtshouldnothaveaddressed

itbecausethepartieshadexplicitlydelegatedarbitrabilitydeterminationstothearbitrator

throughtheirincorporationoftheAAAIndustryRules.

Asexplainedabove,discerningthepartiesintentisourparamountconcern

whenwearedecidingwhetherconsenttoarbitrationpresentsaquestionofarbitrability

oraproceduralconditionprecedent.32 Wehaverepeatedlyrecognizedthat[b]ecause

arbitrationisamatterofcontract,partiescanonlybecompelledtoarbitrateamatter

wheretheyhaveagreedtodoso.33Thus,iftherearetermsinacontractthateither

excludearbitrationorindicatethatanissueshouldnotbesubjecttoarbitration,then


(Alaska2007)(providingforarbitrationwhenitisconsistentwiththepartiesintent).

33 Id.at477.

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requiringthatthematterbesenttoarbitrationwouldbeinappropriate.34 Inthiscasewe

areconvinced that the plain languageof thearbitration provisiondemonstrates the

parties intent that Jacobs decide unilaterally whether any given dispute will be

arbitrated;thatis,adisputesarbitrabilityisdeterminedbywhetherJacobsagreesto

arbitrateit.Werespectthepartieschoiceoflanguage.ToadoptGeoTeksposition

insteadwouldbetoholdthatapartythathasbargainedforthecontractualrighttoavoid

arbitrationatitssoleoptionmustinfactarbitrateinordertovindicatethatrightwith

noprospectofdenovojudicialreview.

GeoTek also argues that the parties arbitration provision expressly

providesthatdisputesshallberesolvedaccordingtotheappropriateIndustryRulesof

theAmericanArbitrationAssociationandthattheserulesgivethearbitratorthepower

toruleon his orher ownjurisdiction, including any objections with respect tothe

existence,scope,orvalidityofthearbitrationagreement. 35 Weneednotdecidewhat

theAAAIndustryRuleswouldrequireinthiscase,becausewedisagreewithGeoTeks

assertionthattheygoverntheprocedurethepartieshaveadoptedfortheinitiationof

arbitration.

Thepresumptionthatarbitrabilityisaquestionforthecourtscanonlybe

rebuttedifthepartieshave clearlyandunmistakablyprovide[d]otherwise.36 The

arbitrationprovisionatissuehereplainlystatesthatamattershallbesubmittedtothe

AmericanArbitrationAssociationforprocessingundertheappropriateIndustryRules


347,353(Alaska2009).

35 See Am.ArbitrationAssn,Comm.ArbitrationRule7(a)(2013).

36 State v. Pub. Safety Emps. Assn,798P.2d1281,1285(Alaska1990)

(quotingAT & T Techs., Inc. v. Commcns Workers of Am.,475U.S.643,649(1986)).

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oftheAmericanArbitrationAssociationthenineffectonly[ i]n the event [Jacobs]

elects to have the matter resolved through arbitration;ifJacobssoelects,thenthe

matterwillbesubmittedtotheAAAat[Jacobss]direction.37Underthecontracts

explicitlanguage,theAAArulescomeintoplayonlyafterJacobshasagreedtosubmit

aclaimtoarbitrationwhichinthiscaseitrefusedtodo. 38 Thepartiesdidnotclearly

andunmistakablyprovidethatthearbitratordeterminequestionsofarbitrability,but

rathertheopposite. 39

B. TheSuperiorCourtDidNotErrInGrantingSummaryJudgmentTo

JacobsOnGeoTeksNegligenceClaims.

