Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc. et al
Filing
96
ORDER granting 53 Motion to Amend; granting in part and denying in part 69 Motion to Amend; denying 72 Motion in Limine; denying 73 Motion for Summary Judgment; granting 74 Motion for Partial Summary Judgment; granting in part and denying in part 75 Motion for Partial Summary Judgment; granting in part and denying in part 86 Motion in Limine to Strike. See Order for details. Signed by Judge Joshua M. Kindred on 2/7/2024. (JDS, COURT STAFF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
AHTNA DESIGN-BUILD, INC., an
Alaska corporation,
Plaintiff,
vs.
ASPHALT SURFACING, INC., a
California corporation, and UNITED
FIRE & CASUALTY COMPANY, Bond
No. 54-197210,
Defendants.
UNITED STATES OF AMERICA
FOR THE USE OF ASPHALT
SURFACING, INC., a California
corporation,
Plaintiff,
vs.
AHTNA DESIGN-BUILD, INC., an
Alaska Corporation; GREAT
AMERICAN INSURANCE GROUP,
an Ohio corporation Bond
No. 3348912,
Defendants.
Case Nos. 3:21-cv-00228-JMK
3:22-cv-00219-JMK
Consolidated
ORDER REGARDING
PENDING MOTIONS
Pending before the Court are several motions. At Docket 53, Ahtna DesignBuild, Inc. (“Ahtna”) moves to file an amended complaint. 1 At Docket 69, Asphalt
Surfacing, Inc., on behalf of the United States (“ASI”) moves for leave to file its own
amended complaint. At Docket 72, Ahtna moves in limine to exclude an expert witness’s
rebuttal report. At Dockets 73 and 74, Ahtna moves for summary judgment with respect
its claims, ASI’s counterclaims, and ASI’s Unfair Trade Practices Act claim.
At
Docket 75, ASI and United Fire & Casualty Company Bond No. 54-197210 (“UFCC”)
move for partial summary judgment. And, at Docket 86, ASI moves to strike the Affidavit
of Randy Rogers submitted in support of Ahtna’s motion for summary judgment. All the
motions are fully briefed. The Court took each under advisement without oral argument.
I.
BACKGROUND
The following facts are undisputed unless otherwise noted.
A.
Ahtna Executes a Subcontract with ASI to Perform Road Maintenance Work
Specified in a Prime Contract between Ahtna and the United States
This dispute arises from a federal public works contract for roadway
maintenance at Fort Hunter Liggett in Monterrey County, California.
Ahtna is a
construction and engineering corporation headquartered in Alaska with offices in
California. In 2020, Ahtna contracted with the U.S. Army (“the United States”) to
resurface eight asphalt roadways in and around Fort Hunter Liggett. 2 The project, Job
Order Contract #W911 SA-18-D-2002, consisted of removing existing pavement
1
The docket numbers referenced herein are associated with Case No. 3:21-cv-00228, the
lead case in these consolidated matters.
2
See Docket 73-2 (containing eight scopes of work for eight separate roadways).
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markings, cleaning and preparing specified roadways, mitigating existing cracks, removing
and replacing damaged pavement, and applying a cape seal followed by a Type II slurry
seal. 3
A cape seal is a treatment applied to some roadways and consists of an
application of an asphalt emulsion chip seal followed by the application of asphalt emulsion
slurry seal. 4 A slurry seal is a mixture of materials such as asphalt emulsion, graded
aggregates, mineral filler, water, and other additives. 5 The precise ratios of these elements
is determined, and the slurry seal prepared, according to a “mix design.” 6 The California
Department of Transportation (“Caltrans”) requires the mix design for different types of
slurry seal to conform to certain specifications. 7 Once a slurry seal is mixed, it is applied
onto a pavement surface, coalesces into a film, and then cures as water evaporates. 8
The prime contract between Ahtna and the United States included eight
“Statements of Work” which identified contract requirements and prescribed design and
technical criteria for the work Ahtna was to perform on specific roadways. 9 For instance,
each Statement of Work specified the temperatures at which the roadway materials could
be placed. 10 However, although these Statements of Work contained some specifications
regarding how the contractors should apply cape seal and slurry seal, they did not specify
3
4
5
6
7
8
9
10
Docket 73-2 at 14.
See, e.g., id. at 21 (providing for the application of cape seal on the Stuaret Road).
Docket 73-3 at 9.
See id. at 11.
Id.
Id. at 9.
See Docket 73-2 at 12–99.
See, e.g., id. at 21–22.
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how to mix the cape seal or the slurry seal. 11 Rather, the Statements of Work required that
if differences existed between Caltrans’ requirements and the contract provisions, the
contractor was to follow the more stringent specifications. 12
On November 24, 2020, Ahtna executed a subcontract (“the Subcontract”)
with ASI to perform the asphalt paving services specified in the prime contract between
Ahtna and the United States. 13 The Subcontract provided that time was of the essence and
that performance was to take place between November 12, 2020, and December 31, 2020. 14
The Subcontract also specified which provisions of the prime contract would “flow down”
and be incorporated therein. 15 The Statements of Work included in the prime contract were
not incorporated in the Subcontract. 16
And the Subcontract did not include any
specifications for the “mix design” of the slurry seal or prescribe precautions to be taken
in the event of cold or otherwise unsuitable weather. 17 This Subcontract followed prior
communications between Ahtna and ASI, in which Ahtna provided ASI notice to proceed
prior to the Subcontract’s execution. 18
11
See, e.g., id. at 21–23 (discussing the cape and slurry seal requirements for the Stuaret
Road portion of the project); id. at 33–35 (same for South Infantry Road); id. at 45–47 (same for
North Infantry Road).
12
See, e.g., id. at 21 (discussing the cape and slurry seal requirements for the Stuaret
Road).
13
Docket 73-6.
14
Id. at 1, 3.
15
Id. at 11, 46–71.
16
See Docket 73-6.
17
See id.; see also Docket 73-18 at ¶ 24.
18
Docket 75-3 at 17.
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In turn, ASI subcontracted with Graham Contractors (“Graham”) to apply
the slurry seal. 19 As part of its agreement to subcontract, Graham required ASI to sign an
“Inclement Weather Release,” in which ASI acknowledged it had been specifically warned
that the anticipated weather conditions “are not conducive to” the application of slurry seal
and that it would bear all risk associated with the application and performance of the slurry
seal, among other things. 20
Ahtna gave ASI notice to proceed with the project on November 2, 2020, and
specified that ASI would start work on November 14, 2020, and continue until
December 31, 2020. 21
At the time the parties executed the Subcontract, Ahtna was informed that
cold weather might affect the project. Ahtna’s 30(b)(6) designee and project manager, Bill
Lowe, testified that he had conversations in August and September 2020 with ASI
employees about the possibility of the weather becoming too cold. 22 Moreover, he spoke
with ASI’s president, Buck Neu, about the possibility that cold weather could affect the
performance of the slurry seal. 23 In his own 30(b)(6) deposition, Mr. Neu stated that ASI
informed Mr. Lowe that the weather was unsuitable on multiple occasions but that
Mr. Lowe insisted the Subcontract be completed by December 30th. 24 However, Ahtna
project manager, Randy Rogers, submitted at affidavit in support of Ahtna’s motion for
19
20
21
22
23
24
Docket 75-13 at 2.
Docket 73-5.
Docket 75-2 at 17.
Id. at 8.
Id. at 42.
Docket 75-13 at 5–6.
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summary judgment in which he states that Ahtna would not have entered into the
Subcontract with ASI had it known it would sign a weather release with its own
subcontractor, Graham. 25
B.
Ahtna Identifies Alleged Deficiencies in ASI’s Application of Slurry Seal, Seeks
Cure, and Ultimately Terminates the Subcontract
Dissatisfied with the quality of the road work, Ahtna directed ASI to stop
work on the project on December 16, 2020. 26 Between January 13 and January 18, 2021,
Ahtna sent ASI emails that detailed a “punch list” of alleged deficiencies in its
performance, as well as photos. 27 On January 29, 2021, ASI responded to the punch list
items and proposed various means to correcting the deficiencies that Ahtna had identified
in its earlier emails. 28 Representatives from Ahtna and ASI then conducted a “site walk”
in early February to identify the deficiencies that ASI would correct. 29 Thereafter, on
February 24, 2021, ASI sent a proposed plan to address the punch list items. 30 However,
concerns about performing repairs in cold weather persisted until March 31, 2021,
preventing ASI from addressing the punch list. 31
On April 19, 2021, Ahtna issued a written notice to cure to ASI, stating that
ASI was in default of its obligations under the Subcontract and listing obligations under
25
26
27
28
29
30
31
Docket 73-18 at ¶ 22.
Docket 75-2 at 23.
Id. at 27.
Id. at 48.
Id. at 49.
Id. at 50.
Id. at 51.
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the Subcontract that Ahtna found incomplete or deficient. 32 The letter indicated that Ahtna
believed 95 percent of the punch list items it previously had identified remained
incomplete. 33 On April 30, 2021, ASI responded, noting that Ahtna had not paid it for
work completed in November and December, that it was willing to conduct another site
walk-through, and proposed a work plan to address any issues. 34
Ahtna supplemented its notice of default on May 24, 2021. 35 Its letter
informed ASI that Ahtna had retained Asphalt Pavement & Recycling Technologies, Inc.
