Lepping v. Greeno et al

Filing 66

ORDER denying 44 Motion for Summary Judgment. Signed by Judge John W. Sedwick on 9/23/11. (GMM, CHAMBERS STAFF)

UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

KURT LEPPING,
Plaintiff,
vs.
DAVID L. GREENO and WENDY C.
GREENO,
Defendants.

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3:10-cv-00148 JWS
ORDER AND OPINION
[Re:

Motion at Docket 44]

I. MOTION PRESENTED
At docket 44, plaintiff Kurt Lepping (“plaintiff” or “Lepping”) moves pursuant to
Federal Rule of Civil Procedure 56 for summary judgment. Defendants David and
Wendy Greeno (“defendants” or “the Greenos”) oppose the motion at docket 50.
Plaintiff’s reply is at docket 61. Oral argument was heard on September 22, 2011.
II. BACKGROUND
In 2005, Lepping and the Greenos jointly purchased a tract of land in the
Matanuska-Susitna Valley, intending to develop and subdivide it. In 2006, the parties
formed Paradise Properties, LLC, with the assistance of a lawyer, John Davies
(“Davies”), and transferred the property to the company. Davies forwarded the deed
that transferred the tract to the company to the Greenos along with a draft operating
agreement that the parties had discussed. The Greenos were advised to seek
independent legal advice to assist with review of the operating agreement. The

operating agreement provided that Lepping would have sole managerial authority even
though Lepping and the Greenos each had a fifty-percent interest in the LLC. The
Greenos maintain that they were sidetracked and never agreed to or signed the
operating agreement. Lepping maintains that the operating agreement is indicative of
the parties’ agreement and that the Greenos assented to its terms.
Complaints from neighbors delayed approval of the subdivision by the
Matanuska-Susitna Borough. Those issues were resolved in 2008. Lepping maintains
that, at that time, the Greenos informed him they would no longer contribute to the
project. The Greenos maintain that Lepping commingled personal and company funds
and could not properly account for expenditures. Lepping sent the Greenos letters
stating that they were in breach of the operating agreement and attempted to complete
the project on his own. The Greenos informed the Borough that they disputed
Lepping’s managerial authority and requested that approval of the subdivision be
postponed until the parties’ dispute was resolved.
Lepping filed suit in the Superior Court for the State of Alaska at Palmer
asserting claims for breach of contract and promissory estoppel, seeking damages and
injunctive relief. The case was removed to federal court in July 2010 on the basis of
diversity jurisdiction.1
III. STANDARD OF REVIEW
Summary judgment is appropriate where “there is no genuine issue as to any
material fact and . . . the movant is entitled to judgment as a matter of law.”2 The
materiality requirement ensures that “only disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of summary
judgment.”3 Ultimately, “summary judgment will not lie if the . . . evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”4 In resolving a motion
1

Lepping is a citizen of Alaska, and the Greenos are citizens of Washington.

2

Fed. R. Civ. P. 56(c)(2).

3

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

4

Id.

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for summary judgment, a court must view the evidence in the light most favorable to the
non-moving party.5 The reviewing court may not weigh evidence or assess the
credibility of witnesses.6 The burden of persuasion is on the moving party.7
IV. DISCUSSION
A. The Operating Agreement
Lepping argues that the Greenos are bound by the terms of the draft operating
agreement. There are several issues of material fact precluding summary judgment on
Lepping’s breach-of-contract claim. Foremost, the Greenos maintain that they never
expressed assent to the terms of the operating agreement–particularly the clause
granting Lepping managerial authority.8
Lepping contends that the Greenos’ silence operated as acceptance of the
operating agreement. Lepping cites § 69 of the Restatement (Second) of Contracts but
does not offer any analysis. Section 69(1)(a) provides that “silence and inaction operate
as an acceptance . . . [w]here an offeree takes a benefit of offered services with
reasonable opportunity to reject them and reason to know that they were offered with
the expectation of compensation.”9 Disputed issues of material fact preclude summary
judgment under § 69(1)(a) insofar as the Greenos dispute that they took the benefit of
Lepping’s services as manager of the LLC.10
Section 69(1)(b) states that silence operates as acceptance “[w]here the offeror
has . . . given the offeree reason to understand that assent may be manifested by

5

Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000).