GeoTekalsoappealsfromthesuperiorcourtsgrantofsummaryjudgment

toJacobsonGeoTeksnegligenceclaims.GeoTekallegedinitsamendedcomplaintthat

JacobswasresponsibleforDSIspaymentstoGeoTekbecauseofJacobssnegligent

failure (1) torequireDSI to post a performance bond toensure the paymentof its

subcontractors,asrequiredbyJacobssformcontract;(2)tofollowtheprovisionsofits

proposedriskmanagementplanregardinga15percent retainageand signedreleases

fromDSIssecond-tiersubcontractors;and(3)toinformGeoTekthatithadnottaken

thesesteps.Thesuperiorcourtfoundnosupportinthecontract,instatutes,orinthe

37 Emphasisadded.

38 See Opan Realty Corp. v. Pedrone,335N.E.2d854,855(N.Y.1975)

(holdingthatwherepartnershipagreementstatedthatanydisputewouldbedecidedby

theAmericanArbitrationAssociationbutmustfirstbesubmittedtothepartnershipfor

consideration,whetherthispreconditionhadbeensatisfiedwasamatterforthecourt).39 We necessarily reject GeoTeks additional argument that the claims

assignedtoitbyDSIwereseparatelyarbitrable.ArbitrabilitydependedonJacobss

electiontoarbitrate,whichitnevermadewithregardtoanyoftheclaimsatissue,

whetherdirectorassigned.

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commonlawfortheimpositionofanegligencedutyonJacobs. Weconcludethatthe

superiorcourtdidnoterr.

1. ThesuperiorcourtcorrectlyheldthatJacobsdidnothavean

extra-contractualdutytoprotectGeoTekagainsttheriskof

nonpaymentbyDSI.

Todeterminewhetheradefendantowesaplaintiffadutyofreasonable

care,wefirstdeterminewhetheradutyisimposedbystatute,regulation,contract,

undertaking,thepartiespreexistingrelationship,orexistingcaselaw.40Ifthese

sources do not resolve the issue, we apply the multi-factor approach discussed in

D.S.W....todeterminewhetheranactionabledutyexists. 41Theso-calledD.S.W.

factorsaresevenpublicpolicyconsiderationsweusetodeterminewhetherweshould

recognizeanegligencedutynototherwisedefinedbylaw.42

40 McGrew v. State, Dept of Health & Soc. Servs., Div. of Family & Youth

Servs.,106P.3d319,322(Alaska2005)(footnoteomitted).

41 Id.(citingD.S.W. v. Fairbanks N. Star Borough Sch. Dist.,628P.2d554,

555(Alaska1981)).

42 TheD.S.W.factorsare:

The foreseeability of harm to the plaintiff, the degree of

certaintythattheplaintiffsufferedinjury,theclosenessofthe

connectionbetweenthedefendantsconductandtheinjury

suffered, the moral blame attached to the defendants

conduct,thepolicyofpreventingfutureharm,theextentof

the burden to the defendant and consequences to the

communityofimposingadutytoexercisecarewithresultingliabilityforbreach,andtheavailability,costandprevalence

ofinsurancefortheriskinvolved.

D.S.W.,628P.2dat555(quotingPeter W. v. San Francisco Unified Sch. Dist.,131Cal.

Rptr.854,859-60(Cal.App.1976)).

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Foritsimpositionofadutyinthiscase,GeoTekreliesonMattingly v.

Sheldon Jackson College.43InMattingly weheldthatadefendantowesadutyofcare

totakereasonablemeasurestoavoidtheriskofcausingeconomicdamages,asidefrom

physicalinjury[orpropertydamage],toparticularplaintiffsorplaintiffscomprisingan

identifiableclass[ofpersonswho]defendantknowsorhasreasontoknowarelikelyto

suffer such damages from its conduct.44 GeoTek contends that [i]n accord with

Mattingly,...JacobssawarenessofGeoTekcombinedwithitsknowledgethatGeoTek

couldsuffer[the]economicharmofnotbeingpaidbyDSIiswhatgaverisetoaduty.

ButGeoTekmisinterpretsourholdinginMattingly. Mattingly didnot

createanewdutyintort,letaloneonesobroadastoprovideanegligencecauseof

action for any foreseeable economic harm caused by anothers lack of due care.