(“APART”), to collect and test samples of the slurry seal that ASI had applied and that
APART’s analysis indicated an issue with the slurry mix ASI used caused the asphalt to
scuff, bleed oil, and harden improperly. 36 Specifically, the letter indicated that APART
found that the asphalt content of ASI’s slurry mix exceeded the amount permitted under
Caltrans’s specifications. 37 Ahtna then insisted that any proposal to remediate the issues
would need to include removing the existing slurry seal and applying a new slurry seal that
complies with Caltrans standards, among other things. 38
On August 25, 2021, ASI responded to Ahtna and proposed a remediation
plan. 39 However, on September 29, 2021, Ahtna notified ASI that its performance under
32
33
34
35
36
37
38
39
Docket 73-8.
Id. at 5.
Docket 75-9 at 16–25.
Id. at 34–37.
Id. at 34.
Id. at 35.
Id. at 36.
Docket 73-15.
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the Subcontract was terminated due to ASI’s alleged default of its obligations. 40 Ahtna
later contracted with an ASI competitor, Pavement Coatings, to remove and replace the
slurry seal on the roads at issue. 41
C.
Ahtna Submits a Claim on ASI’s Performance Bond Which ASI’s Surety,
UFCC, Denies
Prior to executing the Subcontract, ASI secured a performance bond from
United Fire and Casualty Company (“UFCC”). 42 On May 12, 2021, Ahtna submitted a
formal claim on the bond, Bond No. 54-197210, to UFCC and gave UFCC notice of its
intent to declare ASI in default and terminate the Subcontract. 43 As discussed, Ahtna then
supplemented its notice of default on May 24, 2021, and insisted that ASI would have to
remove and replace the chip seal and slurry to remediate the issues it had identified. 44
UFCC retained an investigative firm, JS Held, and an engineering firm, Ninyo and Moore,
to assess the situation. 45 ASI also responded to Ahtna’s notice of default on June 2, 2021,
and indicated that it would create a work plan for removing and replacing the surface
treatments based on a change order, but demanding payment for the work it already had
performed. 46
40
41
42
43
44
45
46
Docket 73-16.
Docket 75-10 at 39.
Docket 73-11.
Docket 73-12.
Docket 75-9 at 34–37.
Docket 75-22 at 3–4.
Docket 75-9 at 39–41.
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On August 12, 2021, engineers from Ninyo and Moore and representatives
from ASI, Graham, and Ahtna visited the site. 47 When Ahtna rejected ASI’s proposed
remediation plan, UFCC responded to Ahtna’s May 12, 2021, Notice of Default and
Termination letter. 48 In its letter, UFCC asserted that Ahtna had failed to allow it an
opportunity to remedy the default under the Bond and thus had breached its terms. 49
Moreover, it noted that the slurry was performing “as expected.” 50 Accordingly, it denied
Ahtna’s bond claim. 51
D.
Procedural History
On October 14, 2021, Ahtna initiated this lawsuit against ASI in the District
of Alaska, alleging breach of contract, breach of the implied warranty of good faith, a claim
against the performance bond, performance bond bad faith, and violation of the Alaska
Unfair Trade Practices and Consumer Protection Act (“UTPCPA”). 52 Subsequently, on
November 3, 2021, ASI filed a Miller Act complaint on behalf of the United States in the
Northern District of California, asserting breach of contract against Ahtna and seeking
recovery of the Miller Act Bond from Ahtna’s surety, Great American Insurance Group. 53
47
See Docket 75-22 at 12–13.
Id. at 12–14.
49
Id. at 13.
50
Id.
51
Id. at 13–14.
52
See Docket 1.
53
See Docket 1, US ex rel. Asphalt Surfacing, Inc. v. Ahtna Build-Design, Inc., et al.,
3:22-cv-00219-JMK.
48
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ASI’s Miller Act suit was transferred to the District of Alaska 54 and the two cases were
consolidated. 55
II.
A.
LEGAL STANDARDS
Leave to Amend
Once the deadline to amend a pleading as a matter of course has passed, a
party may amend its pleading “only with the opposing party’s written consent or the court’s
leave.” 56 “The court should freely give leave when justice so requires.” 57 The decision to
grant or deny leave to amend rests in the “sole discretion of the trial court,” 58 though the
Ninth Circuit has instructed that “[r]equests for leave should be granted with ‘extreme
liberality.’” 59
Consistent with the liberal spirit of Rule 15, courts should only decline to
grant leave to amend “if there is strong evidence of ‘undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance of the
amendment, or futility of amendment, etc.’” (together, “the Foman factors”). 60 Among
54
Docket 24, US ex rel. Asphalt Surfacing, Inc. v. Ahtna Build-Design, Inc., et al., 3:22cv-00219-JMK.
55
Docket 46; see also Docket 40, US ex rel. Asphalt Surfacing, Inc. v. Ahtna BuildDesign, Inc., et al., 3:22-cv-00219-JMK.
56
Fed. R. Civ. P. 15(a)(2).
57
Id.
58
Stanton v. Battelle Energy All., LLC., 83 F. Supp. 3d 937, 949 (D. Idaho 2015).
59
Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) (quoting Moss v.
U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009)).
60
Sonoma Cnty. Ass’n of Retired Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir.
2013) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
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these factors, “the consideration of prejudice to the opposing party . . . carries the greatest
weight.” 61 “Prejudice is the ‘touchstone of the inquiry under Rule 15(a).’” 62 Indeed,
“[a]bsent prejudice, or a strong showing of any of the remaining Foman factors, there exists
a presumption under Rule 15(a) in favor of granting leave to amend.” 63 “The party
opposing amendment bears the burden of showing prejudice.” 64
B.
Summary Judgment
Summary judgment is appropriate where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” 65 A material fact is one that “might affect the outcome of the suit under the
governing law.” 66 “A genuine issue of material fact exists when the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” 67
The party seeking summary judgment bears the initial burden of establishing
the absence of a genuine issue of material fact. 68 To establish that a fact cannot be
genuinely disputed, the movant either can cite the record or show “that the materials cited
61
62
2001)).
Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
Id. (quoting Lone Star Ladies Inv. Club v. Schlotzsky's Inc., 238 F.3d 363, 368 (5th Cir.
63
Id. (emphasis in original).
DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987).
65
Fed. R. Civ. P. 56(a).
66
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
67
Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025,
1031 (9th Cir. 2010).
68
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
64
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do not establish the . . . presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” 69
Once the movant has made such a showing, the non-movant “bears the
burden of production under [FRCP] 56 to ‘designate specific facts showing that there is a
genuine issue for trial.’” 70 The non-moving party “must do more than simply show that
there is some metaphysical doubt as to the material facts.” 71 A party cannot “defeat
summary judgment with allegations in the complaint, or with unsupported conjecture or
conclusory statements.” 72
“If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would
have the ultimate burden of persuasion at trial.” 73 Ultimately, in ruling on a motion for
summary judgment, the court must view the facts and draw all reasonable inferences in the
light most favorable to the non-moving party. 74
69
Fed. R. Civ. P. 56(c)(1).
Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting Celotex Corp. v. Catrett, 477
U.S. 317, 324 (1986)).
71
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)
(internal citation omitted); see also Liberty Lobby, 477 U.S. at 252 (specifying that the non-movant
“must show more than the mere existence of a scintilla of evidence”); accord In re Oracle Corp.
Secs. Litig., 627 F.3d 376, 387 (9th Cir. 2010).
72
Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003).
73
Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102–03 (9th
Cir. 2000).
74
Scott v. Harris, 550 U.S. 372, 378 (2007).
70
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“[W]hen parties submit cross-motions for summary judgment, each motion
must be considered on its own merits.” 75 The court rules on each motion “on an individual
and separate basis.” 76
III.
A.
DISCUSSION
Ahtna’s Motion for Leave to File Amended Complaint
Ahtna argues that leave to amend its Complaint filed on October 14, 2021, is
appropriate under both Federal Rules of Civil Procedure 15 and 16. 77 Furthermore, it
asserts that amendment is necessary because new evidence emerged in the Rule 30(b)(6)
deposition of ASI’s designee, Buck Neu, and requires Ahtna substantially alter the facts it
pled to support its claims. 78 ASI and UFCC respond that amendment is not appropriate
because Ahtna knew or should have known all the allegedly new facts prior to filing suit
and amendment would be futile. 79 ASI also points out that Ahtna failed to comply with
Local Rule 15.1(a), which requires a party seeking leave to amend to file a proposed
amended pleading that clearly indicates how it differs from the pleading it amends, and
asks that the motion to amend be denied on this basis. 80
75
Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th
Cir. 2001) (citations and quotation omitted).
76
Tulalip Tribes of Wash. v. Washington, 783 F.3d 1151, 1156 (9th Cir. 2015) (quoting
10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, FED. PRAC. & PROC. § 2720 (3d
ed. 1998)).
77
See generally Docket 53; Docket 62 at 13–15.
78
Docket 53 at 5–9.
79
Docket 61 at 5–15.
80
Id. at 5.