6

Dominguez-Curry v. Nevada Transp. Dept., 424 F.3d 1027, 1036 (9th Cir. 2005).

7

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

8

See, e.g., doc. 50-3 at 8.

9

Restatement (Second) of Contracts § 69(1)(a).

10

See, e.g., doc. 50-1 at 2 (David Greeno “played an active role in the management and
decision-making regarding all aspects of the . . . project.”).

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silence.”11 Subparagraph (b) does not apply because there is no evidence that Lepping
gave the Greenos reason to understand that the terms of the draft operating agreement
could be accepted by silence.
Section 69(1)(c) states that silence can constitute acceptance “[w]here because
of previous dealings or otherwise, it is reasonable that the offeree should notify the
offeror if he does not intend to accept.”12 There were no previous dealings between the
parties from which it might be inferred that the Greenos should have informed Lepping
that they did not intend to accept. Moreover, the Greenos were instructed to have the
draft operating agreement reviewed by independent counsel. It is not reasonable, in
light of that circumstance, for the Greenos’ silence to constitute acceptance.
B. Promissory Estoppel
Lepping argues that the Greenos are estopped from denying that they promised
to cede managerial authority to him. Disputed material issues of material fact also
preclude summary judgment on this claim. “Four elements are necessary to prove a
claim of promissory estoppel: (1) an ‘actual promise’ that induces the action or
forbearance; (2) the action or forbearance was actually foreseen or reasonably
foreseeable; (3) the action or forbearance amounted to a substantial change in position;
and (4) enforcement of the promise is necessary in the interest of justice.”13
It is disputed whether the Greenos actually promised to cede managerial
authority to Lepping. Consequently, Lepping is not entitled to summary judgment on his
promissory estoppel claim.
C. Equitable Relief
Lepping is correct that “it is the court, not the jury, that must determine . . .
appropriate equitable relief.”14 “[T]he nature of a claim–equitable or legal–depends on

11

Restatement (Second) of Contracts § 69(1)(b).

12

Id. § 69(1)(c).

13

Alaska Trademark Shellfish, LLC v. Dept. of Fish & Game, 172 P.3d 764, 766 (Alaska

2007).
14

Martinez v. Cape Fox Corp., 113 P.3d 1226, 1232 (Alaska 2005).

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the remedy sought.”15 Lepping’s complaint indicates that damages are sought in
addition to equitable relief.16 “[F]acts common to legal and equitable claims must first be
tried to a jury and the primary equitable issues, if any, disposed of in light of the jury
verdict.”17 Here, important disputed facts are common to Lepping’s legal and equitable
claims and consequently must be tried to a jury.
Moreover, “[o]ne who seeks the interposition of equity must generally show that
he either has no remedy at law or that no legal remedy is adequate.”18 Damages may
be inadequate “when the amount of damages is highly speculative.”19 Lepping has not,
at this juncture, shown that damages would be highly speculative. The Greenos
suggest that “[d]amages can be measured by valuing the lots, then subtracting the costs
of development from the sale proceeds based on those valuations.”20 The court agrees
that such calculations would likely ensure that any award of damages would not be
highly speculative.
V. CONCLUSION
For the reasons above, plaintiff’s motion at docket 44 for summary judgment
pursuant to Rule 56 is DENIED.
DATED at Anchorage, Alaska, this 23rd day of September 2011.

/s/ JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

15

Henrichs v. Chugach Alaska Corp., 250 P.3d 531, 539 (Alaska 2011).

16

Doc. 1-1 ¶¶ 61, 66, 70, 75, 79.

17

Henrichs, 250 P.3d at 540.

18

Knaebel v. Heiner, 663 P.2d 551, 553 (Alaska 1983).

19

Id.

20

Doc. 50 at 24.

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