Mattingly simply expanded liability in tort to include purely economic losses; this

marked asignificantdeparturefrom thelong-standingvirtuallyper se rulebarring

recoveryforeconomiclossunlessthenegligentconductalsocausedphysicalharm.45

AfterMattingly wehaveneverheldthatforeseeableeconomicharmtoan

identifiableplaintiffisallthatisrequiredtoestablishadutyofcare. 46Forexample,in

Mesiar v. HeckmanweconsideredwhethertheAlaskaDepartmentofFishandGame

43 743P.2d356(Alaska1987).

44 Id.at360(quotingPeople Express Airlines, Inc. v. Consol. Rail Corp.,495

A.2d107,116(N.J.1985))(firstalterationinMattingly;secondalterationadded).

45 Id.at359(quotingPeople Express,495A.2dat109).

46

AfederalcourtrecognizedthisinU.S. ex rel. N. Star Terminal & StevedoreCo. v. Nugget Constr., Inc., 445 F. Supp. 2d 1063, 1076 n.42 (D. Alaska 2006)

(Mattingly ...standsforthepropositionthatapartythatisonlyeconomicallyinjured

cannonethelesssuefornegligence,so long as a duty exists.Itdefinestheparametersof

anexistingdutyanddoesnot,asPlaintiffsimply,imposeanewdutywherethere

otherwisewouldbenone.)(emphasisadded).

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couldbeliableonclaimsithadnegligentlymiscountedasalmonrun,therebycausing

unnecessary restrictionson certainYukonRiverfisheriesandeconomicharmto the

plaintiffs.47Todeterminewhetheranactionabledutyofcareexist[ed]weturnedtothe

D.S.W. factors.48InourdiscussionofthefirstD.S.W. factortheforeseeabilityof

harmwecitedMattinglyforthepropositionthatforpurelyeconomicharm,the

identifiableclassofplaintiffsmustbeparticularlyforeseeableinnumber,type,and

economicexpectations.49 WeagreedwiththeplaintiffsthattheDepartmentsclosure

decisionspredictablyandspecificallyharmedusers[includingtheplaintiffs].50 But

notingthatanyfisheries-managementactionthatharmsoneusergroupmayfavorothers,

weconcludedthattheforeseeabilityofharmto[theplaintiffs]isnotadispositive

factorindeterminingtheexistenceofatortdutyandwentontoweightheremaining

D.S.W. factors.51WeultimatelyconcludedthattheDepartmentowednoactionableduty

totheplaintiffsaconclusionwewouldnothavereachedifallthatisrequiredunder

Mattingly foradutytoexististheforeseeabilityofeconomicharmtoanidentifiable

plaintiff.52

47 964P.2d445,448-49(Alaska1998).

48 Id. at450(citingD.S.W. v. Fairbanks N. Star Borough Sch. Dist.,628P.2d

554,555(Alaska1981)).

49 Id.

50 Id.

51

Id.

52 Id. at452;see also Lynden Inc. v. Walker,30P.3d609,614(Alaska2001)

(summarizingMesiar and noting that in that case, [d]espite the foreseeability of

economicinjurytofishermenifdatawasimproperlycollected,wefoundthat[other

D.S.W.]factorsarguedagainstimposingaduty).

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WefollowedthesamecourseinStephens v. State, Department of Revenue,

decidedjustafewmonthsafterMattingly.53AtaxpayersuedtheState,allegingthatthe

Department of Revenue hadnegligently and maliciously attempted to collect on a

judgment for unpaid taxes after the debt had been discharged in bankruptcy.54 To

determine whether the defendant owed the plaintiff a duty of care under the

circumstances,wereviewedtheD.S.W.factors.55Weobservedinitiallythat[i]nnocent

defendantsorthosenotliabletoaplaintiffwillforeseeablysufferharmasadirectresult

ofanegligentlybroughtprosecutionorlawsuit,butagaintheforeseeabilityofeconomic

harmtoanidentifiableplaintiffwasnotsufficienttoestablishaduty: weanalyzedthe

remainingpublicpolicyconsiderationsfromD.S.W. andconcludedthatnodutyexisted.56

Notably,theNewJerseycasewefollowedinMattingly,People Express

Airlines v. Consolidated Rail Corp.,57recognizedthelimitsoflookingtoforeseeability

alonetodeterminewhetheradutyintortexists. Reflectingourownrelianceonpublic

policy concerns as identified inD.S.W., the New Jersey Supreme Court inPeople

Expressobservedthatcourtswillberequiredtodrawuponnotionsoffairness,common

senseandmoralitytofixthelinelimitingliabilityasamatterofpublicpolicy,ratherthan

anuncriticalapplicationofparticularforeseeability.58NewJerseycourtssincePeople

53 746P.2d908(Alaska1987).