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As a threshold matter, the Court must determine whether to apply
Rule 15(a)’s “as justice so requires” standard or Rule 16(b)(4)’s “good cause” standard. In
its pretrial Scheduling and Planning Order, the Court omitted to include a deadline for
motions to amend. 81 However, Local Civil Rule 16 provides that “[u]nless otherwise
ordered . . . [m]otions to amend the pleadings . . . must be filed not later than 60 days after
the date the Pretrial Scheduling Order is entered.” 82 “Thereafter, a party may seek leave
of court to modify this deadline” under Federal Rule of Civil Procedure 16(b)(4). 83
Although the Court did not specify a deadline for motions to amend in its Scheduling and
Planning Order, the Local Rules nonetheless required any motion to amend to be filed
within 60 days of the Order’s entry on December 13, 2021. Ahtna’s instant motion to
amend was untimely as it was filed well after this February 12, 2022, deadline. Ahtna
should have filed a motion to modify the motions deadline under Rule 16(c)(4) before
seeking leave to amend under Rule 15(a).
Under Rule 16, the court only may modify its scheduling order “for good
cause . . . .” 84 “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad
faith of the party seeking to interpose an amendment and the prejudice to the opposing
party, Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of the party
81
See Docket 16 at 7.
D. Alaska Loc. Civ. R. 16.1(c)(2). In its reply, Ahtna indicates that the Court’s
scheduling order did not specify that it incorporated the Local Rules. The Local Rules supplement
the Federal Rules of Civil Procedure and govern all proceedings in the District of Alaska unless
the court orders otherwise. See D. Alaska Loc. Civ. R. 1.1(a)(2), (4).
83
Id.
84
Fed. R. Civ. P. 16(b)(4).
82
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seeking the amendment.” 85 “Although the existence or degree of prejudice to the party
opposing the modification might supply additional reasons to deny a motion, the focus of
the inquiry is upon the moving party’s reasons for seeking modification.” 86
Once the scheduling order deadline for motions to amend is modified, courts
freely give leave to amend “when justice so requires.” 87 Generally, “[r]equests for leave
should be granted with ‘extreme liberality.’” 88 Indeed, the Ninth Circuit instructs that
courts should only decline to grant leave to amend “if there is strong evidence of ‘undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, or futility of amendment, etc.’” 89
Ahtna has not shown good cause to modify the deadline for motions to
amend. District courts within the Ninth Circuit generally find discovery of new evidence
sufficient to satisfy the “good cause” standard. 90 This stands to reason as an amendment
could not have been filed prior to the deadline when it reflects information that a party only
85
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992).
Id.
87
Id.
88
Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) (quoting Moss v.
U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009)).
89
Sonoma Cnty. Ass’n of Retired Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir.
2013) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
90
See, e.g., Ada Cty. Highway Dist. v. Rhythm Eng’g, LLC, No. 1:15-CV-00584-CWD,
2017 WL 1502791, at *8 (D. Idaho Apr. 25, 2017); M.H. v. County of Alameda, No. 11-2868 CW,
2012 WL 5835732 (N.D. Cal. Nov. 16, 2012); Macias v. Cleaver, No. 1:13-CV-01819-BAM, 2016
WL 8730687, at *4 (E.D. Cal. Apr. 8, 2016); see also Gambrel v. Twin Falls Cnty., No. CIV. 1:12369 WBS, 2014 WL 1612677, at *1 (D. Idaho Apr. 22, 2014) (“[T]his is a textbook example of
‘good cause.’”).
86
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obtained thereafter. Nevertheless, this reasoning only holds when evidence is newly
discovered. Courts “inquire whether the moving party knew or should have known the
facts and theories raised by the amendment in the original pleading.” 91 “Late amendments
to assert new theories are not reviewed favorably when the facts and the theory have been
known to the party seeking amendment since the inception of the cause of action.” 92
In this case, the parties dispute whether Ahtna knew or should have known
of the facts underlying its proposed amendment at the time it initiated this action. Ahtna
contends that the Rule 30(b)(6) deposition of Buck Neu revealed for the first time that there
were no specifications for a mix design in the Subcontract and these specifications were
ASI’s responsibility, that ASI decided that it did not need to devise specifications, and that
ASI’s crew followed no specifications when mixing sealant. 93 Ahtna further indicates that
it learned that ASI’s subcontractor, Graham, told ASI that it was inadvisable to apply
sealant in December, ASI signed a release with Graham acknowledging that applying
sealant in December could result in a defective product, and undertook work in December
weather conditions. 94 Ahtna argues this allegedly new information means it must amend
its claims related to malfeasance to make clear they relate to ASI’s nonfeasance.
91
AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 953 (9th Cir. 2006)
(internal quotations and citations omitted).
92
See Acri v. International Ass’n of Machinists, 781 F.2d 1393, 1398 (9th Cir. 1986)
(denying leave to amend under Rule 15).
93
Docket 53 at 3.
94
Id. at 4–5.
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ASI, for its part, claims that Ahtna knew or should have known all these facts
prior to filing suit and following earlier discovery in this matter. 95 ASI points out that
Ahtna drafted the Subcontract, which contained no specifications for a mix design, and that
Ahtna’s project manager, Bill Lowe, who drafted the Scopes of Work attached to the
Subcontract, testified that neither the Subcontract nor Scopes of Work contained any
specifications and that the Statements of Work, which reference Caltrans specifications,
were not incorporated as part of the Subcontract. 96 Moreover, ASI states that Ahtna knew
it had subcontracted with Graham Contractors due to their employees’ presence on site and
that it disclosed its subcontract with Graham on January 10, 2022. 97 Therefore, Ahtna
knew or should have known that Graham determined the slurry mix onsite.
In ASI’s view, “a plain reading of the Subcontract and consultation with
[Ahtna’s] own 30(b)(6) designee, Bill Lowe, would have fully disclosed that ASI was not
contractually bound to any specifications, that Caltrans specifications had not been
incorporated into the Subcontract, that no mix design was required to be submitted, that
Graham Inc. was a subcontractor on the project that provided the slurry mix and laid the
slurry and was the entity that should be questioned regarding the slurry mix provided for
the project; along with the third parties who tested the materials in the submittals that were
provided for the aggregate, the oil and the emulsion.” 98
95
96
97
98
Docket 61 at 6.
Id. at 6–7 (citing Docket 61-2 at 102:3–106:2).
Id. at 9.
Id. at 10.
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The Court agrees that Ahtna should have known of the facts it seeks to raise
in its proposed First Amended Complaint. Ahtna drafted the Subcontract and filed suit
based in part of a breach of its terms. Therefore, the absence of specifications in the
contract cannot be newly discovered evidence. Moreover, ASI disclosed its subcontract
with Graham more than one year before Ahtna took its 30(b)(6) deposition of Mr. Neu and
moved to amend. Information regarding Graham’s role therefore was not newly discovered
in May 2023.
Ultimately, Ahtna fails to show “good cause” for the Court to modify its
deadlines and allow leave to amend. However, as discussed below, ASI has shown good
cause and the Court will modify the Scheduling and Planning Order’s deadline for motions
to amend for both parties. Given that the deadline will be extended, the Court considers
whether to grant Ahtna leave to amend under Rule 15.
Separately, ASI argues that Ahtna’s amendment is futile because
“undisputed facts demonstrate [Ahtna] could not survive a motion for summary
judgment.” 99 But “leave to amend should be denied as futile only if no set of facts can be
proved under the amendment to the pleadings that would constitute a valid and sufficient
claim or defense.” 100 Therefore, it is immaterial whether Ahtna’s amendment would
survive summary judgment. ASI does not demonstrate that amendment is futile or that any
99
Id. at 11.
Barahona v. Union Pac. R.R. Co., 881 F.3d 1122, 1134 (9th Cir. 2018) (internal
citations and quotations omitted).
100
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of the other Foman factors apply and preclude amendment. Accordingly, Ahtna’s Motion
for Leave to Amend Complaint is GRANTED.
B.
ASI’s Motion to Amend
ASI moves to modify the motions deadline and for leave to amend its own
complaint. ASI argues that it discovered new causes of action following the delayed
disclosure of highly relevant evidence and seeks to amend its complaint to add a cause of
action for violation of the UTPCPA, supplement its breach of contract claim, substitute
Defendant Great American Insurance Company for Great American Insurance Group, and
modify its request for damages. 101
As discussed, the court only may modify its scheduling order “for good
cause. . . .” 102 The “good cause” inquiry focuses on “the diligence of the party seeking the
amendment.” 103 Discovery of truly new evidence is paradigmatically “good cause” for
modification of the scheduling order. 104
Following modification of the scheduling order to allow a party to move to
amend, the court will grant leave to amend “if justice so requires.” 105 “Requests for leave
should be granted with ‘extreme liberality’” and courts should only decline to grant leave
to amend “if there is strong evidence of ‘undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by amendments previously
101
Docket 63 at 2.
Fed. R. Civ. P. 16(b)(4).
103
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992).
104
See, e.g., Gambrel v. Twin Falls Cnty., No. CIV. 1:12-369 WBS, 2014 WL 1612677,
at *1 (D. Idaho Apr. 22, 2014).
105
Fed. R. Civ. P. 15(a)(2).
102
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allowed, undue prejudice to the opposing party by virtue of allowance of the amendment,
or futility of amendment, etc.’” 106 “A district court does not err in denying leave to amend
where the amendment would be futile, or where the amended complaint would be subject
to dismissal.” 107
ASI asserts that good cause exists to modify the deadline for motions to
amend as it discovered new evidence well after the initial deadline and Ahtna recently
changed its position with respect to pertinent facts. 108 Specifically, ASI contends that, in
April 2023, Ahtna disclosed an August 2021 report of testing and a table of results
generated by a contractor, APART, for 18 samples taken during an examination of the
allegedly defective pavement at issue in this suit. 109 Previously, Ahtna had produced a
May 10, 2021, report from APART that had been created with the single sample result as
its basis.
