United States of America v. AHTNA Construction and Primary Products, LLC

• Court: District Court, D. Alaska
• Decided: August 17, 2021
• Docket: 4:19-cv-00010
• Status: Unknown

Opinion

3 IN THE UNITED STATES DISTRICT COURT

4 FOR THE DISTRICT OF ALASKA 5

6 UNITED STATES for the use & 7 benefit of MIDSTATE EQUIPMENT, INC.; MIDSTATE EQUIPMENT, Case No. 4:19-cv-00010-JWS 8 INC., 9 Plaintiffs, FINDINGS OF FACT AND 10 CONCLUSIONS OF LAW 11 vs.

12 AHTNA CONSTRUCTION & PRIMARY PRODUCTS, LLC; 13 GREAT AMERICAN INSURANCE 14 COMPANY,

15 Defendants. 16

18 19 I. INTRODUCTION AND STATEMENT OF JURISDICTION 20 This Miller Act lawsuit was tried to the court from July 12, 2021, through 21 July 16, 2021, in Anchorage, Alaska. This court has subject matter jurisdiction 22 pursuant to 40 U.S.C. § 3133. The parties’ several state law claims also were tried. 23 24 They are so related to the Miller Act claim as to form part of the same controversy. 25 This court has jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367(a). 26 Pursuant to Federal Rule of Civil Procedure 52, the court sets out its 27 28 findings of fact and conclusions of law below. 1 II. FINDINGS OF FACT 2 1. Plaintiff Midstate Equipment, Inc. (hereinafter “Midstate”), is an 3 Alaska corporation. It is a civil construction contractor located in Delta Junction, 4 5 Alaska. 6 2. Defendant Ahtna Construction and Primary Products, LLC 7 (hereinafter “Ahtna”), is an Alaska limited liability company. It is a general contractor 8 9 specializing in civil construction. 10 3. Defendant Great American Insurance Company (hereinafter 11 “Great American”) is an Ohio corporation authorized to do business in Alaska as a 12 surety. 13 14 4. Ahtna entered into an agreement with the United States 15 Department of Agriculture, Natural Resources Conservation Service (hereinafter 16 “NRCS”), in 2018 to perform work at the Delta Clearwater Remediation Project 17 18 Phase 2 near Delta Junction, Alaska (hereinafter “the Project”). The NRCS/Ahtna 19 contract is referred to hereinafter as the “Prime Contract.” 20 5. As required by law, Ahtna provided a payment bond (“the Bond”) 21 22 for the Project. The Bond was issued by Great American. 23 6. Among other things, the Prime Contract required Ahtna to 24 provide and spread topsoil and woody debris on the Project site in accordance with the 25 specifications in the Prime Contract. Ahtna agreed that it would be paid on a unit price 26 27 basis of a fixed amount per square yard. 28 1 7. Prior to submitting its bid for the Project, Ahtna had received a 2 proposal from Midstate (hereinafter “Quote”) to supply and deliver top soil and woody 3 debris to the Project. The Quote was given to Ahtna on January 4, 2018. In the Quote, 4 5 Midstate offered to deliver up to 424,450 square yards of topsoil and up to 517,829 6 square yards of woody debris. No other supplier proposed to provide and deliver 7 topsoil and woody debris. Ahtna used Midstate’s Quote in preparing its bid to 8 9 construct the Project. 10 8. Midstate proposed to provide and deliver topsoil at a price of 11 $2.62 per square yard. The Quote stated: “Measurement for payment will be by an 12 agreed price per cuyd per truck load.” 13 14 9. Midstate proposed to provide and deliver woody debris at a price 15 of $2.60 per square yard. The Quote states: “Measurement for payment will be by the 16 truck load.” 17 18 10. Ahtna issued purchase order PO-07020-001 to Midstate 19 (hereinafter “Purchase Order”) for supplying and delivering topsoil and woody debris 20 among other things. The Purchase Order was executed by both parties. The Purchase 21 22 Order included as an attachment a copy of Midstate’s Quote and stated in bold 23 italicized language, “Midstate Original Quote Attached as Reference Only.” For 24 NRCS, the Quote would have been very significant because it showed Midstate would 25 provide the quantities of topsoil and woody debris required by the Prime Contract. The 26 27 Purchase Order was a unit price agreement using square yards for units of delivery. It 28 1 specified payment terms of “Net 30.” Unit costs were specified as $2.62 per square 2 yard for topsoil and $2.60 per square yard for woody debris. 3 11. Prior to commencement of deliveries by Midstate, Ahtna and 4 5 Midstate did not discuss, much less agree on, the dimensions of a truckload nor a unit 6 price per truckload for either topsoil or woody debris. 7 12. NRCS estimated that the Project would require 424,450 square 8 9 yards (“SY”) of topsoil and 517,829 square yards of woody debris.1 NRCS prepared 10 detailed Project specifications (“Specifications”) describing the types of materials to 11 be used and the methods employed for their placement.2 12 13. The Specifications stated Ahtna would be paid for both topsoil 13 14 and woody debris based on “in-place” measurements. Ahtna and NRCS would 15 together use professional surveyors to measure the total surface covered by these 16 materials, determining the amount of surface area through a “horizontal projection” of 17 18 the surveyed “perimeter.”3 19 14. For topsoil measurements, the parties would then calculate total 20 square yards of material according to the measured perimeter and the uniform 21 22 thickness or “lift” of the topsoil spread by Ahtna.4 23 24 25 26 1 Trial Exhibit (hereinafter “Ex.”) 6, p. 6. 27 2 Ex. 3. 3 Ex. 3, pp. 7, 11. 28 4 Trial Transcript (hereinafter “Tr.”). Vol. 3, pp. 107–11 (T. Champine) (describing process of measuring placed materials). 1 15. The Project drawings instructed Ahtna to spread the “loose” 2 topsoil into an eight-inch-thick lift throughout the Basin and adjoining areas.5 The 3 Specifications instructed Ahtna to spread the topsoil using a “low ground pressure 4 5 (LGP) type dozer . . . equipped with and operating by GPS machine control.”6 GPS 6 devices mounted on the blade of the dozer monitored the height of the blade from the 7 subgrade.7 The GPS machine control would adjust the height of the blade to 8 9 compensate for any changes in the subgrade.8 The result was a consistent “loose” lift 10 thickness. 11 16. Section 7(a)(6) of the Specifications provided: “The measured 12 thickness of the topsoil shall be from the approved subgrade to the top of the loose 13 14 topsoil before track-walking.”9 “Track-walking” refers to the compression of the 15 topsoil lift by the tracks of the dozer immediately after the blade at the front of the 16 dozer has cut the loose topsoil into a lift.10 The Specifications thus required that the 17 18 dozer maintain a blade height of eight inches to create the loose lift for purposes of 19 measurement for payment, but did not require any particular compaction density or 20 depth after the blade had “cut” this lift and the tracks of the dozer immediately 21 22 compacted the topsoil. 23 24

25 5 Ex. 2, pp. 7–10, 17–19. 26 6 Ex. A, p. 53. 7 Tr. Vol. 4, p. 134 (D. McKoon); Tr. Vol. 4, p. 99 (D. O’Donnell) (“That dozer blade does 27 not go below that 8 inches.”). 8 Tr. Vol. 3, pp. 108–09 (T. Champine). 28 9 Ex. A, p. 53. 10 Tr. Vol. 3, pp. 108-109 (T. Champine). 1 17. The Project Specifications also provided detailed requirements 2 for “furnishing and spreading woody debris at locations shown on the drawings.”11 3 The woody debris needed to have “a minimum stem length of four (4) feet and a 4 5 minimum diameter of four (4) inches at the largest end.”12 Ahtna needed to spread the 6 woody debris in a way that would result in “ground coverage” of 20 to 40 percent.13 7 18. Both Ahtna and NRCS would measure the woody debris for 8 9 payment by determining the “horizontal projection” of the surveyed “perimeter.”14 10 However, unlike the “lift thickness” requirement for topsoil, the woody debris placed 11 within the measured perimeter would only “count” for payment if it met the ground 12 coverage density required, regardless of how thick it was placed. 13 14 19. According to the Specifications: “Percent Ground cover shall be 15 measured by throwing a 100-foot tape over random linear transects of the woody debris 16 matrix” and measuring lengths of woody debris exceeding one (1) inch in diameter 17 18 which are attached to a larger piece of wood meeting the four (4) inch diameter 19 requirement.”15 Consequently, if the person taking these measurements identified 20 woody debris but it did not meet these dimensions, that woody debris would not create 21 22 the required density and would not count towards the density requirement. If placed 23 24

25 11 Ex. A, p. 78. 26 12 Id. 13 Id. 27 14 Ex. A, pp. 80–81; Tr. Vol. 3, p. 129 (T. Champine) (Q. “Was there anyone else out there besides Ahtna that was going out and taking measurements of those boundaries?” A. “NRCS took 28 measurements of those boundaries”). 15 Ex. A, p. 78. 1 woody debris did not result in the required ground coverage, other woody debris, with 2 correct dimensions, could be added to the uncounted woody debris in order to pass the 3 density requirements and be counted for payment.16 4 5 20. As part of preparation of its bid on the Project, Ahtna contacted 6 Midstate Equipment, Inc. (“Midstate”).17 Midstate is a civil construction contractor 7 located in Delta Junction, Alaska. 8 9 21. Midstate determined that it could submit bids to supply the topsoil 10 and woody debris to the Project, but chose not to bid to place the materials.18 11 22. On January 4, 2018, Midstate delivered the Quote to Ahtna 12 offering to deliver up to 424,450 SY of topsoil and 517,829 SY of woody debris to the 13 14 Project.19 The Quote stated a unit price of $2.62 per SY of topsoil and $2.60 per SY 15 of woody debris. 16 23. The Quote stated “[p]lacement is responsibility of others.”20 It 17 18 also noted that for topsoiling: “Measurement for payment will be by an agreed price 19 per cuyd per truck load.”21 It noted that for woody debris: “Measurement for payment 20 will be by the truck load.”22 21 22 23

