Sea Hawk Seafoods, Inc. v. City of Valdez

282 P.3d 359, 2012 WL 3055197, 2012 Alas. LEXIS 111
CourtAlaska Supreme Court
DecidedJuly 27, 2012
DocketNos. S-14078, S-14098
StatusPublished
Cited by10 cases

This text of 282 P.3d 359 (Sea Hawk Seafoods, Inc. v. City of Valdez) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sea Hawk Seafoods, Inc. v. City of Valdez, 282 P.3d 359, 2012 WL 3055197, 2012 Alas. LEXIS 111 (Ala. 2012).

Opinion

OPINION

STOWERS, Justice.

I. INTRODUCTION

Sea Hawk Seafoods, Inc. sued the City of Valdez for damages after Valdez applied for a grant from the State of Alaska for funding to convert Sea Hawk's seafood processing facility into a fish meal plant but then declined to accept the $600,000 grant that the State conditionally awarded to Valdez. On pre-trial motions, the superior court dismissed Sea Hawk's claims for breach of contract, breach of an agreement to negotiate, and breach of a duty to negotiate in good faith,. Valdez and Sea Hawk filed cross-motions for summary judgment on Sea Hawk's remaining claim for promissory es-toppel, which the court denied. Shortly before trial, the court dismissed Sea Hawk's promissory estoppel claim as a discovery sanction. Sea Hawk and Valdez both appeal.

[362]*362Sea Hawk's claims are based on statements made and a letter sent by the Valdez City Manager to the owner of Sea Hawk. Because these communications, even when viewed in the light most favorable to Sea Hawk, are insufficient as a matter of law to support Sea Hawk's claims, we affirm the superior court's rulings dismissing Sea Hawk's breach of contract and negotiation claims, but we reverse the court's ruling denying Valdez summary judgment on Sea Hawk's promissory estoppel claim.

II. FACTS AND PROCEEDINGS

A. Facts

Sea Hawk owned and operated a seafood processing plant in Valdez. In 2008 in response to declining salmon prices, the State established the Fisheries Economic Development Grant Program to assist qualifying businesses in the seafood industry. Sea Hawk was struggling to survive as a traditional seafood processor at that time, so Terry Bertoson, Sea Hawk's owner and sole shareholder, developed a plan with Norquest Seafoods, Inc. to convert Sea Hawk's processing facility into a fish meal plant. Sea Hawk agreed to contribute its existing buildings and equipment, Norquest agreed to contribute meal plant equipment, and the grant would provide the funds necessary to purchase and install additional odor abatement equipment. Bertoson initially planned to submit his own proposal directly to the State, but decided to ask Valdez to submit the grant application in order to demonstrate to the State that the project would benefit not only a private business but also the local community.

In April 2008 Bertoson contacted David Dengel, the Valdez City Manager, and requested that Valdez submit the grant application on Sea Hawk's behalf. According to Bertoson, Dengel indicated Valdez would be interested in supporting the project and, in-the course of their discussions over the next two months, promised him Valdez would submit the grant application and, if awarded the grant, pass the funds through to Sea Hawk.

In May 2003 Bertoson sent a draft grant application to Dengel. On May 27 Dengel presented the plan to the Valdez City Council at a work session.1 Bertoson claims that after this work session, Dengel informed him the City Council had approved the project and reiterated his earlier promise that Valdez would submit the application and, if awarded the grant, pass the funds through to Sea Hawk. On May 80 Dengel sent Bertoson a letter confirming Valdez's support for the grant application and outlining the remaining issues to be resolved. The letter stated:

I am finalizing the application for [the] Fisheries Economic Development Matching Grant Program grant. If the City is successful in the application process for the Fish Meal Plant, there are a number of issues that will need to be resolved before the City accepts the grant.
As I have indicated previously, the City will not be putting any of its own funds into the project. Any match or cost overruns will need to be covered by you and any partners. Because this is a pass through grant, there will need to be assurance{s] in place that indemnify the City for any compliance issues that may arise in the future. Since the State in the application states that the Program is still evoly-ing all of the policy decisions have not yet been made. Another recurring issue is one of odor from the plant. There will need to be assurances that the plant will not produce an offensive odor. Once the State informs the City as to whether we received the grant we will need to put together an agreement that addresses all of these issues and any others that will arise[ ] between now and then.
If the City is not successful in getting the grant funds requested for the fish meal plant, the City is not responsible for the failure if any of Sea Hawk Seafoods. Terry, the City is supportive of the project and the commercial fishing industry, we just need to make sure that the City is protected and indemnified.

Bertoson emailed Dengel that same day, agreeing to Valdez's conditions and asking [363]*363whether there was anything he needed to do. Dengel replied: "You do not need to do anything with the letter it is standard on the City's part." . §

Valdez submitted the grant application, requesting $950,000 for the proposed fish meal plant. The grant program required local government applicants to provide a resolution of support for their grant application. On June 2, 2008, the City Council passed a formal resolution of support, stating: "The City of Valdez supports the State of Alaska Fisheries Economic Development Grant Application for a Fish Meal Plant."

In August 2003 state officials visited Sea Hawk's facility in Valdez and prepared an analysis of the proposed fish meal plant, noting several issues with the proposal. The report recommended the State set aside $600,000 for the project, contingent upon these issues being addressed. |

On March 15, 2004, the State notified Valdez it had been selected as a "potential recipient" of a $600,000 grant and asked Valdez to submit additional information about the proposal. On April 1 Dengel sent Bertoson a letter stating that Valdez had received 2 $600,000 grant but would not accept it until it had negotiated an agreement with Sea Hawk: "Be advised that even though the City has been notified of a grant award, the City has yet to accept the grant funds. Acceptance of the grant is contingent upon an agreement being successfully negotiated between the City, SeaHawk Seafoods, and Nor-quest." At a City Council meeting on April 5, council members and local citizens voiced concerns about odors from the proposed fish meal plant impacting the town's tourist industry. The City Council decided to request proposals for a fish meal plant located outside the harbor area of town, but did not receive any proposals in response to its request. On May 3, despite continuing concerns about potential odor issues, the City Council voted to negotiate an agreement with Sea Hawk for the operation of a fish meal plant. Valdez and Sea Hawk went through several proposed contracts, but were ultimately unable to reach a final agreement.

The State notified Valdez that it had until December 28, 2004, to make a decision regarding the grant award. On December 20 a council member moved to approve a final agreement with Sea Hawk and the motion failed. Consequently, Valdez did not accept the $600,000 grant. Sea Hawk continued operating for a few weeks in 2005 and 2007 before closing and selling its facility in 2008.

B. Proceedings

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Bluebook (online)
282 P.3d 359, 2012 WL 3055197, 2012 Alas. LEXIS 111, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sea-hawk-seafoods-inc-v-city-of-valdez-alaska-2012.