Furthermore, ASI argues that new evidence came to light in its 30(b)(6)
deposition of Ahtna’s designee and subsequent discovery responses, in which Ahtna
admitted that it did not understand APART’s report, that it had been warned that cold
weather could adversely affect the project, and conceded that the issues with the slurry at
the heart of this dispute were caused by cold weather. ASI argues that its proposed
106
Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) (quoting Moss v.
U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009)); Sonoma Cnty. Ass’n of Retired Emps. v.
Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir. 2013) (quoting Foman v. Davis, 371 U.S. 178, 182
(1962)).
107
Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991) (internal citations omitted).
108
Docket 69 at 11–14.
109
Id. at 11–12.
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amendments stating causes of action for violation of the UTPCA, breach of the contract’s
confidentiality provision, and third-party beneficiary breach of contract are not futile. 110
Finally, ASI seeks to substitute Great American Insurance Company for Great American
Insurance Group, suggesting that it inadvertently named the company by its trade name,
not its corporate moniker. 111
In opposition, Ahtna contests ASI’s representations regarding the August
2021 APART report, stating that it produced the report in its initial Rule 26(a) disclosures
prior to discovery. 112 Moreover, it argues that the report, which addresses the asphalt
content used, is not the crucial evidence that ASI claims as the parties now agree that the
issue with the slurry was not its conformity with industry standards, but the environmental
conditions, specifically the temperature, during its application. 113
Ahtna also argues that amendment to include a third-party beneficiary breach
of contract claim is futile because such a claim fails as a matter of law. 114
1.
Amendment is appropriate
Good cause exists to modify the Court’s scheduling order and justice requires
the Court to grant ASI leave to amend.
First, good cause exists to amend the Court’s scheduling order because ASI
could not have discovered information that necessitated its amendment until after the
110
111
112
113
114
Id. at 10–14.
Id. at 9.
Docket 77 at 2.
Id. at 3.
Id. at 7–14.
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Court’s deadline. The parties disagree as to whether the August 2021 APART report was
disclosed in prior discovery or after the deadline to amend had passed. However, only ASI
produces any support for their contention. In a sworn declaration, Michael Davis states
that Ahtna produced the August 2021 APART report in its Third Supplemental Responses
on April 14, 2023. 115 Furthermore, the Bates numbers on the August 2021 APART report
are within the range that Ahtna’s Third Supplemental Responses purported to provide. 116
Therefore, the Court can only conclude that Ahtna did not disclose the APART August
2021 report until after the deadline for ASI to amend its pleadings had passed. Similarly,
ASI discovered new information during a Rule 30(b)(6) deposition of Ahtna that provides
good cause to modify the deadline to amend. As such, there is good cause to amend the
deadline for motions to amend and the Court proceeds to consider whether ASI should be
granted leave under Rule 15.
Second, leave to amend is appropriate. Ahtna does not appear to oppose the
inclusion of ASI’s UTPCPA or breach of subcontract claims, challenge its substitution of
Great American Insurance Company, or take issue with modifying the damages sought.
However, Ahtna opposes ASI’s proposed cause of action for third-party beneficiary breach
of contract as futile. 117 In particular, Ahtna argues that ASI lacks standing to sue under
Ahtna’s prime contract with the United States. In its view, ASI is not a third-party
beneficiary who may sue on the contract because ASI is an incidental beneficiary. 118 ASI,
115
116
117
118
Docket 69-1 at ¶ 4.
Docket 69-9.
Docket 77 at 7–14.
Id. at 9–14.
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on the other hand, asserts that the prime contract between Ahtna and the United States
includes a reference to “associated subcontractors” and thus makes clear that ASI, as an
associated subcontractor, was part of a class of parties intended to benefit under the
contract. 119
“Federal law governs the interpretation of contracts entered pursuant to
federal law where the federal government is a party.” 120 Under federal common law,
district courts look to “general principles for interpreting contracts.” 121 “One such general
principle is that only a party to a contract or an intended third-party beneficiary may sue to
enforce the terms of a contract or obtain an appropriate remedy for breach.” 122
“To sue as a third-party beneficiary of a contract, the third party must show
that the contract reflects the express or implied intention of the parties to the contract to
benefit the third party.” 123
“The intended beneficiary need not be specifically or
individually identified in the contract, but must fall within a class clearly intended by the
parties to benefit from the contract.” 124
A party seeking to demonstrate its third-party beneficiary status in the
context of a government contract has a “comparatively difficult task.” 125 “Parties that
119
120
2004).
Docket 69 at 13–14.
Chickaloon-Moose Creek Native Ass’n., Inc. v. Norton, 360 F.3d 972, 980 (9th Cir.
121
Klamath Water Users Prot. Assoc. v. Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999).
GECCMC 2005-C1 Plummer St. Off. Ltd. P’ship v. JPMorgan Chase Bank, Nat. Ass’n,
671 F.3d 1027, 1033 (9th Cir. 2012).
123
Klamath Water Users Protective Ass’n, 204 F.3d at 1211.
124
Id.
125
Cnty. of Santa Clara v. Astra USA, Inc., 588 F.3d 1237, 1244 (9th Cir. 2009), rev’d on
other grounds sub nom. Astra USA, Inc. v. Santa Clara Cnty., Cal., 563 U.S. 110 (2011).
122
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benefit from a government contract are generally assumed to be incidental beneficiaries,
and may not enforce the contract absent a clear intent to the contrary.” 126 Courts “examine
the precise language of the contract for a ‘clear intent’ to rebut the presumption that the
third parties are merely incidental beneficiaries.” 127 Ultimately, “a putative third-party
beneficiary must demonstrate an intent on the part of the contracting parties to ‘grant [it]
enforceable rights.’” 128
ASI asserts it is a third-party beneficiary because the prime contract between
Ahtna and the United States references “associated subcontractors.”
However, the
references to “associated subcontractors” appear in provisions in the prime contract that
pertain to security measures and training. 129 These references indicate that the contract
contemplated the use of subcontractors. But ASI has not identified any “precise language”
in the contract that evinces a “clear intent to rebut the presumption that the third parties are
merely incidental beneficiaries” or “an intent on the part of the contracting parties to grant
it enforceable rights.” 130 As such, ASI has not shown it has standing to raise a third-party
beneficiary claim for breach of contract. Amendment to include this cause of action is
futile.
126
Klamath Water Users Protective Ass’n, 204 F.3d at 1211.
Cnty. of Santa Clara v. Astra USA, Inc., 588 F.3d at 1244 (internal quotations and
citations omitted).
128
Caltex Plastics, Inc. v. Lockheed Martin Corp., 824 F.3d 1156, 1160 (9th Cir. 2016)
(emphasis in original) (quoting Orff v. United States, 358 F.3d 1137, 1147 (9th Cir. 2004)).
129
See Docket 77-2 at 18, 30, 42, 56.
130
Cnty. of Santa Clara v. Astra USA, Inc., 588 F.3d at 1244; Caltex Plastics, Inc., 824
F.3d at 1160 (internal quotations and citations omitted).
127
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ASI may file an amended complaint but may not include a cause of action
for third-party beneficiary breach of contract. ASI’s Motion for Leave to File an Amended
Complaint is GRANTED IN PART. ASI is instructed to file an Amended Complaint
consistent with this Order.
2.
Sanctions are not appropriate
In its opposition to the motion to amend, Ahtna points out that ASI withdrew
a similar motion that sought to include two further claims, moves for sanctions, and seeks
an award of the expenses it incurred in opposing ASI’s prior motion. 131 ASI contests that
it acted in good faith when it filed and withdrew its previous motion to amend. ASI also
cross-moves for the expenses it incurred in opposing Ahtna’s motion for sanctions. 132
Sanctions are not appropriate. As an initial matter, Ahtna’s motion for
sanctions is procedurally improper. “A motion for sanctions must be made separately from
any other motion and must describe the specific conduct that allegedly violates
Rule 11(b).” 133 Neither Ahtna nor ASI have presented separate motions for sanctions. The
Court therefore declines to impose any sanction on that basis.
Moreover, the Court is not satisfied that ASI’s motions to amend were
improper under Rule 11. Under Rule 11, attorneys, by signing each motion, certify that
“to the best of the persons knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances . . . it is not being presented for any improper purpose,
131
132
133
Docket 77 at 2.
Docket 78 at 8–14.
Fed. R. Civ. P. 11(c)(2).
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such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; the
claims, defenses, and other legal contentions are warranted by existing law or by a
nonfrivolous argument for extending, modifying, or reversing existing law or for
establishing new law,” among other things. 134
The gravamen of Ahtna’s argument for sanctions is that ASI filed a motion
to amend, causing Ahtna to expend resources in responding, and then withdrew its motion,
only to later file a pared-down version of its motion and proposed amended complaint.
This hardly constitutes litigating with an improper purpose, “such as to harass, cause
unnecessary delay, or needlessly increase the cost of litigation.” 135 Indeed, by withdrawing
its motion and presenting a more limited amended complaint, ASI reduced needless
litigation. And although Ahtna did expend resources to respond to the first motion to
amend, the fact that ASI presented a similar second motion should have reduced the amount
of resources Ahtna needed to dedicate to its subsequent response.