24 16 Tr. Vol. 4, p. 123 (D. McKoon) (“What happens when you go out there and measure it after 25 it’s placed is you got – you got to place a lot of wood out there to make that area meet spec”). 26 17 Tr. Vol. 3, pp. 137–38 (T. Champine). 18 Tr. Vol. 1, p. 13 (D. Karr). 27 19 Ex. 5. 20 Id. 28 21 Ex. 5, p. 2. 22 Id. 1 24. The Quote did not further define “truckload” by describing either 2 the types of trucks Midstate planned to use or the anticipated carrying capacity of those 3 trucks. The Quote also did not identify a unit price per truckload or state when the 4 5 parties would be expected to arrive at such a price. 6 25. On February 1, 2018, Ahtna and NRCS signed an agreement 7 awarding the Project to Ahtna.23 NRCS agreed to pay Ahtna $4.40 per SY for topsoil 8 9 and $3.55 per SY for woody debris.24 10 26. On February 12, 2018, Ahtna delivered the Purchase Order to 11 Midstate offering to purchase topsoil and woody debris for the Project.25 The Purchase 12 Order stated the same estimated quantities and unit costs in the Quote. 13 14 27. The Purchase Order was a “unit price” agreement, with square 15 yards for units of delivery.26 It did not describe payment by the truckload. It stated in 16 bold italics: “Midstate Original Quote Attached as Reference Only.”27 17 18 28. Ahtna and Midstate executed the Purchase Order without any 19 changes to the text on February 14, 2018.28 20 21 22 23 24

26 23 Ex. 6, p. 2. 24 Ex. 6, p. 6. 27 25 Ex. 7. 26 Tr. Vol. 3, p. 29 (J. Braham). 28 27 Ex. 7, p. 3. 28 Ex. 9. 1 29. Prior to performance, the parties neither discussed nor agreed 2 upon the dimension of a “truckload” nor a unit price per “truckload” for either topsoil 3 or woody debris.29 4 5 30. Midstate began delivering topsoil on June 22, 2018.30 Midstate 6 used both side-dump trucks and lower-capacity end-dump trucks.31 The trucks would 7 enter the work area and dump the topsoil. Midstate did not confirm the quantity of the 8 9 loads of topsoil as they were delivered by Midstate onto the jobsite.32 Ahtna personnel 10 examined the dumped load, but only to make sure there were no excessive organic 11 materials.33 12 31. On June 26, 2018, representatives of Ahtna, NRCS, and Midstate 13 14 met at the Project site to evaluate the level of compaction in the topsoil immediately 15 created by the dozer when it track-walked the eight-inch “loose” lift the blade at the 16 front of the dozer had cut into the topsoil delivered by Midstate.34 Ahtna and NRCS 17 18 informally agreed that the tracks of the dozer compressed the loose lift to 19 approximately 6.5 inches.35 20 32. However, Ahtna and NRCS did not agree to change the eight-inch 21 22 loose lift requirement in the Specification that was used to measure the lift and serve 23

24 29 Ex. 20; Ex. 25. 25 30 Tr. Vol. 1, p. 27 (D. Karr). 26 31 Tr. Vol. 3, p. 14 (J. Braham). 32 Tr. Vol. 2, p. 160 (S. Perkins); Tr. Vol. 2, p. 167 (C. Sonnichsen); Tr. Vol. 2, pp. 174–75 27 (K. Sams). 33 Tr. Vol. 4, p. 110 (D. McKoon). 28 34 Ex. B; Tr. Vol. 4, p. 140 (D. McKoon). 35 Tr. Vol. 4, p. 140 (D. McKoon). 1 as basis for payment to Ahtna.36 According to the contract between Ahtna and NRCS, 2 such a change would have required a written modification to the Specifications under 3 the parties’ contract and the Federal Acquisition Regulations.37 There is no written 4 5 modification between Ahtna and NRCS of any kind among the exhibits that were 6 admitted at trial. Midstate representatives Dick Karr and John Braham acknowledged 7 at trial that he never saw such a modification.38 8 9 33. Mr. Karr became concerned that the estimated track-walking 10 compaction density discussed at the June 26 meeting was incorrect.39 He mistakenly 11 believed that the specification had changed and the parties had agreed to a 6.5-inch 12 compacted lift for purposes of payment, and that, because the topsoil might compact 13 14 much more than eight inches during track-walking, Ahtna was now placing the 15 materials “too thick” in order to meet the measurement for payment.40 16 34. Mr. Karr began asking Midstate representatives onsite to sign 17 18 daily load sheets indicating the number of truckloads of topsoil delivered.41 He did 19 this because the load sheets stated an estimated average topsoil capacity for each truck, 20 and Mr. Karr was concerned that being paid on the basis of in-place values rather than 21 22

23 36 Tr. Vol. 3, pp. 156–57 (T. Champine) (“It’s not a real deviation because they were 24 approving the eight-inch loose fill was being complied with”); Tr. Vol. 4, pp. 98–99 (D. O’Donnell) (“We were paid on 8 inches loose at the cut below the dozer blade”); Tr. Vol. 4, p. 140 (D. McKoon) 25 (“I know that this stuff was yielded in at 8 inches. That’s the only way you can place this stuff, to 26 know what you’re putting in. That was the agreement.”). 37 Ex. 6, p. 31 (incorporating FAR 52.243-4 “Changes”). 27 38 Tr. Vol. 2, p. 115 (D. Karr); Tr. Vol. 3, p. 17 (J. Braham). 39 Tr. Vol. 1, p. 48 (D. Karr). 28 40 Ex. 29. 41 Ex. 20. 1 by the truckload would result in underpayment to Ahtna and, consequently, 2 underpayment to Midstate.42 3 35. The load sheets specified that each truck carried 112.5 SY of 4 5 topsoil per load, despite the absence of any agreement on estimated truckload 6 quantities between the parties.43 When assuming an eight-inch lift, 112.5 SY of topsoil 7 is 25 cubic yards (“CY”).44 8 9 36. Mr. Karr also was concerned that Ahtna would not spread 10 delivered woody debris to a minimum density of 20 percent.45 If Ahtna placed the 11 woody debris at a higher density, then it would be placing more material than necessary, 12 resulting in potential underpayment to Ahtna and, consequently, Midstate.46 For this 13 14 reason, Mr. Karr also wanted to be paid by an estimated quantity per truckload for 15 woody debris.47 16 37. Mr. Karr had prepared the original bid estimate for Midstate.48 In 17 18 it, he used an estimated truckload capacity of 28 CY of topsoil.49 However, in a July 22, 19 2018 letter to Ahtna, he informed Ahtna that it would be billed on the basis of 25 CY 20 per truck.50 At trial, Mr. Karr testified that he planned to use the lower estimate in 21 22

23 42 Ex. 24. 43 Ex. 20, p. 2. 24 44 Ex. E. A “square yard” is a measurement of area, but a “cubic yard” is a measure of volume. In order to estimate the number of square yards a truck will carry it is necessary to convert those square 25 yards into cubic yards. 26 45 Ex. 25. 46 Ex. 37. 27 47 Ex. 25. 48 Tr. Vol. 1, p. 13 (D. Karr). 28 49 Ex. 4, p. 2. 50 Ex. E. 1 order to receive an interim payment and “get a cash flow going,” with Midstate 2 delivering a later invoice showing more accurate quantities later in the future.51 3 38. On July 30, 2018, Midstate sent Ahtna its first invoice (Invoice 4 5 1931), billing for 911 loads of topsoil at an estimated truckload volume of 121.5 SY 6 (27 CY).52 The invoice billed Ahtna for 1,080 loads of woody debris, with an 7 estimated truckload volume of 124.24 SY. 8 9 39. Ahtna acknowledged internally that it needed to make a “progress 10 payment” to Midstate in order to keep its subcontractor funded, but Ahtna also needed 11 a basis for Midstate’s estimated average volumes before it could process payment.53 12 40. Ahtna asked Midstate for a basis for the estimated truckload 13 14 volumes in Invoice 1931.54 Midstate replied: “We arrived at the load capacity thru 15 past experience and field verification.”55 16 41. Ahtna informed Midstate that it needed a “more scientific” 17 18 explanation for the estimates.56 A dispute ensued between the parties regarding the 19 estimated volumes of each truck, the best method for determining estimated volumes, 20 and the results of tests performed in an effort to establish those volumes. 21 22 23 24

25 51 Tr. Vol. 2, p. 109 (D. Karr); see also Tr. Vol. 2, p. 5 (D. Karr). 26 52 Ex. 33. 53 Tr. Vol. 3, p. 147 (T. Champine) (Q. “Why not just pay the full amount of the invoice 27 here?” A. “Because I don’t have any data to justify those volumes”); see also Ex. 36; Ex. 49. 54 Ex. 35. 28 55 Id. 56 Ex. 37. 1 42. On August 3, 2018, Midstate sent Ahtna a revised Invoice 1931.57 2 The load count remained the same, but Midstate increased its estimated truckload 3 capacities to 129.5 SY per truck for topsoil and 124.24 SY per truckload for woody 4 5 debris. 6 43. Ahtna began receiving estimates of placed quantities from its 7 surveyors, who were using the methods described in the Specifications to measure the 8 9 amount of placed topsoil and woody debris.58 Ahtna noted that Midstate’s invoice 10 requested 21.4 percent more topsoil than measured in-place, and 25.67 percent more 11 woody debris than measured in-place. 12 44. To Ahtna, the variance between invoiced quantities and measured 13 14 quantities indicated that Midstate was sending topsoil in underloaded trucks and woody 15 debris that did not meet the required Specification (i.e., woody debris that was placed 16 but did not “count” toward payment).59 17 18 45. Ahtna’s Project Superintendent had observed underloaded trucks 19 of topsoil at the Project “all summer long,” confirming Ahtna’s theory explaining the 20 variance.60 Ahtna had not rejected these truckloads because the topsoil was needed to 21 22 move the Project forward and meet the Project deadlines, and it made no sense to reject 23 24 25