54 Id.at909.

55 Id.at910.

56 Id.at911.

57 495A.2d107(N.J.1985).

58 Id.at116.

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Express haveheldthatforeseeabilityaloneisinsufficienttoshowtheexistenceofaduty

inanegligencecaseclaimingeconomicharm. 59

Insum,whilewehavelabeledforeseeabilitythesinglemostimportant

criterionforimposingadutyofcare, 60itisclearthatAlaskascourtsmuststillconsider

thefullpanoplyofD.S.W. factorswhendecidingwhetheranactionabledutyofcare

exists.WerejectGeoTeksargumentthat,underMattingly,Jacobssknowledgeof

DSIsfinancialsituationanditsknowledgethatGeoTekwouldbeharmedifDSIdidnot

pay its subcontractors would be enough, without more, to establish a duty of care

actionableintort.61

59 See, e.g.,Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Grp., Inc.,

638A.2d1288,1294(N.J.1994)(Abilitytoforeseeinjurytoapotentialplaintiffdoes

notinitselfestablishtheexistenceofaduty.... Oncetheforeseeabilityofaninjured

party is established, we must decide whether considerations of fairness and policy

warranttheimpositionofaduty.(citationsomitted)).

60 R.E. v. State, 878 P.2d 1341, 1346 (Alaska 1994);see also State v.

Sandsness,72P.3d299,305-06(Alaska2003)(WhilethemostimportantsingleD.S.W.

factorisforeseeability,itisnotdispositive.).

61 GeoTek also contends that, independent of Mattingly, Jacobss

developmentofariskmanagementplanwasavoluntaryundertakingthatextendedits

liabilitybeyondwhatwasotherwiserequiredbylaw,citingGuerrero v. Alaska Hous.

Fin. Corp.,6P.3d250,258(Alaska2000).GeoTekdoesnotdevelopthisargument

further. In Guerrero we reviewed the dismissal of a complaint under the lenient

standardsofAlaskaCivilRule12(b)(6)andheldthattheallegationsofthecomplaintdidnot necessarily rule out the possibility that the defendant landlord had voluntarily

expandedthescopeofitsdutyofcare.Butwenotedthatourrulingontheimpropriety

ofadismissalunderRule12(b)(6)doesnotnecessarilyprecludethesuperiorcourtfrom

decidingdisputedissuesofdutyonsummaryjudgment,id. at 258n.33,ashappened

inthiscase.

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2. GeoTek does not identify other D.S.W. factors that could

supporttherecognitionofadutyinthiscase.

Intheabsenceofanyothersourceofadutyofcare,weweightheseven

D.S.W.factorstodeterminewhetheracommonlawdutyofcareexists.62Hingingits

argumentonforeseeabilityaloneunderMattingly,GeoTekdoesnotaddresstheother

D.S.W. factors.Thesuperiorcourtdidnotaddressthemeither,findingthatthequestion

ofdutywascontrolledbyourdecisioninMunicipality of Anchorage v. Tatco, Inc.63 The

plaintiffs in Tatco had supplied materials to the contractor on a municipal landfill

project.64Whenthecontractorfailedtopay,thesupplierssuedtheMunicipalityforits

failuretorequirethecontractortopostapaymentbondortocertify,beforebeingpaid,

thatithadpaidallitslaborersandsuppliers.65WeheldthattheMunicipalitywasentitled

tosummaryjudgmentbecauseapaymentbondforthebenefitofsubcontractorswasnot

required either by statute66 or by the contract between the Municipality and the

contractor.67 WedonotconsiderTatco controllinginthiscase,however,asthesuppliers

62 See Parnell v. Peak Oilfield Serv. Co.,174P.3d757,767(Alaska2007)

(quotingBolieu v. Sisters of Providence in Wa.,953P.2d1233,1235(Alaska1998))

(internalquotationmarksomitted).