ASI also seeks fees for expenses incurred in responding to Ahtna’s motion
for sanctions. The Federal Rules provide that, in a sanctions dispute, “[i]f warranted, the
court may award to the prevailing party the reasonable expenses, including attorney’s fees,
incurred for the motion.” 136 ASI argues fees are warranted here as Ahtna filed its motion
for sanctions in bad faith. In support of this contention, ASI submits email communications
between counsel that indicate the parties had discussed an unopposed motion to modify the
134
135
136
Fed. R. Civ. P. 11(b).
Fed. R. Civ. P. 11(c)(1).
Fed. R. Civ. P. 11(c)(2).
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Court’s scheduling order and that ASI had sent their proposed amended Complaint to
Ahtna to see if it would Ahtna would stipulate its acceptance of an amended pleading. 137
These communications do not demonstrate bad faith, so the Court will not
award a fee.
C.
ASI’s Motion in Limine to Strike the Affidavit of Randy Rogers
Next, ASI moves to strike the affidavit of Randy Rogers, which Ahtna
submits in support of its Motion for Summary Judgment on the First Amended Complaint
and Counterclaims. It argues that his affidavit is not made on personal knowledge,
includes statements that are not admissible, and does not demonstrate he is competent to
testify. 138 ASI then presents a six-page long table that matches statements included in
Mr. Rogers’ affidavit with specific objections, including hearsay and lack of foundation.139
ASI also objects that Mr. Rogers’ statements conflict with documents or other evidence
produced and should not be allowed override that evidence, particularly that of 30(b)(6)
representatives. 140
Ahtna insists that Mr. Rogers has personal knowledge of the matters he avers
to as a program manager at Ahtna who worked on the contract at issue. 141 It further argues
that Mr. Rogers does not purport to offer any expert opinion so objections in that vein are
futile. 142 And it asserts that ASI’s objections that Mr. Rogers’ statements conflict with
137
138
139
140
141
142
Docket 78-2; Docket 78-3; Docket 78-4; Docket 78-5.
Docket 86 at 4.
Id. at 4–10.
Id.
Docket 90 at 4.
Id. at 5.
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other evidence in the case are not relevant at summary judgment as they go to impeachment
and weight and that Mr. Rogers’ affidavit is not a “sham affidavit.” 143
At the summary judgment stage, a party asserting that a fact cannot be or is
genuinely disputed must support their assertion by citing the record or showing “that the
materials cited do not establish the . . . presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support the fact.” 144 When an affidavit or
declaration is used to support or oppose a motion, it “must be made on personal knowledge,
set out facts that would be admissible in evidence, and show that the affiant or declarant is
competent to testify on the matters stated.” 145 The Court’s review of affidavits and
declarations at summary judgment does not “focus on the admissibility of the evidence’s
form.” 146 “We instead focus on the admissibility of its contents.” 147 “On a motion for
summary judgment, ‘a court will disregard only the inadmissible portions of a challenged
affidavit offered in support of or opposition to the motion and will consider the admissible
portions in determining whether to grant or deny the motion.’” 148
143
Id. at 6–11.
Fed. R. Civ. P. 56(c)(1).
145
Fed. R. Civ. P. 56(c)(4).
146
Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003).
147
Id.
148
Jha v. Chicago Title Ins. Co., No. 2:23-CV-00584, 2023 WL 7386430, at *3 (W.D.
Wash. Nov. 8, 2023) (quoting Lee v. Nat’l Life Assur. Co. of Canada, 632 F.2d 524, 529 (5th Cir.
1980)).
144
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1.
Mr. Rogers’ affidavit does not establish his personal knowledge on
Ahtna’s intention and conduct regarding the Subcontract
A party seeking admission of evidence in support of a motion for summary
judgment bears the burden of proving its admissibility. 149 And, as discussed, Rule 56(c)(4)
requires that declarations adduced in support of or in opposition to summary judgment be
made based on a declarant’s personal knowledge. Here, ASI points out that many of
Mr. Rogers’ statements as to Ahtna’s knowledge, intent, and conduct with respect to the
Subcontract lack foundation. In response, Ahtna highlights that Mr. Rogers is employed
as a program manager at Ahtna, frequently works on federal contracts, and worked on the
contract at issue in this litigation. 150
Mr. Rogers’ affidavit itself does not allow the Court to conclude that he has
personal knowledge of Ahtna’s knowledge, intentions, and conduct with respect to the
Subcontract. 151 Mr. Rogers avers he is a program manager at Ahtna, but that alone does
not suffice to show that Mr. Rogers has personal knowledge of the matters on which he
speaks. 152 For example, the fact that he is a program manager at Ahtna does not suggest
he has personal knowledge that Ahtna “intended to subcontract the Project to a contract
with expertise in [asphalt], who would then adopt suitable specifications for the Project,”
that the specifications for “preparation of the Slurry Seal or the proper means of application
of those materials . . . were to be selected by ASI as the asphalt contractor,” that Ahtna was
149
In re Oracle Corp. Sec. Litig., 627 F.3d 376, 385 (9th Cir. 2010).
Docket 90 at 4.
151
The Court does not consider the facts asserted in Ahtna’s opposition as they are not
attestations by Mr. Rogers in his affidavit.
152
Docket 73-18 at ¶ 1.
150
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not aware that ASI planned to subcontract, or that its subcontractor warned against placing
slurry seal in incorrect temperatures. 153 Therefore, these statements, which purport to
explain what Ahtna intended with respect to the Subcontract, as well as similar statements
identified at Docket 86, must be stricken. The Court will not rely on Mr. Rogers’
statements that assert Ahtna’s intentions or conduct with respect to the Subcontract in
determining summary judgment.
2.
The Court declines to address purported conflicts between Mr. Rogers’
affidavit and Mr. Lowe’s Rule 30(b)(6) testimony
Additionally, ASI argues that there are conflicts between Mr. Rogers’
statements regarding Ahtna’s intentions and conduct and those of Ahtna’s Rule 30(b)(6)
designee and that the conflicting statements must be stricken. 154 A corporation generally
cannot defeat summary judgment based on an affidavit that conflicts with the testimony of
its Rule 30(b)(6) designee. 155 However, the Ninth Circuit warns that this rule applies
narrowly—“only where the purportedly conflicting evidence truly, and without good
reason or explanation, is in conflict, i.e., where it cannot be deemed as clarifying or simply
providing full context for the Rule 30(b)(6) deposition.” 156
ASI identifies a number of statements in Mr. Rogers’ affidavit that it asserts
conflict with Ahtna’s Rule 30(b)(6) designee, Bill Lowe’s, testimony. 157 However, it does
153
Id. at ¶¶ 12, 14, 19, 20.
Docket 86 at 4–10.
155
Snapp v. United Transportation Union, 889 F.3d 1088, 1103–04 (9th Cir. 2018).
156
Id. at 1103.
157
See Docket 86 at 4–10 (identifying paragraphs 6, 12, 14, 18–22, 25, and 29-32 as
problematic).
154
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not precisely identify specific segments of Mr. Lowe’s testimony with which the statements
in Mr. Rogers’ affidavit conflict. Instead, ASI points to portions of its factual background
in its Motion for Summary Judgment at Docket 75. Given the imperative to directly
compare Mr. Rogers’ statements and Mr. Lowe’s statements to determine whether they
conflict in a manner that “cannot be deemed as clarifying or simply providing full context
for the Rule 30(b)(6) deposition,” these citations are not enough. 158 The Court lacks
sufficiently specific citations to make a determination here and thus declines to do so.
3.
The Court need not address the remaining objects to Mr. Rogers’
affidavit
ASI also identifies numerous other objections to Mr. Rogers’ affidavit,
including that his statements contain hearsay and that he is not competent to speak on
certain topics. 159 However, the Court need not rule on these objections for the purposes of
summary judgment, as the statements to which ASI objects contain undisputed factual
assertions that are available as part of the broader record on summary judgment.
ASI’s Motion In Limine is GRANTED IN PART AND DENIED IN
PART.
D.
Ahtna’s Motion In Limine to Exclude Mr. Duval’s Rebuttal Report
Ahtna moves in limine to exclude the rebuttal report of ASI’s retained expert,
John Duval. It argues that Mr. Duval impermissibly opines on legal issues, including
158
159
Snapp, 889 F.3d at 1103.
Docket 86 at 4–10.
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contract interpretation. 160 And it contends that the rebuttal report improperly exceeds the
scope of the report to which it purports to respond. 161
ASI responds that Mr. Duval is qualified by experience to offer an opinion
on construction contracts and that his report does not contain legal conclusions. 162
1.
Mr. Duval does not improperly offer legal conclusions
Ahtna objects to nine opinions Mr. Duval offers, which it contends
impermissibly state legal conclusions. 163 It further argues that Mr. Duval lacks the
requisite qualifications to opine on legal principles. 164
“Under Federal Rule of Evidence 704(a), expert testimony is not
objectionable solely ‘because it embraces an ultimate issue’; however, ‘an expert witness
cannot give an opinion as to her legal conclusion, i.e., an opinion on an ultimate issue of
law.’” 165 In the end, “instructing the jury as to the applicable law ‘is the distinct and
exclusive province’ of the court.” 166
Of the nine opinions Ahtna contests are legal conclusions, none usurp the
Court’s role in instructing the jury as to the applicable law. While Mr. Duval references
the Subcontract and various legal concepts, he never offers a legal conclusion or an opinion
160
Docket 72 at 5–8.