27 57 Ex. 45. 58 Ex. 46; Tr. Vol. 3, pp. 125–29 (T. Champine). 28 59 Ex. 46; Tr. Vol. 3, p. 172 (T. Champine). 60 Tr. Vol. 4, pp. 112–14 (D. McKoon). 1 usable topsoil when Midstate was at all times being paid by the in-place square-yard 2 and not the truckload.61 3 46. Although Midstate disputed that the trucks of topsoil were 4 5 underloaded, Ahtna was not routinely inspecting truckloads and thus had no 6 verification beyond individual reports from the jobsite. Because Midstate was being 7 paid for in-place square-yards, there was no system in place (by either Midstate or 8 9 Ahtna) to inspect the truckloads of topsoil prior to delivery and make sure that they 10 were full.62 11 47. At trial, Midstate presented testimony during a review of 14 12 photos of side-dump trucks, stating that each truck was carrying more than 27 CY of 13 14 topsoil.63 However, 14 photos is too small a sample from which to draw the conclusion 15 that Midstate consistently delivered more than 2,500 full loads throughout the Project. 16 48. Ahtna put Midstate on notice that it was observing underloaded 17 18 trucks of topsoil. Ahtna’s Project Manager had called Midstate’s president, John 19 Braham, earlier in the Project, and asserted that Ahtna personnel were complaining of 20 underloaded trucks.64 21 22 49. On the woody debris, Ahtna’s Project Superintendent also 23 observed delivered loads with less than four inches diameter at the stem and therefore 24 25

27 61 Tr. Vol. 4, pp. 115–16 (D. McKoon) (“I take all the topsoil that I could get, right?”). 62 Tr. Vol. 4, pp. 114–16 (D. McKoon). 28 63 Tr. Vol. 3, pp. 7–12; Ex. 64, 65, 66, 68, 69, 70, 74, 75, 76, 77, 78, 81, 86. 64 Tr. Vol. 2, pp. 183–84 (J. Braham). 1 at a density lower than required in the Project Specifications.65 Ahtna generally did 2 not reject these truckloads because the materials could be placed at the Project together 3 with the in-spec woody debris, saving the time and effort of either sorting the pile or 4 5 finding a way to return the entire pile of woody debris to the harvest area.66 Also, 6 Midstate acknowledged at trial that it did not have the capability to haul-away out-of- 7 spec debris rejected by Ahtna.67 8 9 50. Out-of-spec woody debris placed at the Project would not “count” 10 towards payment because it would not be captured in the measurements made by Ahtna 11 and NRCS.68 Ahtna believed that Midstate would ultimately receive payment only for 12 the in-spec material that it delivered because Midstate was at all times paid by the in- 13 14 place square-yard and not the truckload. 15 51. Midstate’s project manager accused Ahtna personnel of lying 16 about light loads of topsoil delivered to the Project.69 17 18 52. Midstate requested a meeting between its president, John Braham, 19 and Ahtna’s President, Dave O’Donnell, to resolve the dispute over estimated and 20 actual quantities of delivered materials.70 21 22 23 24

25 65 Tr. Vol. 4, pp. 123–27 (D. McKoon). 26 66 Tr. Vol. 4, pp. 118–19 (D. McKoon). 67 Tr. Vol. 2, p. 126 (D. Karr). 27 68 Tr. Vol. 4, p. 123 (D. McKoon) (“What happens when you go out there and measure it after it’s placed is you got – you got to place a lot of wood out there to make that area meet spec”). 28 69 Ex. 50; Tr. Vol. 2, p. 128 (D. Karr). 70 Ex. 51. 1 53. The two individuals met at the jobsite on August 13, 2018.71 2 Mr. Karr indicated to Mr. O’Donnell at this meeting that he was trying to avoid 3 financial hardship and looking for a payment of some kind in order to further fund his 4 5 work.72 Mr. Karr acknowledged that Midstate had botched its original bid.73 The 6 parties did not come to an agreement at the meeting regarding quantities. 7 54. Mr. Karr sent an email to Mr. O’Donnell on August 22, 2018, 8 9 asking for an agreement that the estimated average truckload capacity for Midstate’s 10 trucks was 27 CY (121.5 SY) for topsoil and 120 SY for woody debris.74 11 55. On August 22, Mr. O’Donnell wrote back: “Even though you 12 gave me a number in your bid which follows the bid schedule as well as the 13 14 specifications in which to measure against, I’ll agree to the truck load measurement of 15 120 sq./yd for woody debris and 27 CY on topsoil. With that being said, I also reserve 16 my right to reject any load that does not meet those volumes or does not meet project 17 18 specifications. This is final and I will not entertain any other discussion on this 19 matter.”75 20 56. Mr. O’Donnell explained at trial that by “I’ll agree to the 21 22 truckload measurement” he meant that Ahtna would agree to process interim payment 23 on the basis of the estimated measurements. 76 Midstate offered no evidence 24

26 71 Ex. 51; Tr. Vol. 4, pp. 57–64 (D. O’Donnell). 72 Tr. Vol. 4, pp. 60–62 (D. O’Donnell). 27 73 Tr. Vol. 4, p. 62 (D. O’Donnell). 74 Ex. 53. 28 75 Ex. 54. 76 Tr. Vol. 4, p. 65 (D. O’Donnell). 1 demonstrating that this was not Mr. O’Donnell’s intention at the time he made the 2 statement. 3 57. Mr. O’Donnell also explained at trial that by “this is final” he 4 5 meant that there would be no further discussion as to the estimated average capacities 6 of the trucks for purposes of processing interim payment to Midstate.77 In other words, 7 “final” did not refer to future payments on the basis of truckload measurements being 8 9 final payments rather than interim payments. Midstate offered no evidence 10 demonstrating that this was not Mr. O’Donnell’s intention at the time he made the 11 statement. 12 58. At trial, Ahtna presented expert testimony that the practice of 13 14 interim or “progress” payments following delivery of civil construction materials is 15 standard practice for similar projects in Alaska.78 The purpose of progress payments 16 and a final reconciliation is to address the uncertainty as to delivered quantities without 17 18 in-place measurements and at the same time the need for the subcontractor/supplier to 19 receive some form of payment in order to continue funding their operations.79 20 59. Mr. O’Donnell testified that he did not explicitly inform Mr. Karr 21 22 of the fact that invoices would be paid only as interim progress payments because 23 Mr. O’Donnell knew Mr. Karr personally and reasoned that a person with so much 24 25 26

27 77 Tr. Vol. 4, p. 66 (D. O’Donnell). 28 78 Tr. Vol. 4, p. 33 (M. Jens). 79 Id. 1 experience in Alaska civil construction would anticipate receipt of progress 2 payments.80 3 60. Mr. Champine, who reviewed invoices from Midstate throughout 4 5 2018, also did not inform Midstate that it would receive interim progress payments. 6 Mr. Champine also reasoned that the industry practice was so pervasive in Alaska civil 7 construction that it was unnecessary to inform Midstate.81 8 9 61. John Braham, president of Midstate, was personally expecting 10 that Midstate was receiving interim progress payments at least at some point during 11 performance of the work. He testified at trial that Midstate intended to later send a 12 final invoice on the basis of actual placed quantities but never did so.82 13 14 62. Prior to the August 22 agreement, Ahtna had observed that 15 Midstate’s truckloads were “trending up” and become more and more full.83 But after 16 August 22 these truckloads began to lighten.84 17 18 63. On August 25, 2018, Midstate informed Ahtna that it was now 19 delivering “marginal” woody debris with a diameter of approximately 3.5 inches.85 20 Midstate was running-out of debris that was four inches and above in diameter, so it 21 22 “took a chance” and delivered the marginal trees in hopes that the materials would 23 24

26 80 Tr. Vol. 4, pp. 75–82 (D. O’Donnell). 81 Tr. Vol. 3, pp. 166–67 (T. Champine). 27 82 Tr. Vol. 3, pp. 13–14 (J. Braham). 83 Tr. Vol. 4, pp. 62–63 (D. O’Donnell). 28 84 Tr. Vol. 4, pp. 70–71 (D. O’Donnell). 85 Ex. 55. 1 ultimately meet the Project Specifications.86 This woody debris could be placed by 2 Ahtna but would not be counted for purposes of payment when the woody debris was 3 measured.87 4 5 64. On August 29, 2018, Midstate delivered Invoice 1940, requesting 6 payment for 632 truckloads of topsoil and 1,148 truckloads of woody debris according 7 to the estimated capacities stipulated in the August 22 email.88 8 9 65. Invoice 1940 erroneously included in the stated count of 10 truckloads of topsoil some deliveries by an end-dump vehicle Midstate used, which 11 carried less than 27 CY.89 There was no evidence at trial of an agreement between the 12 parties as to the estimated average quantities of the end-dump vehicles. 13 14 66. On September 24, 2018, Midstate submitted Invoice 1951, 15 requesting payment for 444 truckloads of topsoil and 552 truckloads of woody debris 16 according to the estimated capacities stipulated in the August 22 email.90 17 18 67. On October 3, 2018, Midstate submitted Invoice 1953, requesting 19 payment for 310 truckloads of topsoil and 370 truckloads of woody debris according 20 to the estimated capacities stipulated in the August 22 email.91 21 22 23 24

26 86 Ex. 55. 87 Tr. Vol. 4, p. 123 (D. McKoon). 27 88 Ex. 56. 89 Ex. R, p. 9. 28 90 Ex. 84. 91 Ex. 89. 1 68. On October 8, 2018, Midstate submitted Invoice 1954, requesting 2 payment for 22,356 SY of topsoil and 39,960 SY of woody debris.92 This invoice did 3 not include a count of truckloads. 4 5 69. In October the 2018 season ended and the Project shut down for 6 the winter. 7 70. During the shutdown, Ahtna consulted with its surveyor to 8 9 determine the amount of topsoil and woody debris placed at the Project using the 10 system of measurement described in the Specifications.93 Ahtna did this in order to 11 prepare a pay application to NRCS summarizing all materials placed in 2018. 12 71. Using survey data, Ahtna calculated that it had placed 248,679 13 14 SY of topsoil and 336,199 SY of woody debris in 2018.94 Following a lengthy 15 approval process, NRCS paid Ahtna for these quantities according to the original unit 16 price agreement.95 17 18 72. By the end of 2018, Midstate had billed Ahtna for 301,418 SY of 19 topsoil and 417,960 SY of woody debris.96 That was a substantial variance between 20 what Midstate invoiced Ahtna for and what NRCS had approved for payment to 21 22 Ahtna.97 23 24