63 774P.2d207(Alaska1989).

64 Id.at208.

65 Id.

66

Wedeterminedthatthecontractatissuewasnotcoveredby theLittleMillerAct,AS36.25.010.025,andspecificallyitsrequirementthatpublicentities

requirepublic-workscontractorstopostbondsforthepaymentoflaborersandsuppliers,

AS36.25.010(a).Id.at211.

67 Id.at210-12.

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in Tatco apparently did not ask the court to decide whether the Municipality had

breachedadutyintortindependentofstatuteandcontract.

BecauseGeoTekdoesnotanalyzetheD.S.W. factorsinitsbriefingbefore

us,weneednotdecidewhethertheyrequireustorecognizeanactionabledutyintort.68

We do note, however, that most factors militate against it. First, as contrasted to

negligence creating a risk of death or physical injury, we have ascribed little

blameworthinesstoordinarynegligencethatmerelycauseseconomic...harm.69This

isparticularlytruewhenpartiesareinapositiontohavecontractedaroundtherisk;

GeoTeksinjurywouldnothaveoccurredabsentitsowndecisiontoenterintoacontract

withDSI,knowing,asitdid,thatDSIhadfailedtosecurebonding.Thepolicyof

preventingfutureharmalsodoesnotrequirerecognitionofanoveldutyintort,asother

contractingpartieshavetheabilitytoprotectthemselveseitherbyrefusingtoenterinto

relationships theyconsiderfinancially fraughtor bynegotiatingformoreprotective

provisionsintheircontractsbeforesigningthem.70 Imposingadutyincaseslikethisone

wouldsubjectcontractorstotheaddedburdenofprotectingthepurelyeconomicinterests

ofpartieswithwhomtheyhavenoprivity; 71itwouldalsoenhancetheirriskofhaving

68 See Glover v. Ranney,314P.3d535,545(Alaska2013)([W]hereapoint

isgivenonlyacursorystatementintheargumentportionofabrief,thepointwillnotbe

consideredonappeal.)(internalquotationmarksomitted).

69 See Mesiar v. Heckman,964P.2d445,451(Alaska1998).

70 See Alaska Pac. Assurance Co. v. Collins,794P.2d936,946(Alaska1990)

(notingthat[p]romisessetforthinacontractmustbeenforcedbyanactiononthat

contract).71 See Imperial Mfg. Ice Cold Coolers, Inc. v. Shannon,101P.3d627,630

(Alaska2004)(explainingthat theLittleMillerActisbasedonthepremisethat the

governmentcannotbechargedbythosewithwhomthegovernmenthasnocontractual

(continued...)

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topaytwiceforthesamelaborormaterials.72Andfinally,GeoTekdoesnotprovide

public-policysupportfromotherjurisdictions;itdoesnotciteanycasesinwhichcourts

imposed an extra-contractual duty on contractors to answer for the debts of their

subcontractorsincircumstanceslikethosepresentedhere.

V. CONCLUSION

ThesuperiorcourtsgrantsofsummaryjudgmentareAFFIRMED.73

71(...continued)

relationship).

72 See id. (holding that the Little Miller Act does not provide a private

negligencecauseofactionagainstagovernmententityforitsfailuretorequireapayment

bondinpartbecauseifthelegislaturehadintendedtoimposegovernmentliability

ineffect...torequirepublicentitiestopaytwiceforapublicprojectthisintentionwouldhavebeenexpressedbecauseitisasignificantvariationfromtheexistingnorm).

73 Becauseweaffirmthesuperiorcourtsjudgment,wenecessarilyreject

GeoTeksargumentthatitshouldbeconsideredtheprevailingpartyforpurposesofan

attorneysfeesaward.

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geotek alaska, inc. v. jacobs engineering group, inc., alaska (2015)

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