Id. at 9–10.
162
Docket 79 at 5–17.
163
Docket 72 at 3–4.
164
Id. at 7–8.
165
Garcia v. Vitus Energy, LLC, 605 F. Supp. 3d 1179, 1184 (D. Alaska 2022) (emphasis
in original) (quoting United States v. Diaz, 876 F.3d 1194, 1197 (9th Cir. 2017)).
166
Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1016 (9th Cir. 2004)
(quoting United States v. Weitzenhoff, 35 F.3d 1275, 1287 (9th Cir. 1993)).
161
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on an ultimate issue of law. Furthermore, Ahtna’s motion in limine mischaracterizes
Mr. Duval’s conclusions. For example, Ahtna claims that Mr. Duval offers the opinion
that “cosmetic” issues in the slurry seal would not constitute breach of the Subcontract.
But Mr. Duval’s discussion of “cosmetic issues” is limited and does not offer an opinion
as to breach. Mr. Duval opines that the “cosmetic issues” could have been corrected during
the punch list phase of the project and that they did not impact the performance of the slurry
seal. 167 These opinions might support a finding that ASI did not breach the Subcontract,
but they do not constitute testimony on that ultimate issue.
The other eight opinions Ahtna challenges are permissible for similar
reasons: they are fact-based opinions that do not reach ultimate issues. 168
Having reviewed Ahtna’s objections and Mr. Duval’s report, the Court
concludes that Mr. Duval did not improperly usurp its role. Insofar as Ahtna seeks to
challenge Mr. Duval’s qualifications to offer his opinions under Rule 702, its arguments
are not sufficiently developed and unpersuasive. That Mr. Duval is not an attorney does
not mean he cannot offer his opinion on construction contracts, which he has considerable
experience drafting, negotiating, and managing. 169
167
Docket 72-2 at 28–33.
See id. at 3–5 (discussing the distinction between contract specifications and building
codes), 6–8 (discussing the types of projects to which CALTRANS specifications apply), 8–16
(discussing “design-build” as a contract delivery method), 19 (discussing the import of the
liquidated damages clause, which is not an ultimate issue), 16–19 (discussing how the contract
could have incorporated specifications, 36 (opining there is no accepted industry standard of care).
169
See Docket 79-7 at ¶¶ 5–6; see also Hangarter, 373 F.3d at 1015 (noting that Rule 702
contemplates a broad conception of expert qualifications).
168
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2.
Mr. Duval’s rebuttal report does not exceed the scope of Dr. Shatnawi’s
initial report
Ahtna next argues that Mr. Duval’s rebuttal report should be excluded
because it exceeds the scope of Dr. Shatnawi’s report by making arguments regarding the
sufficiency of ASI’s remediation proposal and concluding that Pavement Coating’s work
to “correct” the deficiencies in the slurry seal constituted “betterment.” 170
The scope of an expert’s rebuttal report is limited. 171 “An expert report
qualifies as a rebuttal report if it ‘is intended solely to contradict or rebut evidence on the
same subject matter identified by another party under [Federal Rule of Civil Procedure]
26(a)(2)(B) or C.’” 172 Experts designated as rebuttal experts may offer limited testimony
and may not testify in a party’s case-in-chief. 173 And, “proper expert rebuttal cannot
explore new areas not raised in initial reports.” 174
Mr. Duval’s rebuttal report does not exceed the scope of the report to which
it responds.
Dr. Shatnawi opines in his report that Ahtna correctly deemed ASI’s
remediation proposal insufficient and suggests that the solution to the slurry seal’s alleged
performance issues was milling them off and applying a new cape seal. 175 Mr. Duval’s
rebuttal testimony regarding the sufficiency of ASI’s remediation proposal does not
170
Docket 72 at 9.
Specter v. Texas Turbine Conversions, Inc., No. 3:17-cv-00194-TMB, 2020 WL
7234369, at *4 (D. Alaska Dec. 8, 2020) (citing Fed. R. Civ. P. 26).
172
Id. (alterations in original) (quoting Fed. R. Civ. P. 26(a)(2)(D)(ii)).
173
Lindner v. Meadow Gold Dairies, Inc., 249 F.R.D. 625, 636 (D. Haw. 2008).
174
TCL Commc’ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson, No. CV 1502370 JVS, 2016 WL 7042085, at *4 (C.D. Cal. Aug. 17, 2016).
175
Docket 72-1 at 11.
171
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explore new areas, but responds to Dr. Shatnawi’s opinion. In the same vein, Mr. Duval’s
opinion that milling off and replacing the cape seal constituted “betterment” responds to
Dr. Shatnawi’s assertion that these measures were required to address the slurry seal’s
alleged performance issues. Ahtna’s motion to exclude Mr. Duval’s rebuttal report is
DENIED.
E.
Ahtna’s Motion for Summary Judgment at Docket 73
Ahtna moves for summary judgment on the claims it asserts in its First
Amended Complaint as well as the counterclaims ASI asserts. 176 ASI opposes, arguing
that disputes of material fact preclude summary judgment in favor of Ahtna. 177
As explained below, summary judgment in Ahtna’s favor is not warranted.
Ahtna makes conclusory arguments that each of its claims have been proven and does not
meaningfully grapple with the record. Ahtna’s Motion for Summary Judgment filed at
Docket 73 is DENIED in its entirety.
1.
Summary judgment that ASI breached its Subcontract with Ahtna is not
appropriate
Ahtna argues that ASI breached at least two provisions of the agreement: a
provision requiring it to perform work “with the care and skill ordinarily used by members
of the trade or profession appropriate to the task, practicing under similar conditions using
modern methods for the locality of the work” and a provision requiring ASI to “re-perform
any
services
176
177
not
meeting
specifications
and
standards,
without
additional
Docket 73.
Docket 84.
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compensation.” 178 In Ahtna’s view, ASI breached the first provision “by failing to adopt
and follow reasonable specifications and precautions for the application of Slurry Seal in
unsuitable weather, despite warnings from its subcontractor of the need to do so” and
violated the second provision by refusing to reperform the defective work. 179
ASI responds that the first provision requiring ASI perform work with care
and skill ordinarily used in the trade cannot modify or add terms to the contract and
therefore, cannot support a claim that ASI had a contractual duty to adopt and follow
specifications and precautions for the application of slurry seal in unsuitable weather.180
ASI does not appear to address the alleged breach of the provision requiring reperformance.
As the movant, Ahtna bears the initial burden and must establish an absence
of a genuine issue of material fact by either citing the record or showing “that the materials
cited do not establish the . . . presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” 181 Then, it must show that judgment as
a matter of law is warranted on the basis of the undisputed facts. 182 Ahtna has not carried
that burden here.
With respect to the first provision Ahtna claims ASI breached, Ahtna has not
established that failing to adopt and follow reasonable specifications and precautions for
the application of slurry seal in unsuitable weather would have breached the provision
178
179
180
181
182
Docket 73 at 17 (quoting Docket 73-6 at 2).
Id.
Docket 84 at 17–18.
Fed. R. Civ. P. 56(c)(1).
Fed. R. Civ. P. 56(a).
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requiring ASI to perform work “with the care and skill ordinarily used by members of the
trade or profession . . .” Its motion does not cite to any evidence in the record that allows
the Court to conclude that care and skill ordinarily used by members of the profession
required ASI to adopt specifications or weather precautions. In its reply, Ahtna suggests
that ASI’s expert concludes that it is industry practice to follow certain specifications in
applying slurry seal in suitable weather. 183 But a district court need not consider arguments
first raised in a reply. 184 And, regardless, Ahtna’s citation to ASI’s expert’s report is
insufficient to establish the industry standard. ASI’s expert, Mr. Duval, does not purport
to offer an opinion on the industry standard. 185 Rather, he examined the cape and chip seal
at Fort Hunter Liggett and offered opinions on the performance of these treatments and the
parties’ contract. 186
With respect to the second provision Ahtna claims ASI breached, there is a
genuine dispute of material fact that precludes summary judgment. Ahtna asserts that ASI
did not reperform work that was rejected, but the facts do not support that straightforward
narrative. Although ASI does not directly respond to this argument, the Court must
conduct an independent review of the record to determine whether the motion and
supporting materials entitled Ahtna to summary judgment. 187
183
Docket 92 at 5 (citing Docket 75-25 at 33–38).
Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007).
185
See Docket 75-25 at 1, 40–42.
186
Id. at 40–42.
187
See Heinemann v. Satterberg, 731 F.3d 914, 917 (9th Cir. 2013); Fed. R. Civ.
P. 56(e)(3).
184
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The record shows that ASI made efforts to cure deficiencies raised by Ahtna
prior to Ahtna’s termination of the Subcontract on September 29, 2021. When Ahtna
initially identified deficiencies in a punch list in early 2021, ASI proposed a plan to address
the issues, which was delayed due to weather concerns. 188 Furthermore, ASI proposed a
remediation plan but Ahtna rejected the plan and terminated of the contract. 189 Therefore,
the record does not reflect Ahtna’s straightforward assertion that “[ASI] refused to do what
was needed to address the problem” and thus breached the contract. 190 Additionally, there
is at least a dispute as to whether ASI was prevented from meeting its contractual
obligations when Ahtna terminated the contract on September 29, 2021.
Summary
judgment with respect to the breach of contract claim is not warranted on the motion and
record before the Court.
2.