26 92 Ex. 93. 93 Tr. Vol. 3, p. 142 (T. Champine). 27 94 Ex. G, p. 29. 95 Tr. Vol. 3, pp. 140–42 (T. Champine); Tr. Vol. 4, pp. 75–76 (D. O’Donnell). 28 96 Ex. 102, pp. 1–3. 97 Ex. 102. 1 73. On November 2, 2018, Ahtna sent Midstate a letter informing 2 them of the variance between the quantity billed and the quantity placed.98 Ahtna 3 concluded that Midstate’s estimate of square yards on the basis of truckload capacities 4 5 had been highly inaccurate. 6 74. Ahtna further concluded that this inaccuracy was due to either: 7 (1) a failure of the parties to properly estimate the average capacity of each vehicle; 8 9 (2) the delivery of underloaded trucks of topsoil and woody debris that was out-of- 10 specification and therefore not counted toward payment; or (3) all of the above.99 11 75. Ahtna explained at trial that it waited until November 2, 2018, to 12 send a letter explaining actual placed quantities and corresponding payment to 13 14 Midstate because it was only at that point that Ahtna had completed its survey of placed 15 quantities, received certified approval from NRCS, and prepared a pay application for 16 reimbursement to Ahtna.100 17 18 76. Midstate presented no evidence at trial that Ahtna intentionally 19 waited until November 2, 2018, to send the above letter to Midstate in order to wait 20 until Midstate was done delivering materials for the 2018 season. 21 22 23 24 25 26

27 98 Id. 28 99 Id. 100 Tr. Vol. 4, pp. 75–76 (D. O’Donnell). 1 77. Ahtna agreed to make a final payment of $108,251.18 to “true-up” 2 for all materials delivered and measured in-place.101 Ahtna made the payment on 3 December 28, 2018.102 4 5 78. Midstate believed that it had been underpaid. On December 21, 6 2018, Midstate placed a Miller Act claim on Ahtna’s payment bond, in the amount of 7 $376,564.82.103 8 9 79. On March 15, 2019, Midstate requested information regarding its 10 continued performance in 2019.104 11 80. On March 29, 2019, Ahtna informed Midstate that it was 12 cancelling further deliveries from Midstate.105 Ahtna asserted that the delivery of 13 14 incomplete loads of topsoil and non-conforming loads of woody debris had resulted in 15 invoicing for materials never delivered, and Ahtna was therefore cancelling further 16 deliveries.106 17 18 81. Ahtna procured topsoil and woody debris for the Project in 2019 19 by self-performance.107 Ahtna avers that it enjoyed a savings in comparison to the 20 amounts charged by Midstate because Ahtna consistently procured complete loads of 21 22 topsoil and woody debris that always met the specified dimensions.108 23

24 101 Ex. 102, p. 5. 25 102 Ex. 106, p. 5. 26 103 Ex. 105, p. 24; see 41 U.S.C. § 3131 et seq. 104 Ex. 111. 27 105 Ex. 114. 106 Ex. 114, p. 6. 28 107 Tr. Vol. 4, p. 73 (D. O’Donnell). 108 Ex. 122; Tr. Vol. 4, pp. 22–23 (T. Champine). 1 82. Total invoices from Midstate and payments by Ahtna in 2018 are 2 as follows: 3 Invoice No Invoice Date Amount Date Paid Amount Paid Balance 4 1931 (v.3)109 7/27/2018 $ 626,958.63 09/25/2018 $ 626,958.63110 $ - 5 1940 (v.2)111 8/31/2018 $ 559,325.19 10/12/2018 $ 559,325.19112 $ - 6 1951113 9/24/2018 $ 313,562.52 10/19/2018 $ 313,562.52114 $ - 1953115 10/3/2018 $ 214,122.30 12/28/2018 $ 108,251.18116 $ 105,871.12 7 1954117 10/8/2018 $ 162,468.72 11/9/2018 $ 42,000.00118 $ 120,468.72 8 $ 1,876,437.36 $ 1,608,097.52 $ 253,079.56

9 83. Midstate struggled to demonstrate the actual amount outstanding 10 and the accuracy of its own invoices. For example, Midstate has acknowledged that 11 Invoice 1931 (v.3) overbilled Ahtna by $7,332.75 because Midstate incorrectly 12 13 invoiced for topsoil that was actually woody debris, and incorrectly invoiced for topsoil 14 at 27 CY per truckload when Midstate had used an end-dump truck carrying just 12 15 CY per truckload.119 Midstate made similar mistakes in Invoice 1940, overbilling 16 17 Ahtna $7,250.83.120 18 84. At trial Mr. Karr could not explain why Invoice 1931 billed Ahtna 19 for 1,080 loads of woody debris and yet his analysis of truck tickets showed only 1,051 20 21

22 109 Ex. 61. 23 110 Ex. 106, p. 2. 111 Ex. 63. 24 112 Ex. 106, p. 3. 113 Ex. 84. 25 114 Ex. 106, p. 3. 26 115 Ex. 89. 116 Ex. 106, p. 5. 27 117 Ex. 93. 118 Ex. 106, p. 4. 28 119 Ex. 170. 120 Ex. 170, p. 2. 1 loads.121 Mr. Braham admitted that Midstate had billed Ahtna for materials it never 2 delivered.122 3 85. Midstate’s expert economist attempted to change his damages 4 5 calculus in the middle of trial to correct the overbilling.123 However, he also 6 acknowledged that the records generally used to formulate Misdate’s invoices “do not 7 agree with each other.”124 8 9 86. Midstate continued invoicing Ahtna even after the parties’ 10 contract had terminated. On February 5, 2020, Midstate informed Ahtna that in the 11 course of litigation it had “discovered” truck tickets for 84 loads of topsoil that were 12 never invoiced.125 Despite the cancellation of the parties’ contract one year prior, 13 14 Midstate demanded payment within 30 days. 15 87. Rather than wait 30 days for payment, Midstate asked this Court 16 two days later for leave to amend its Complaint and include the balance for the 17 18 “discovered” truck tickets in its damages quantum.126 Midstate was now suing Ahtna 19 for a balance not yet due. 20 21 22 23 24

25 121 Tr. Vol. 2, pp. 131-135. 26 122 Tr. Vol. 3, p. 27 (J. Braham) (Q. “So Ahtna paid for woody debris that it never got, right?” A. “Yes”). 27 123 Ex. 171; Tr. Vol. 3, p. 75 (G. Moorehead). 124 Tr. Vol. 3, p. 82. 28 125 Ex. 138. 126 See Motion for Relief from Deadline to File Amended Complaint, Docket 31. 1 III. CONCLUSIONS OF LAW 2 Breach of Contract 3 1. The parties do not dispute the validity of the Purchase Order or 4 the enforceability of the stipulated agreement regarding estimated truckload quantities, 5 6 memorialized in the August 22, 2018 email from Mr. O’Donnell to Mr. Karr (hereafter 7 the “August 22 Email”). 8 2. A breach of contract is a failure, without legal excuse, to perform 9 10 any promise which forms the whole or part of a contract.127 Midstate asserts that Ahtna 11 breached the parties’ contract twice: first when it failed to pay Midstate’s invoices and 12 again when it canceled further deliveries. 13 14 3. Because the parties’ agreement was an agreement for the purchase 15 of goods, the Uniform Commercial Code (“UCC”), as incorporated in Alaska Statutes, 16 governs the construction and enforcement of the agreement.128 17 4. The parties present competing interpretations of both the original 18 19 Purchase Order and the agreement memorialized in the August 22 Email. This Court 20 interprets both agreements by “ascertain[ing] and giv[ing] effect to the reasonable 21 intentions of the contracting parties.”129 22 23 24

26 127 Kimp v. Fire Lake Plaza II, LLC, 484 P.3d 80, 89–90 (Alaska 2021) (quoting 23 WILLISTON ON CONTRACTS § 63:1 (4th ed. 2018)). 27 128 See AS 45.02.101 et seq. 129 W. Pioneer, Inc. v. Harbor Enters., Inc., 818 P.2d 654, 656 (Alaska 1991); see also Weiner 28 v. Burr, Pease & Kurtz, P.C., 221 P.3d 1 (Alaska 2009) (applying rule of construction to a disputed modification to an existing agreement). 1 5. The court may attempt to ascertain the intent of the contracting 2 parties by examining “language of the contract as a whole, the objects sought to be 3 accomplished by the contract, the circumstances surrounding its adoption, and case 4 5 law interpreting its provisions.”130 The relevant extrinsic evidence examined by the 6 court is the course of performance by the parties, the course of dealing between the 7 parties, and the usage of trade.131 8 9 6. The parties do not dispute that the Purchase Order was a unit price 10 agreement to deliver quantities of topsoil and woody debris at a square yard unit price. 11 The parties do dispute whether the Purchase Order obligated them to later agree to a 12 stipulated quantity of each material carried by each truck for purposes of payment. 13 14 7. However, it is not necessary for the Court to decide this issue. 15 Ahtna did later agree to pay by the truckload on the basis of a stipulated quantity. The 16 August 22 Email offered, and Midstate accepted, a modification to the Purchase Order 17 18 that stipulated “the truckload measurement of 120 sq./yd. for woody debris and 27 cy 19 on topsoil.”132 Five times in 2018 Midstate invoiced for square yards of delivered 20 materials by multiplying its recorded truckloads by these stipulated truckload 21 22 measurements, and Ahtna paid three of these invoices in full. 23 8. The court must decide whether the August 22 Email was an offer 24 to make “interim” payments on the basis of stipulated truckload measurements, with 25 26

27 130 Monzigo v. Alaska Air Grp., Inc., 112 P.3d 655, 660 (Alaska 2005). 28 131 AS 45.02.202. 132 Ex. 54. 1 final payment delivered to Midstate on the basis of the actual measured quantity of 2 square yards of material delivered by Midstate. 3 9. The plain language of the August 22 Email does not lend itself to 4 5 either party’s interpretation. On the one hand, there is no mention of “interim” or 6 “progress” payments, so the plain meaning does not clearly warrant that interpretation. 7 On the other hand, the August 22 Email only agrees to a stipulated “truck load 8 9 measurement,” and does not state whether such measurement is a unit price basis for 10 payment that replaces the original “square yard” basis for payment stated in the 11 Purchase Order. 12 10. The August 22 Email states: “This is final and I will not entertain 13 14 any other discussion on the matter.”133 Mr. O’Donnell explained at trial that “this is 15 final” did not mean that all further payments to Midstate would be final, but rather that 16 there would be no further discussion as to estimated truckload measurements.134 A 17 18 plain reading of the August 22 Email, which makes no reference whatsoever to 19 payments, supports Mr. O’Donnell’s testimony. 20 11. Even if the plain language of the August 22 Email were sufficient 21 22 to show the intent of the contracting parties, “[i]t is not necessary to find that an 23 agreement is ambiguous before looking to extrinsic evidence as an aid to determine 24 25 26 27

