Alaska Northern Development, Inc. v. Alyeska Pipeline Service Co

Brief Fact Summary. Alaska Northern Development, Inc. (Plaintiff) appeals from a judgment in favor of Alyeska Pipeline Service Co. (Defendant) in a contract formation and interpretation dispute.

Synopsis of Rule of Law. Parol evidence restricts external evidence that contradicts the integrated terms of a written contract.

Facts. David Reed (Reed), a shareholder of Plaintiff, initiated discussions with Defendant regarding the purchase of surplus parts. A letter of intent was prepared by Reed, in which Plaintiff proposed to purchase Defendant’s entire inventory of Caterpillar parts. The place for purchase price was left blank. Defendant responded with its own letter, also leaving the purchase price blank, but added that the sale was subject to the final approval of the owner committee. The price was subsequently decided upon. The owner’s committee rejected the agreement. Plaintiff contends that it was said that the owner’s committee’s approval was necessary for the price term only, and not the entire contract. Plaintiff filed a complaint alleging that there was a contract between Plaintiff and Defendant, which Defendant breached. Defendant moved for summary judgment and the superior court granted summary judgment in favor of Defendant on the punitive damages count. The court initially denied Defendant’s
Motion for Summary Judgment, however, the court reviewed the case and announced that it would reverse its earlier holding and grant Defendant’s motion. The court applied the parol evidence rule to the letter and therefore no extrinsic evidence could be presented to the jury.

Issue. Whether the writing was integrated, and if so whether the evidence of a prior or contemporaneous agreement contradicts or is inconsistent with the integrated portion?

Held. Yes. Judgment affirmed.
The letter was integrated with respect to the approval clause but the contract was merely partially integrated based on the evidence presented.
The excluded evidence does not contradict the integrated portion of the writing. Plaintiff contends that the superior court erred in granting summary judgment because the evidence conflicted as to the meaning of the owner committee approval clause. However, the words in the letter are not reasonably susceptible to the interpretation offered by Plaintiff. Thus, there is no merit in Plaintiff’s claim.
The superior court also found that the owner committee’s approval power was limited to the approval of the price to be inconsistent with and contradictory to the language used in the letter. Inconsistency is the absence of reasonable harmony in terms of the language and respective obligations of the parties. Under this definition, the proffered parol evidence limiting the owner committee’s right of final approval is inconsistent with the integrated term that conditionally gives the committee the right to approval. Thus, parol evidence was properly excluded since it contradicted the integrated clause.

Discussion. This court adopts the Corbin view, which states looks at all available evidence to determine the actual intention of the parties.