Summary judgment on Ahtna’s implied covenant of good faith and fair
dealing is not warranted
Next, Ahtna seeks summary judgment on its claim that ASI violated the
implied covenant of good faith and fair dealing. Ahtna asserts that ASI intentionally
disregarded the standard of care required by the Subcontract and violated the covenant of
good faith and fair dealing. 191
ASI disputes the evidence on which Ahtna relies to show that ASI treated
Ahtna in a manner that a reasonable person would regard as unfair. 192
188
189
190
191
192
Docket 75-2 at 48–51.
Docket 73-15.
Docket 73 at 14.
Id. at 24.
Docket 84 at 19–21.
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Under Alaska law, “[t]he covenant of good faith and fair dealing is implied
in every contract in order to effectuate the reasonable expectations of the parties to the
agreement . . . .” 193 “The covenant includes subjective and objective elements, both of
which must be satisfied.” 194 “The subjective element prohibits one party from acting to
deprive the other of the benefit of the contract.” 195 “The objective element requires each
party to act in a manner that a reasonable person would regard as fair.” 196
Here, Ahtna argues that there is no dispute of fact that a reasonable person
would regard ASI’s actions with respect to the contract as unfair because ASI was warned
it should follow reasonable precautions with respect to the weather when placing the slurry,
did not take such precautions, and failed to take corrective action after the slurry failed due
to ASI’s failure to exercise care when placing the slurry. 197 For its part, ASI insists that it
and others advised Ahtna that cold weather could be an issue, but Ahtna chose to proceed
with slurry application. 198 Furthermore, it argues that it sought to take corrective steps
after Ahtna identified issues with the slurry. 199
Summary judgment is not warranted. The facts Ahtna claims indicate that
ASI did not act in a way a reasonable person would regard as fair are disputed. Specifically,
the record contains evidence that ASI and others warned Ahtna about cold weather at
193
Ramsey v. City of Sand Point, 936 P.2d 126, 133 (Alaska 1997).
Anchorage Chrysler Ctr., Inc. v. DaimlerChrysler Motors Corp., 221 P.3d 977, 992
(Alaska 2009).
195
Id. (internal quotations and citations omitted).
196
Id. (internal quotations and citations omitted).
197
Docket 73 at 24.
198
Docket 84 at 20–21.
199
Id. at 21.
194
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several points and that Ahtna chose to proceed with the project. 200 Furthermore, there is
evidence that ASI sought to correct issues in the slurry application. 201
As such, a
reasonable person could conclude that ASI acted fairly under the circumstances and a
factfinder must determine whether Ahtna has met the objective element of its claim of
breach of the covenant of good faith and fair dealing.
3.
Disputes of material fact exists as to Ahtna’s UTPCPA claim
Ahtna seeks summary judgment on its UTPCPA claim. It asserts that ASI
violated the UTPCPA because it “misled [Ahtna] into believing that it would be delivering
a professionally competent work product, all the while knowing there was a substantial
probability it would not do so.” 202 Specifically, Ahtna contends that ASI promised to
execute the Subcontract, which included applying slurry seal, even though it had no
intention of taking the weather precautions necessary to ensure the product performed. 203
ASI responds that Ahtna has not established that ASI made false
representations or that it could be deceived, misled, or confused about ASI’s placement of
slurry seal given the warnings it received about the weather. 204 Indeed, in ASI’s view,
200
See Docket 75-2 at 8 (conversations about the impact of the weather between Ahtna
and Buck Neu of ASI in August and September 2020, prior to the execution of the contract); id. at
42 (Mr. Lowe and Mr. Neu discussed the possibility that cold weather could affect the slurry seal);
Docket 75-13 at 5–6 (Mr. Lowe was specifically told that the weather was unsuitable but he
insisted that the project be completed by December 30).
201
See Docket 75-2 at 50 (work plan in response to punch list); Docket 73-15 (ASI’s
August 2021 remediation plan).
202
Docket 73 at 26.
203
Id. at 24–26.
204
Docket 84 at 21–23.
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Ahtna insisted on an ill-advised timeline for performance of the Subcontract despite its
awareness that cold weather posed a risk. 205
The Alaska UTPCPA declares unlawful “[u]nfair methods of competition
and unfair or deceptive acts or practices in the conduct of trade or commerce . . . .” 206 The
Act defines unfair methods of competition and unfair or deceptive acts or practices to
include a number of acts, including “representing that goods or services are of a particular
standard, quality, or grade, or that goods are of a particular style or model, if they are of
another” and “engaging in any other conduct creating a likelihood of confusion or of
misunderstanding and that misleads, deceives, or damages a buyer or a competitor in
connection with the sale or advertisement of goods or services.” 207
To establish a prima facie case under the UTPCPA, a party must prove two
elements: “(1) that the defendant is engaged in trade or commerce; and (2) that in the
conduct of trade or commerce, an unfair act or practice has occurred.” 208 “An act or
practice is deceptive or unfair if it has the capacity or tendency to deceive.” 209 “The
plaintiff need not prove that the defendant intended to deceive; it is enough to show that
the acts and practices were capable of being interpreted in a misleading way.” 210
205
Id. at 22–24.
Alaska Stat. § 45.50.471(a).
207
Alaska Stat. § 45.50.471(b)(6) & (11).
208
State v. O’Neill Investigations, Inc., 609 P.2d 520, 534 (Alaska 1980).
209
Id.
210
Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240, 1255 (Alaska 2007) (internal
quotations and citations omitted).
206
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Ahtna’s UTPCPA claim cannot be decided on summary judgment. As
discussed, there is a dispute as to whether Ahtna and its representatives were aware that
the weather was an issue but chose to proceed with the project anyway. 211 As such, the
undisputed facts fail to demonstrate that ASI represented that its services were of a
particular standard that were not, nor that it engaged in conduct creating a likelihood of
confusion or of misunderstanding.
4.
Disputes of material fact preclude summary judgment against UFCC’s
performance bond
Ahtna next argues that it is entitled to judgment against the UFCC Bond
guaranteeing ASI’s performance of the Subcontract. It states that the terms of the Bond
required UFCC to arrange for the completion of the work, hire another contractor to
complete the project, or arrange for a new contract for the project’s completion once Ahtna
gave written notice of ASI’s default and terminated the contract for ASI’s failure to cure
the default. 212 And it submits that UFCC breached the terms of the Bond when it did not
take one of these actions and instead argued that Ahtna had wrongfully terminated the
Subcontract. 213 ASI does not address these arguments directly.
Again, there is a material dispute of fact that precludes summary judgment
as to this claim. Ahtna points to the language of the Subcontract and to evidence that shows
211
See Docket 75-2 at 8 (conversations about the impact of the weather between Ahtna
and Buck Neu of ASI in August and September 2020, prior to the execution of the contract); id. at
42 (Mr. Lowe and Mr. Neu discussed the possibility that cold weather could affect the slurry seal);
Docket 75-13 at 5–6 (Mr. Lowe was specifically told that the weather was unsuitable but he
insisted that the project be completed by December 30).
212
Docket 73 at 26–27.
213
Id. at 27–28.
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that ASI did not fulfill those obligations. But the record demonstrates that the story is more
complicated. In its letter responding to Ahtna’s notice of default, UFCC argued that Ahtna
had not provided ASI an adequate opportunity to remedy its alleged default and noted its
own conclusions that the slurry was performing as expected. 214 Furthermore, there is
evidence in the record that ASI sought to remedy the default but Ahtna refused to accept
its August 25, 2021, remediation plan. 215 Thus, there is a dispute of fact with respect to
whether the performance bond was breached. Summary judgment is not warranted.
5.
Summary judgment as to Ahtna’s bad faith claim is not appropriate
In addition to its claim for judgment on the Bond, Ahtna asserts a tort claim
against UFCC for bad faith. Ahtna argues that summary judgment on this claim is
appropriate because UFCC did not meaningfully investigate Ahtna’s claim on the Bond
and denied Ahtna’s claim. 216 In particular, Ahtna submits that UFCC knew that it could
not credibly test the asphalt for the material composition at the time of paving and therefore
could not meaningfully investigate whether the mix design complied with “applicable
specifications” at the time of its placement. 217
ASI contests this assertion, insisting that UFCC’s consultant investigated the
asphalt issues in good faith, had at its disposal samples taken by Ahtna’s consultant,
APART, and ultimately concluded that the materials were performing as intended. 218 ASI
214
215
216
217
218
See Docket 75-22 at 12–14.
Docket 73-16.
Docket 73 at 29.
Id. (citing Docket 73-14).
Docket 84 at 25–26.
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underscores that the only specification in the Subcontract for to provide Type II slurry.219
Finally, ASI asserts that the parties disagreed with respect to whether the materials had met
the specifications provided in the Subcontract. 220
“[A]n implied covenant of good faith and fair dealing exists between a surety
and its obligee on payment and performance bonds in the construction context.” 221 A
surety may satisfy this duty “by acting reasonably in response to a claim by its obligee, and
by acting promptly to remedy or perform the principal’s duties where default is clear.” 222
For example, “failure by a surety minimally to investigate its principal’s alleged default
may constitute bad faith if that investigation would confirm the obligee’s allegations in
material part.” 223
Summary judgment is not appropriate for Ahtna’s bad faith claim. There is
a factual dispute as to whether UFCC minimally investigated. Evidence shows that UFCC
hired two firms to investigate the claim, conducted a site investigation, and made
observations regarding the performance of the slurry seal. 224 Notwithstanding UFCC’s
alleged failure to conduct a reliable test of the asphalt’s material composition, there is a
question of fact as to whether the surety minimally investigated the default claim.