28 133 Id. 134 Tr. Vol. 4, p. 66 (D. O’Donnell). 1 what it means.”135 The Court finds that extrinsic evidence is of assistance to 2 determining the intent of the contracting parties. 3 12. The course of performance of the parties provides almost no 4 5 evidence in support of either party’s interpretation of the agreement. Neither side 6 produced evidence at trial showing that either party had indicated to the other in the 7 course of performance whether or not payments processed by Ahtna after August 22, 8 9 2018, were “interim” only. 10 13. However, there was evidence at trial that in the course of 11 performance Midstate delivered truckloads of topsoil that were not fully loaded and 12 truckloads of woody debris that did not meet specifications. Midstate’s performance 13 14 provides some circumstantial evidence that it was expecting payment by the truckload 15 only and not on the basis of in-place materials, because a reasonable contractor 16 expecting to be paid on the basis of in-place materials would use care to deliver fully 17 18 loaded trucks with materials that conformed to the specifications. 19 14. Turning to the course of dealings between the parties, there is 20 evidence in support of Ahtna’s interpretation. Mr. Karr acknowledged at trial that he 21 22 was planning on receiving an interim payment in order to “get some money in the 23 bank.”136 24 25 26 135 Estate of Polushkin ex rel. Polushkin v. Maw, 170 P.3d 162, 167 (Alaska 2007); see also 27 AS 45.02.202. 136 Tr. Vol. 2, p. 109 (D. Karr); Tr. Vol. 2, p. 5 (D. Karr); see also Ex. R, p. 9 (“Midstate sent 28 this invoice with conservative quantities, so it could take an approved invoice to the bank to be used as borrowing collateral.”). 1 15. Also, Midstate’s president, John Braham, delivered a letter to 2 Ahtna on July 22, 2018, stating several times that Midstate’s invoices were “pay 3 estimates” rather than describing them as final.137 At trial, Mr. Braham agreed the 4 5 invoices sent by Midstate were a request for interim payment, with another invoice to 6 follow later based on “what was actually hauled by the trucks.”138 7 16. Turning to evidence of the usage of trade there is stronger 8 9 evidence in support of Ahtna’s interpretation. Ahtna’s President testified that interim 10 payments followed by a final payment on the basis of actual quantities delivered is 11 industry practice in agreements for the delivery of unit price materials to a civil 12 construction project.139 Ahtna’s expert witness, Mike Jens, testified that on the basis 13 14 of more than 50 years working in civil construction projects it was his observation that 15 the “interim payments” approach is standard industry practice.140 Midstate provided 16 no testimony to the contrary at trial. 17 18 17. On balance, the extrinsic evidence supports Ahtna’s interpretation 19 of the August 22 Email, which is that Ahtna offered, and Midstate accepted, interim 20 payments on the basis of estimated truckload quantities and a reconciliation of these 21 22 interim payments with the actual quantities of materials measured-in place once Ahtna 23 made these measurements. 24 25

27 137 Ex. E. 138 Tr. Vol. 3, p. 14 (J. Braham). 28 139 Tr. Vol. 4, pp. 66–69 (D. O’Donnell). 140 Tr. Vol. 4, p. 33 (M. Jens). 1 18. The next issue is whether Midstate was given a final payment on 2 the basis of in-place quantities, pursuant to the parties’ agreement. Ahtna made a final 3 payment of $108,251.18 to Midstate for quantities delivered.141 4 5 19. The UCC obligates Ahtna to “pay at the contract rate for any 6 goods accepted.”142 As explained above, the “contract rate” was at all times $2.62 per 7 SY for topsoil and $2.60 per SY for woody debris. 8 9 20. NRCS paid Ahtna for 248,679 SY of topsoil and 336,199 SY of 10 woody debris.143 Ahtna paid Midstate for 248,679 SY of topsoil and 336,215 SY of 11 woody debris.144 Ahtna fully compensated Midstate for calculated in-place quantities, 12 with overpayment to Midstate for 16 SY of woody debris. 13 14 21. Midstate argues in the alternative that, even if Midstate was to be 15 paid according to “in-place” measurements, Ahtna reimbursed it for an insufficient 16 number of square yards. Under Alaska law, Midstate is entitled to payment only for 17 18 goods actually delivered and accepted.145 19 22. Turning first to topsoil, Midstate argues that Ahtna placed the 20 topsoil too thick on the Project grade, resulting in underpayment to Ahtna and 21 22 consequently Midstate after surveyors calculated the total square yardage. 23 24 25 26 141 Ex. 102. 27 142 AS 45.02.607(a). 143 Ex. G, p. 29. 28 144 Ex. 102. 145 AS 45.02.507(a); AS 45.02.601. 1 23. Midstate asserts that the Specifications originally assumed an 2 eight-inch loose lift cut by the dozer immediately prior to track-walking, but Ahtna 3 and NRCS changed the assumption to a 6.5-inch compacted lift after track-walking. 4 5 Midstate asserts that the change did not correctly account for actual topsoil compaction, 6 and the result was Ahtna placing the topsoil too thick, thereby skewing the final 7 measurement for payment to less than the actual placed square yards. 8 9 24. There is no evidence of a change in the Specifications, which 10 would need to be in writing in order to be legally binding. Ahtna established at trial 11 that it was paid on the basis of an eight-inch loose lift thickness at all times, 12 notwithstanding an informal agreement as to the effect of track-walking on the loose 13 14 topsoil. 15 25. Ahtna demonstrated, through both expert testimony and the 16 testimony of onsite personnel, that Ahtna maintained a consistent eight-inch loose lift 17 18 thickness by maintaining a blade on its dozer that compensated for changes in the 19 subgrade via GPS technology.146 20 26. Midstate’s evidence to the contrary did not include expert opinion 21 22 of any kind. It primarily consisted of daily reports prepared by Mr. Karr to Ahtna, 23 stating that he observed varying topsoil thickness of seven to nine inches during the 24 work.147 Mr. Karr was under the mistaken impression Ahtna and NRCS had agreed to 25 26 27

28 146 Tr. Vol. 4, p. 36 (M. Jens) (“No, I didn’t see that they had put it in too thick”). 147 Ex. 91, pp. 81–87. 1 measurement for payment on the basis of a compacted lift, so these anecdotal findings 2 do not go to the actual issue, which is whether the blade of the dozer maintained a 3 consistent loose lift thickness. Midstate offered no evidence at trial regarding the 4 5 operation of the dozer. 6 27. Midstate has not proven that Ahtna placed topsoil in a way that 7 resulted in inaccurate in-place measurements at the conclusion of the 2018 season. 8 9 28. Midstate also has not proved that the methods used by Ahtna to 10 measure in-place topsoil—prescribed by NRCS and not at Ahtna’s discretion—were 11 inaccurate. 12 29. Turning next to woody debris, Midstate alleges that the 13 14 measurements were inaccurate because Ahtna had placed these materials too thick, 15 resulting in underpayment for actual quantities used. 16 30. Midstate’s evidence consisted primarily of some photographs 17 18 taken by Mr. Karr after Ahtna had cancelled further deliveries by Midstate, allegedly 19 showing materials placed too thick.148 Midstate presented no actual measurements of 20 placed materials at trial. It also did not challenge the efficacy of the measurement-for- 21 22 payment method described in the Specifications. It also did not rebut expert testimony 23 from Ahtna’s expert regarding Ahtna’s placement methods and the accuracy of its 24 measurements.149 25 26 27

28 148 Tr. Vol. 2, pp. 48–61 (D. Karr). 149 Tr. Vol. 4, p. 38 (M. Jens). 1 31. Ahtna did acknowledge at trial placing woody debris very thick 2 at times. It did so because Midstate had delivered “marginal” trees that may or may 3 not meet the requirement of four inches in diameter. At the time of the Project, 4 5 Midstate did not dispute it was delivering “marginal” woody debris.150 6 32. Ahtna attempted to use the marginal woody debris, placing the 7 materials at whatever thickness appeared to be necessary in order to meet the 8 9 requirements of the Specifications. According to Ahtna, any deficiency in the woody 10 debris that resulted in placement of a large quantity of materials was Midstate’s fault. 11 Ahtna’s explanation is persuasive. 12 33. Midstate has not proven that Ahtna placed woody debris in a way 13 14 that resulted in inaccurate in-place measurements at the conclusion of the 2018 season. 15 34. Midstate also has not proved that the methods used by Ahtna to 16 measure in-place woody debris—prescribed by NRCS and not at Ahtna’s discretion— 17 18 were inaccurate. 19 35. Ahtna’s theory as to the reason for Midstate invoicing in excess 20 of placed materials is that Midstate delivered underloaded trucks of topsoil and out-of- 21 22 specification woody debris. This theory is persuasive. It is supported by the evidence 23 of light and nonconforming loads, summarized in the above findings of fact. 24 25 26 27

28 150 Ex. K. 1 36. Midstate has not demonstrated that the quantities used by Ahtna 2 to pay Midstate were inaccurate. Ahtna did not breach the parties’ contract when it 3 delivered final payment for measured square yards. 4 5 37. Midstate argues in the alternative that Ahtna was contractually 6 obligated to pay for the truckloads it delivered, regardless of the actual quantity of 7 conforming materials later measured in-place, because Ahtna accepted those 8 9 truckloads, and rejected almost no loads over the course of the Project. 10 38. A buyer’s obligation to pay for goods is triggered by acceptance 11 of the goods.151 12 39. As a buyer of goods, Ahtna had the right to inspect the topsoil and 13 14 woody debris “before payment or acceptance” and “at a reasonable place and time and 15 in a reasonable manner” following tender of materials by Midstate.152 Tender of 16 delivery took place when Midstate delivered the materials to the jobsite and Ahtna 17 18 exercised control over the materials. Ahtna inspected the topsoil and woody debris 19 upon tender, and accepted almost all of the materials following inspection. 20 40. However, the inspection of topsoil conducted by Ahtna at the 21 22 jobsite did not encompass the quantity of topsoil delivered, only whether or not the 23 topsoil contained excessive organic material.153 The requirement of the UCC that the 24 25 26

27 151 AS 45.02.607(a). 28 152 AS 45.02.513(a). 153 Tr. Vol. 4, p. 110 (D. McKoon). 1 quality of goods conform to the contract applies to the quantity of the goods 2 delivered.154 3 41. Ahtna demonstrated at trial that an inspection of the actual 4 5 number of square yards delivered could not occur until Ahtna spread the topsoil onto 6 the grade and measured the dimensions. It was also unreasonable for Ahtna to send 7 back what appeared to be an underloaded truck or small pile—Ahtna did not want to 8 9 reject perfectly-good topsoil.155 10 42. Midstate presented no evidence at trial that Ahtna could have or 11 should have measured the square yards of topsoil delivered before spreading it in order 12 to confirm the number of square yards delivered. 13 14 43. Similarly, the inspection of woody debris immediately after 15 delivery did not evaluate how much of the woody debris inside the pile contained 16 “marginal” or out-of-spec materials—only that some trees in the pile were out-of- 17 18 specification.156 19 44. Ahtna did not measure the actual quantity of topsoil or in-spec 20 woody debris delivered until after the materials were delivered, spread, and measured 21 22 for payment by both Ahtna and NRCS, and Ahtna and NRCS conferred regarding an 23 agreement on the quantities and concomitant payment to Ahtna. Ahtna’s President 24 25 26

27 154 See, e.g., Pomerantz Paper Corp. v. New Cmty. Corp., 25 A.3d 221 (N.J. 2011). 28 155 Tr. Vol. 4, pp. 115–16 (D. McKoon). 156 Tr. Vol. 4, pp. 118–19 (D. McKoon). 1 explained at trial that final certification of placed materials by NRCS could take 2 months after performance of the work.157 3 45. It would be reasonable to expect that Midstate, which had 4 5 reviewed the Specifications and itself previously delivered topsoil and woody debris 6 for NRCS, would realize the difficulty of measuring actual quantities for payment upon 7 initial acceptance of a truckload.158 8 9 46. A buyer’s obligation to pay for goods is triggered by acceptance 10 of the goods. However, a buyer may revoke acceptance prior to making payment if a 11 “lot or commercial unit” does not conform to the requirements of the agreement to 12 such extent that it “substantially impairs its value to the buyer,” provided that the 13 14 conformity has not been “seasonably cured” by the seller or the buyer’s initial 15 acceptance of the goods was “reasonably induced either by the difficulty of discovery 16 before acceptance or by the seller’s assurances.”159 17 18 47. Where a defect substantially impairs the value to the buyer, but 19 that defect cannot be determined upon initial acceptance of the goods, a subsequent 20 discovery of the defect and revocation of acceptance is timely.160 21 22

23 157 Tr. Vol. 4, p. 74 (D. O’Donnell). 24 158 Tr. Vol. 1, p. 3 (D. Karr). 159 AS 45.02.608; see also Sumner v. Fel-Air, Inc., 680 P.2d 1109, 1116 (Alaska 1984) (failure 25 to deliver title to airplane substantially impaired goods delivered, justifying revocation of acceptance). 26 160 See S&R Metals, Inc. v. C. Itoh & Co. (Am.), Inc., 859 F.2d 814, 817 (9th Cir. 1988) (defect in 14-gauge steel could only be discovered following delivery and initial acceptance, making 27 revocation of acceptance after discovery permissible under the UCC); Exim Brickell LLC v. PDVSA Servs., Inc., 516 Fed. Appx. 742, 754 (11th Cir. 2013) (revocation of acceptance of some lots of 28 powdered milk was timely where buyer demonstrated the difficulty of identifying the defect at the time of the initial acceptance). 1 48. The November 2, 2018 letter from Ahtna to Midstate revoked 2 acceptance of some of the topsoil and woody debris placed by Ahtna on grounds that 3 Midstate had overstated the amount of materials delivered. 4 5 49. The revocation of acceptance was both reasonable and timely. 6 Ahtna demonstrated at trial the difficulty of discovery of the actual quantities delivered 7 by Midstate and accepted by NRCS at the time of the initial acceptance of deliveries. 8 9 50. There was no evidence at trial that Midstate attempted to cure the 10 defect in quantities identified in the November 2, 2018 letter. 11 51. A remaining issue is whether the difference between the amount 12 invoiced and the amount measured in-place was a nonconformity that “substantially 13 14 impaired” the value of the accepted goods, permitting revocation of prior acceptance. 15 The existence of “substantial impairment” (of either a single installment or the whole 16 contract) depends on the facts and circumstances of the particular case.161 17 18 52. The November 2, 2018 letter observed an overage of 121 percent 19 for topsoil and 124.31 percent for woody debris.162 That is a substantial overage, and 20 sufficient to substantially impair the value (asserted by Midstate) of the accepted goods. 21 22 53. Midstate has not demonstrated that that Ahtna untimely revoked 23 acceptance of incorrect quantities of topsoil and woody debris. 24 25 26 161 See Midwest Mobile Diagnostic Imaging, L.L.C. v. Dynamics Corp. of Am., 965 F. Supp. 27 1003, 1013 (W.D. Mich. 1997), aff’d, 165 F.3d 27 (6th Cir. 1998); see also GNP Commodities, Inc. v. Walsh Heffernan Co., 420 N.E.2d 659, 669 (Ill. App. Ct. 1981). 28 162 Topsoil: 248,679/301,418 = 121.21 x 100; Woody Debris: 336,215/417,960 = 124.31 x 100. 1 Wrongful Termination 2 54. Midstate argues that Ahtna wrongfully repudiated its agreement 3 with Midstate by cancelling further deliveries of topsoil and woody debris before work 4 resumed in the 2019 construction season. 5 6 55. Whether or not a cancellation of delivery is a breach of contract 7 under the UCC depends in part on the nature of the contract. An “installment contract” 8 is a contract that “requires or authorizes the delivery of goods in separate lots to be 9 10 separately accepted.”163 11 56. The parties’ agreement was an installment contract because it 12 contemplated delivery of topsoil and woody debris by the truckload. 13 14 57. Ahtna was permitted to reject installments of material that did not 15 conform to either the quantity or the quality agreed to by the parties, but only to the 16 extent that the defect identified by Ahtna “substantially impairs the value of that 17 installment.”164 18 19 58. Moreover, “[i]f nonconformity or default with respect to one or 20 more installments substantially impairs the value of the whole contract, there is a 21 breach of the whole.”165 22 23 24 25 26

27 163 AS 45.02.612(a). 28 164 See AS 45.02.612(b). 165 AS 45.06.612(c). 1 59. Mr. O’Donnell testified at trial that the reason Ahtna canceled 2 further deliveries was: “We had materials being delivered or asked to be paid for that 3 weren’t delivered.”166 4 5 60. The evidence at trial affirmed the accuracy of Mr. O’Donnell’s 6 statement. For example, both Mr. Karr and Mr. Braham admitted that Ahtna paid 7 Invoice 1931 even though it billed Ahtna for truckloads of woody debris never 8 9 delivered. Midstate acknowledged other instances of billing for nonexistent 10 truckloads.167 11 61. Again, the test of “substantial impairment” is subjective, and it is 12 important to distinguish between a mere miscommunication and conduct by a seller 13 14 that causes a breakdown in the parties’ relationship.168 This situation was the latter. 15 For example, John Braham admitted that when Ted Champine called him to discuss 16 the problem of light loads and invoicing for undelivered truckloads, Mr. Braham 17 18 “slammed the phone down, hung up on him.”169 Mr. O’Donnell explained that reports 19 of this kind of incident informed Ahtna’s decision to cancel further deliveries.170 20 62. Ahtna also based its decision on the variance between what 21 22 Midstate billed Ahtna and what Ahtna measured in-place.171 Ahtna observed an 23 24

25 166 Tr. Vol. 4, p. 72. 26 167 Tr. Vol. 3, pp. 14–15 (J. Braham). 168 See Midwest Mobile Diagnostic Imaging, L.L.C., 965 F. Supp. 1003 considering the 27 cumulative effect of the breaching party’s performance based upon all the circumstances). 169 Tr. Vol. 2, p. 184. 28 170 Tr. Vol. 4, pp. 72–73 (D. O’Donnell). 171 Ex. 114. 1 overage of 121 percent for topsoil and 124.31 percent for woody debris. The overage 2 confirmed reports from Mr. McKoon that Ahtna was delivering light loads of topsoil 3 and defective woody debris that NRCS did not count toward payment. An overage of 4 5 that degree substantially impaired the value (asserted by Midstate) of the whole 6 contract. 7 63. There was no evidence at trial that Midstate attempted to cure the 8 9 defect in quantities identified in the November 2, 2018 letter. Ahtna properly cancelled 10 further deliveries by Midstate. 11 64. Finally, Midstate has asserted that Ahtna did not timely respond 12 to a March 15, 2019 letter requesting assurance that Midstate would continue to 13 14 provide materials to the Project during the 2019 season.172 Ahtna responded to the 15 letter on March 29, 2019, explaining that it was canceling further deliveries by 16 Midstate.173 17 18 65. Whether Ahtna timely delivered notice of the cancelation 19 “depends on the nature, purpose, and circumstances of the action.”174 The Court finds 20 that a period of 14 days between the request for assurance and the notification of 21 22 cancellation was not an unreasonably long period of time under the circumstances. 23 24 25 26

27 172 See Amended Complaint [Docket 57], ¶ 17. 28 173 Ex. 114. 174 AS 45.01.215(a). 1 Quantum Meruit and Promissory Estoppel 2 66. Midstate has pled both quantum meruit and promissory 3 estoppel.175 Under both legal theories a party may assert that, although there is no 4 express contract between the parties, there is at least an implied contract because to 5 6 find otherwise would unjustly enrich the defendant.176 The remedy following success 7 of either of these claims is restitution.177 8 67. However, under Alaska law, where a party has acknowledged that 9 10 a valid, binding contract between the parties exists, that party does not have a prima 11 facie claim of promissory estoppel and therefore may not seek a remedy of quantum 12 meruit.178 13 14 68. There is no dispute that the parties had a valid and binding 15 contract. Midstate may not recover under either the theory of quantum meruit or the 16 theory of promissory estoppel. 17 18 Unfair Trade Practices 19 69. Midstate has alleged: “Ahtna’s agreement and subsequent 20 August 22, 2018 email confirming the same was made solely to induce Midstate’s 21 continued performance through the winter shutdown. Ahtna never intended to meet 22 23

24 175 See Amended Complaint [Docket 57], ¶¶ 27–32. 25 176 See Alaska Sales and Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska 2004); see also Brady 26 v. State, 965 P.2d 1, 13 n.38 (Alaska 1998). 177 See Alaska Sales and Serv., Inc., 735 P.2d at 746. 27 178 See Soules v. Ramstack, 95 P.3d 933, 940 (Alaska 2004); see also Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 408 (9th Cir. 1992); see also 30 Williston on Contracts 28 § 77:121 (4th ed. 2021) (“Where a benefit is conferred within the framework of a valid and enforceable contract, the recipient’s liability to make compensation is fixed exclusively by the contract.”). 1 the terms of the agreement it made with Midstate or its August 22, 2018 email.”179 2 Midstate further argues that Ahtna’s “deception” was a violation of Alaska’s Unfair 3 Trade Practices and Consumer Protection Act (“UTPA”).180 4 5 70. Alaska Statute 45.50.471(b) identifies 57 specific unlawful acts 6 or practices. This Court has previously observed that the only provision of the UTPA 7 upon which Midstate can potentially demonstrate a violation is AS 45.50.471(a).181 8 9 This provision generally prohibits unfair or deceptive acts or practices in the conduct 10 of trade or commerce.182 11 71. Whether an act is “unfair” is determined using a “multi-factored 12 approach,” which considers: “(1) whether the practice, without necessarily having 13 14 been previously considered unlawful, offends public policy, as it has been established 15 by statutes, the common law, or otherwise—whether, in other words, it is within at 16 least the penumbra of some common-law, statutory, or other established concept of 17 18 unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; and 19 (3) whether it causes substantial injury to consumers.”183 20 72. Ahtna’s offer to stipulate to estimated truckload quantities, 21 22 presented in Mr. O’Donnell’s August 22 Email, was not an unfair act. Midstate has 23 not demonstrated that the offer offended public policy. Midstate also has not 24

26 179 Amended Complaint [Docket 57], ¶ 35. 180 Amended Complaint [Docket 57], ¶ 37; AS 45.50.010 et seq. 27 181 See Order Re: Motions at Dockets 64, 74, 92 [Docket 118], p. 18. 182 See also State v. O’Neill Investigators, Inc., 609 P.2d 520, 534 (Alaska 1980). 28 183 Merdes & Merdes, P.C. v. Leisnoi, Inc., 410 P.3d 398, 412 (Alaska 2017) (quoting Borgen v. A &M Motors, Inc., 273 P.3d 575, 590 (Alaska 2012)). 1 demonstrated that the offer was immoral, oppressive, or unscrupulous. It was not an 2 act that caused or would cause substantial injury to consumers. 3 73. Moreover, Midstate is seeking enforcement of the terms described 4 5 in the August 22 Email. Midstate cannot both seek enforcement of the offered terms 6 and at the same time argue that the act of offering those terms was “unfair.” 7 74. The remaining issue is whether the August Email was deceptive. 8 9 An act or practice is deceptive if it has “the capacity or tendency to deceive.”184 10 75. Whether an act is deceptive is fact-sensitive. At trial each party 11 demonstrated it was a sophisticated business entity with substantial experience in the 12 civil construction industry in Alaska. The Alaska Supreme Court has noted that an 13 14 unfair trade practice is an “inequitable assertion of power or position” vis-à-vis the 15 contracting parties.185 It is therefore more difficult for Midstate to demonstrate that 16 the email had a capacity or tendency to deceive than it would be if Midstate were not 17 18 in a position equal to that of Ahtna. 19 76. This Court has previously acknowledged that the UTPA prohibits 20 unfair or deceptive acts, but not unfair or deceptive intentions.186 The inquiry is 21 22 23 24 25 26 184 Borgen, 273 P.3d at 589; see also Kenai Chrysler Center, Inc. v. Denison, 167 P.3d 1240, 27 1255 (Alaska 2007). 185 Kenai Chrysler Center, Inc., 167 P.3d at 1256 (quoting S. Atl. Ltd. P’ship of Tenn., L.P. v. 28 Riese, 284 F.3d 518, 539–40 (4th Cir. 2002)). 186 See Order Re: Motions at Dockets 64, 74, 92 [Docket 118]. 1 whether the August 22 Email was “capable of being interpreted [by Midstate] in a 2 misleading way,” regardless of what Ahtna intended at the time it sent it.187 3 77. Midstate has not carried the burden of proving that the August 22 4 5 Email, standing alone, was capable of being interpreted in a misleading way. Midstate 6 has only alleged that Ahtna “never intended to meet the terms of the agreement it made 7 with Midstate or its August 22, 2018 email.”188 Again, Ahtna’s intentions do not 8 9 potentially constitute acts or practices in violation of the UTPA.189 10 78. Turning to the language of the August 22 Email itself, the only 11 specific language therein which Midstate identifies as capable of being interpreted in 12 a misleading way are the words “this is final” at the conclusion of the email.190 13 14 Midstate contends this language could be interpreted to mean that all future payments 15 would be “final” and not interim. 16 79. However, that is not what the email says. It says that the offer to 17 18 “agree to the truckload measurement” is final, and makes no mention of payment at 19 all.191 Also, the parties presented extensive evidence of an acrimonious controversy 20 between them regarding potential truckload measurements prior to the email, so it is 21 22 23

24 187 Kenai Chrysler Center, Inc., 167 P.3d at 1255 (quoting State v. O’Neill Investigations, Inc., 609 P.2d 520, 535 (Alaska 1980)). 25 188 Amended Complaint [Docket 57], ¶ 35. 26 189 Even if Ahtna’s intentions as to whether it would pay Midstate at the time of the August 22 Email were relevant, the evidence in the record is that Ahtna not only intended to pay Midstate 27 according to the terms but actually did pay Midstate exactly according to the terms, at least prior to the December 2018 final payment. See Ex. 106, pp. 2–3. 28 190 Ex. 54. 191 Ex. 54. 1 reasonable to conclude that Mr. O’Donnell said “this is final” to indicate that he did 2 not wish to discuss the matter further. That was his testimony at trial.192 3 80. In addition to not demonstrating that the email was objectively 4 5 misleading, Midstate has not demonstrated that Mr. O’Donnell intended to mislead 6 anyone in his email. There is no testimony proving insincerity on Mr. O’Donnell’s 7 part. 8 9 81. The closest Midstate can get to proof is an email sent by 10 Mr. Champine to Midstate on August 10, 2018, identifying a variance between 11 quantities placed versus stated truckloads.193 Midstate says that Mr. Champine’s 12 knowledge of the variance shows Ahtna’s motivation to pay by the truckload to induce 13 14 continued performance and then “short-pay” after the season ended, knowing it would 15 spend less in the end. However: (1) there are no communications between 16 Mr. Champine and Mr. O’Donnell on this issue, and Mr. O’Donnell is the one that sent 17 18 the “inducing” email; and (2) Mr. Champine shared the information with Midstate—it 19 was hardly a conspiracy. If anything, it put Midstate on notice to expect a “true-up.” 20 82. Midstate also has not demonstrated that it was actually misled by 21 22 the email. Midstate argues that it was induced into “continued performance.” 23 However, Midstate’s project manager, Mr. Karr, testified that Midstate never 24 contemplated terminating its performance in the event that Ahtna did not deliver 25 26

27 192 Tr. Vol. 4, p. 66 (D. O’Donnell) (“I don’t want to go next week and go through this again, 28 or the following week and go through it again.”) 193 Ex. 46. 1 acceptable terms to Midstate.194 If Midstate were in fact contemplating terminating its 2 performance, there is no evidence that it ever communicated this fact to Ahtna prior to 3 the August 22 Email, thereby providing Ahtna a motivation to “induce” continued 4 5 performance. 6 83. There also is an inconsistency in Midstate’s argument that it was 7 fraudulently induced into performance. Midstate has premised its claim of breach of 8 9 contract on the plain language and legal enforceability of the August 22 Email. But a 10 party may not try to recover a remedy on the basis of a contract and at the same time 11 try to recover a separate remedy on grounds that it was fraudulently induced into 12 agreeing with the terms of that same contract.195 13 14 84. Midstate has not demonstrated that delivery of the August 22 15 Email was an act or practice with the capacity or tendency to deceive. Ahtna did not 16 violate the UTPA. 17 18 Midstate Damages 19 85. Midstate has alleged two categories of damages: (1) unpaid 20 invoices; and (2) lost profit and overhead for work it would have performed in 2019 21 22 but for cancellation of further deliveries by Ahtna.196 23 24

25 194 Tr. Vol. 2, pp. 127–28. 26 195 The election-of-remedies doctrine “refers to situations where an individual pursues remedies that are legally or factually inconsistent” and operates to “prevent[] a party from obtaining 27 double redress for a single wrong.” Latman v. Burdette, 366 F.3d 774, 781–82 (9th Cir. 2004) (quoting Alexander v. Gardner–Denver Co., 415 U.S. 36, 49 (1974)); see also Bankers Tr. Co. v. Pac. Emps. 28 Ins. Co., 282 F.2d 106, 110–11 (9th Cir. 1960). 196 See Amended Complaint [Docket 57], p. 11. 1 86. Damages are recoverable following a breach of contract only in 2 an amount that the non-breaching party can establish with reasonable certainty.197 3 87. Midstate has not established the amounts due in its invoices with 4 5 reasonable certainty. This fact is evidenced by uncertainty from Midstate at trial as to 6 the exact quantities and types of materials delivered and therefore the exact amounts 7 allegedly due. 8 9 88. At trial, Midstate acknowledged overbilling Ahtna. Midstate also 10 acknowledged having great difficulty establishing what it delivered to the Project and 11 therefore what was due from Ahtna. Consider Midstate’s constant revisions to its 12 invoices, one of which was made even in the middle of trial: 13 14 Total Amount Claimed Exhibit 15 $268,313.64 Claim on Bond (Ex. 105) 16 $295,114.93 Expert Report (Ex. AN) 17 18 $277,843.21 Supplemental to Expert Report (Ex. 156) 19 $275,340.21 Mid-Trial Report Supplemental (Ex. 171) 20 89. Explanatory notes in two of the exhibits referenced above 21 22 acknowledge inaccuracies in the invoices, resulting in uncertainty on damages.198 Mr. 23 Braham acknowledged at trial that part of the problem was Midstate sometimes billed 24 25 26

27 197 See RESTATEMENT (SECOND) OF CONTRACTS § 352 (1981); City of Whittier v. Whittier 28 Fuel and Marine Corp., 577 P.2d 216, 224 n.29 (Alaska 1978). 198 Ex. 156; Ex. 171. 1 Ahtna for 27 CY of topsoil when the delivery was actually performed by a truck with 2 much smaller capacity.199 3 90. Another problem was poor recordkeeping by Midstate, which 4 5 make it impossible to determine exactly what trucks delivered what materials. At trial, 6 Midstate’s expert economist testified that it is possible to arrive at exact amounts due 7 by examining: “daily reports and truck tickets.”200 However, he also acknowledged 8 9 that in some instances “the two documents don’t agree with each other.”201 10 91. Midstate has not proved with reasonable certainty by a 11 preponderance of the evidence the amounts which it alleges are due on account of 12 unpaid invoices. 13 14 92. The second category of damages sought by Midstate is lost profit 15 and overhead for work it would have performed in 2019 but for cancellation of further 16 deliveries by Ahtna. 17 18 93. Midstate is only owed lost profit, including “reasonable overhead,” 19 if it can prove by a preponderance of the evidence that Ahtna’s cancellation of 20 deliveries for 2019 was a repudiation of the Purchase Order for which Ahtna had no 21 22 legal excuse.202 23 24

26 199 Tr. Vol. 3, p. 15 (J. Braham). 200 Tr. Vol. 3, p. 81 (G. Moorehead). 27 201 Tr. Vol. 3, p. 82 (G. Moorehead). 202 AS 45.02.708. The UCC potentially entitles a non-breaching seller to “incidental costs” 28 incurred by reason of the cancellation of further deliveries. See AS 45.02.710. However, Midstate is not seeking recovery of incidental costs. See Tr. Vol. 3, p. 91 (G. Moorehead). 1 94. “An award of lost profits is not proper if it is the result of 2 speculation.”203 Lost profits must be proved with reasonable certainty.204 There must 3 be a “reasonable basis” upon which a finder of fact can compute an award.205 4 5 95. Midstate’s expert economist calculated lost profits by calculating 6 an anticipated hourly rate for each square yard of topsoil or woody debris Midstate 7 planned to deliver in 2019, then multiplying that hourly rate by the amount of materials 8 9 measured in-place following completion of the work by Ahtna in 2019.206 It is 10 noteworthy that Midstate is using Ahtna’s in-place measurement results, which it 11 otherwise considers unreliable, as a reliable basis for calculation of its lost profit and 12 overhead. 13 14 96. Midstate’s expert then calculated the anticipated “truckload 15 quantities” that would actually be delivered by inflating those quantities beyond the 16 quantities measured in-place.207 He reasoned that Midstate should have been paid for 17 18 more than what was measured in-place in 2018, and therefore should also be paid for 19 more than what was measured in-place in 2019. He calculated that Midstate should 20 receive profit and overhead according to an effective square yard unit price of $3.31 21 22 23 24

25 203 Guard v. P & R Enters., Inc., 631 P.2d 1068, 1071 (Alaska 1981) (citing Dowling Supply 26 & Equip., Inc. v. City of Anchorage, 490 P.2d 907, 909–10 (Alaska 1971)). 204 See id. at 1072. 27 205 See City of Whittier v. Whittier Fuel and Marine Corp., 577 P.2d 216, 222 (Alaska 1978). 206 Ex. AN, p. 6. 28 207 Ex. AN, p. 7 (increasing “average square yards per load” from 96.23 and 94.68 to 121.5 and 120). 1 per SY of topsoil and $3.30 per SY of woody debris, to address the insufficiency of 2 payment on the basis of in-place quantities.208 3 97. Midstate’s basis for its calculation of lost profit and overhead is 4 5 not reasonable. There is no evidence that Ahtna ever agreed, or would agree, to 6 effective unit prices of $3.31 per SY of topsoil and $3.30 per SY of woody debris. 7 Midstate is only speculating that in-place quantities would have been an insufficient 8 9 basis for payment in 2019, and Midstate is only speculating as to the degree of that 10 insufficiency. 11 98. Midstate’s expert economist did not use historical job cost data 12 when determining the expenses that would form Midstate’s direct costs in 2019.209 13 14 Instead, he used bid estimates and conversations with Mr. Karr.210 In construction 15 accounting, the use of bid estimates in lieu of job cost data to establish damages is 16 disfavored, because the latter is more reliable than the former.211 17 18 99. Midstate has not used a reasonable basis for calculating its lost 19 profit and overhead, and therefore has not demonstrated with reasonable certainty what 20 that lost profit and overhead should be. 21 22 100. Having determined that Midstate has not proved an entitlement 23 to damages, it is unnecessary to address Midstate’s claim to recover interest. 24 25 26 208 Tr. Vol. 3, pp. 89–90 (G. Moorhead). 27 209 Tr. Vol. 3, p. 93 (G. Moorehead). 210 Ex. AN, pp. 7–9. 28 211 See Am. Line Builders, Inc. v. United States, 26 Cl. Ct. 1155, 1181–82, 1193 (1992) (describing use of actual job costs as the “preferred” method for calculation of a contractor’s damages). 1 Ahtna Counterclaim: Breach of Contract 2 101. Ahtna has alleged a breach of the Purchase Order by Midstate.212 3 102. A breach of contract is a failure, without legal excuse, to perform 4 any promise which forms the whole or part of a contract.213 5 6 103. Ahtna alleges that the delivery of invoices billing Ahtna for 7 nonexistent or misstated truckloads, and the demand for payment for square yards of 8 materials in excess of the quantities measured in-place, constituted breach of the 9 10 Purchase Order. 11 104. Midstate’s invoicing was a failure, without legal excuse, to 12 perform the promise to bill Ahtna only for square yards of material actually delivered. 13 14 Midstate breached the Purchase Order. 15 Ahtna Counterclaim: Unfair Trade Practices 16 105. Ahtna has alleged that Midstate committed unfair trade practices, 17 in violation of the UTPA.214 18 19 106. The UTPA describes the following as an unfair or deceptive act 20 or practice in the conduct of trade or commerce: “representing that goods or services 21 are of a particular standard, quality, or grade, or that goods are of a particular style or 22 23 model, if they are of another.”215 24 25 26 212 Ahtna Answer to Amended Complaint [Docket 58], p. 11. 27 213 Kimp v. Fire Lake Plaza II, LLC, 484 P.3d 80, 89-90 (Alaska 2021) (quoting 23 Williston on Contracts § 63:1 (4th ed. 2018)). 28 214 Ahtna Answer to Amended Complaint [Docket 58], p. 12. 215 AS 45.50.471(b)(6). 1 107. The UTPA also describes the following as an unfair or deceptive 2 act or practice in the conduct of trade or commerce: “engaging in any other conduct 3 creating a likelihood of confusion or of misunderstanding and that misleads, deceives, 4 5 or damages a buyer or a competitor in connection with the sale or advertisement of 6 goods or services.”216 7 108. Midstate was a seller of goods and Ahtna was a buyer of goods 8 9 within the definitions of the UTPA. 10 109. By representing that all its deliveries of woody debris contained 11 material that met the Project Specifications, when they did not, Midstate violated the 12 UTPA. 13 14 110. By invoicing Ahtna for materials that it did not in fact deliver to 15 the Project, and by representing that it delivered materials in quantities that were not 16 in fact the actual quantities delivered, Midstate violated the UTPA. 17 18 Ahtna Damages 19 111. Although Ahtna has demonstrated by preponderance of the 20 evidence that Midstate breached the Purchase Order, it did not demonstrate at trial any 21 22 actual damages incurred by reason of the breach. Ahtna is therefore awarded nominal 23 damages of one dollar ($1.00).217 24 25 26 216 AS 45.50.471(b)(11). 27 217 Galipeau v. Bixby as Tr. of Irrevocable Tr. of Rose E. Fong, 476 P.3d 1129, 1134 n.13 (Alaska 2020) (“If the breach [of contract] caused no loss or if the amount of the loss is not proved 28 . . .[,] a small sum fixed without regard to the amount of loss will be awarded as nominal damages.” (second alteration original) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 346 (1981)). 1 112. The UTPA provides that a person who suffers an ascertainable 2 loss may bring a civil action to recover for each unlawful act or practice “three times 3 the actual damages or $500, whichever is greater.”218 4 5 113. There is no dispute between the parties that Midstate submitted to 6 Ahtna at least two invoices for materials Midstate never delivered to the Project, and 7 that Ahtna paid those invoices in full.219 There is therefore no dispute that Ahtna has 8 9 suffered an ascertainable loss by reason of Midstate’s violation of the UTPA. 10 114. However, Ahtna did not proffer a calculation at trial of the exact 11 amount it was overbilled by Midstate. Ahtna has not demonstrated its actual damages 12 incurred due to Midstate’s violation of the UTPA with reasonable certainty. 13 14 115. Because Ahtna has demonstrated that it suffered an ascertainable 15 loss but has not demonstrated its actual damages, the Court orders an award of $500 in 16 Ahtna’s favor. 17 18 116. While Ahtna has demonstrated violation of both 19 AS 45.50.471(b)(6) and AS 45.50.471(b)(11), Ahtna will not be awarded attorney’s 20 fees as the prevailing party because these state law counterclaims involved minimal 21 22 time and effort as compared to the time and effort involved in defending against 23 Midstate’s Miller Act claims. Moreover, the defense of the Miller Act claims required 24 consideration of facts intertwined with the counterclaims. 25

27 218 AS 45.50.531(a). 219 Ex. 170 (acknowledging overbilling on Invoice 1931 and Invoice 1940); Ex. 171 28 (acknowledging overbilling on Invoice 1931); Ex. 106, p. 2 (showing payment of Invoice 1931 in full); Ex. 106, p. 3 (showing payment of Invoice 1940 in full). 1 IV. DIRECTION FOR ENTRY OF JUDGEMENT 2 The Clerk is directed to enter judgment that Midstate recover nothing 3 from Ahtna, and that Ahtna recover $501.00 from Midstate. Ahtna may ask the Clerk 4 5 to tax costs pursuant to 28 U.S.C. § 1920 and L. Civ. R. 54.1. 6 DATED this 17th day of August, 2021, at Anchorage, Alaska. 7

8 /s/ John W. Sedwick 9 JOHN W. SEDWICK Senior United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28