219
Id. at 26.
Id. at 26–27.
221
O’Connor v. Star Ins. Co., 83 P.3d 1, 4 (Alaska 2003) (internal citation and quotation
marks omitted).
222
Id.
223
Loyal Ord. of Moose, Lodge 1392 v. Int’l Fid. Ins. Co., 797 P.2d 622, 628 (Alaska
1990).
224
See Docket 75-22 at 3–4, 12–14; see also Docket 75-23 at 1.
220
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Furthermore, Ahtna has not shown that further investigation would have
confirmed Ahtna’s allegation that ASI was in default. An investigation into the mix design
ASI used in the slurry seal would not have confirmed that ASI was in default of the
Subcontract because no mix design was specified in the Subcontract. 225 Perhaps an
investigation into the mix design could have shown that ASI did not act in accordance with
standards of the trade as required by the Subcontract. But, as discussed, Ahtna has not
produced any evidence that the Court can rely on to determine what the standards of the
trade are. Thus, even if UFCC failed to minimally investigate, Ahtna has not demonstrated
that “investigation would [have] confirm[ed] the obligee’s allegations in material part.” 226
6.
Summary judgment on damages is not warranted
Ahtna argues that summary judgment declaring the amount of damages is
warranted because damages are calculable as the cost of completion or repair. 227 It
contends that the figures its expert used are based on “hard data,” such as the invoices
Ahtna paid for reperformance of ASI’s allegedly defective work. 228 ASI responds that
damages are disputed as its retained expert has submitted conflicting reports that indicates
that Ahtna owes ASI damages. 229
Generally, “the cost of completion or repair is the preferred measure for
calculating damages when a building contractor breaches a construction contract by
225
See Docket 73-6; see also Docket 73-18 at ¶ 24.
Loyal Ord. of Moose, Lodge 1392, 797 P.2d at 628.
227
Docket 73 at 30–31.
228
Id. at 31–32.
229
Docket 84 at 27–28; see also Docket 84-12 (Joseph Seder’s expert report); Docket 8413 (Mr. Seder’s rebuttal report).
226
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incomplete or defective performance.” 230
However, Ahtna has not established the
preliminary matter—that there was incomplete or defective performance of the
Subcontract. Therefore, the Court cannot assume the measure of damages traditionally
applied where a contractor breaches a construction contract is the correct method of
calculating damages in this case. Furthermore, even assuming this measure of damages
applied, there is a material dispute of fact as to the figures Ahtna’s expert, Jeffrey
Lounsberry, uses to calculate damages. 231
7.
Summary judgment dismissing ASI’s counterclaims is not appropriate
Finally, Ahtna seeks summary judgment as to all of ASI’s counterclaims. In
conclusory terms and without identifying ASI’s counterclaims, it asserts that “the legal
theories pleaded in ASI’s Complaint are untenable and unsupported by the undisputed
facts.” 232 This sparse showing fails to carry Ahtna’s burden on summary judgment with
respect to ASI’s counterclaims.
F.
Ahtna’s Motion for Partial Summary Judgment at Docket 74
In a second motion, Ahtna moves for summary judgment dismissing ASI’s
UTPCPA claim as alleged in ASI’s lodged First Amended Complaint. 233
230
231
232
233
Advanced, Inc. v. Wilks, 711 P.2d 524, 526 (Alaska 1985).
See Docket 84-13 at 4–8.
Docket 73 at 32–33.
See Docket 69-4.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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1.
The UTPCPA applies to commercial disputes
Ahtna first argues that ASI may not maintain a UTPCPA claim because the
Act does not apply to claims unrelated to the act of purchasing a good or service. 234 ASI
responds that the Act applies to commercial transactions as well as consumer
transactions. 235
As discussed, the UTPCPA declares unlawful “[u]nfair methods of
competition and unfair or deceptive acts or practices in the conduct of trade or
commerce . . . .” 236 The Act “may apply in the business-to-business context.” 237 In
Western Star Trucks, Inc. v. Big Iron Equipment Service, Inc., the Alaska Supreme Court
held that the language of UTPCPA demonstrates that it “was not intended to be limited to
consumer transactions” and applied the statute to a transaction between a commercial
vehicle manufacturer and a potential dealer. 238 Since the Alaska Supreme Court’s decision
in Western Star Trucks, Alaska courts have applied the UTPCPA in commercial contract
disputes, including in the construction context. 239 Moreover, the Alaska Supreme Court
has advocated for a “flexible, case-specific approach” in UTPCPA cases. 240
234
Docket 74 at 4–7.
Docket 85 at 5–8.
236
Alaska Stat. § 45.50.471(a).
237
ASRC Energy Servs. Power & Commc’ns, LLC v. Golden Valley Elec. Ass’n, Inc., 267
P.3d 1151, 1163 (Alaska 2011) (citing Western Star Trucks, Inc. v. Big Iron Equipment Service,
Inc., 101 P.3d 1047, 1053–54 (Alaska 2004)).
238
Western Star Trucks, Inc., 101 P.3d at 1049–52.
239
See ASRC Energy Servs. Power & Commc’ns, LLC, 267 P.3d at 1154.
240
Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240, 1256 (Alaska 2007).
235
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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ASI asserts a UTPCPA claim premised on Ahtna’s alleged conduct in the
course of the parties’ dispute concerning the performance of the Subcontract, including its
communications with the United States and its conduct in litigation related to the
Subcontract. 241 ASI’s claim fits within the scope of the UTPCPA because ASI’s claim is
based on acts or practices in the conduct of a commercial transaction.
Although
communications with a third-party and the initiation and maintenance of a lawsuit are not
themselves part of the parties’ commercial transaction, these acts are sufficiently related to
the commercial contract such that they may be considered acts or practices in the conduct
thereof.
2.
Summary judgment dismissing ASI’s UTPCPA is appropriate as ASI
fails to adduce evidence of an ascertainable loss
Alternatively, Ahtna argues that ASI’s UTPCPA claim fails on the merits.242
Among other things, Ahtna argues that “as a threshold matter, ASI lacks standing to pursue
a claim based on [Ahtna’s] relationship with a third party” because it did not demonstrate
that it suffered an ascertainable loss of money or property due to Ahtna’s alleged failure to
provide information to the United States. 243 ASI asserts that it properly alleged violations
of the UTPCPA because Ahtna disparaged ASI to the United States. 244 However, it cites
to its First Amended Complaint for support. 245
241
242
243
244
245
See Docket 69-4 at 28–31.
Docket 74 at 7–9.
Id. at 8.
Docket 85 at 13–14.
Id. (citing Docket 69-4 at 31).
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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ASI’s UTPCA claim alleges that Ahtna engaged in two acts that are unfair
or deceptive within the meaning of the Act: first, that it concealed the results of July 2021
testing of the asphalt from Forth Hunter Liggett and, second, that Ahtna concealed from
the United States that it had been warned on multiple occasions that weather conditions
were unsuitable for the planned construction activities. 246
A party seeking damages under the UTPCPA must “suffer[] an ascertainable
loss of money or property as a result of” an allegedly unfair or deceptive act. 247 While ASI
contends that it suffered a loss because Ahtna disparaged its services, it has not adduced
any evidence that demonstrates such a loss. Instead, it cites to allegations in its First
Amended Complaint. But a party cannot “defeat summary judgment with allegations in
the complaint, or with unsupported conjecture or conclusory statements.” 248 Accordingly,
summary judgment dismissing ASI’s UTPCPA claim is warranted. Ahtna’s Motion for
Summary Judgment is GRANTED and its UTPCPA claim is DISMISSED.
G.
ASI’s Motion for Summary Judgment
ASI moves for partial summary judgment dismissing several of Ahtna’s
claims, namely Counts I, II, III, IV, and V, except for the claims related to Section IV of
the Subcontract. 249 ASI also seeks summary judgment on Ahtna’s proposed amended
complaint. 250
246
247
248
249
250
Docket 69-4 at 28–29.
Alaska Stat. § 45.50.531(a).
Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003).
Docket 75 at 2–3.
Id. at 3.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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As explained below, ASI’s Motion for Summary Judgment is GRANTED
IN PART AND DENIED IN PART.
1.
Partial summary judgment is warranted to narrow Ahtna’s breach of
contract claim (Count I)
ASI seeks summary judgment partially dismissing Ahtna’s breach of contract
claim (Count I). 251
It argues that the Subcontract between the parties included an
integration clause that limited the contract to its written terms, that the written terms did
not include Caltrans or other technical specifications, and that Ahtna’s breach of contract
claim should be dismissed insofar as it is based on ASI’s alleged failure to comply with the
specifications in the Subcontract. 252 In opposition, Ahtna asserts that Section 4 of the
Subcontract required ASI to follow specifications because it required it perform its services
under the standard of care ordinarily used by members of the industry. 253
Partial summary judgment is warranted. Ahtna may not assert a claim for
breach of the Subcontract on the theory that ASI failed to comply with written
specifications in the parties’ agreement.
There is no genuine dispute of fact that the Subcontract did not include a term
mandating adherence to Caltrans or other specifications. The Subcontract does not include
any written terms that expressly state specifications are to be followed. 254 And the
251
252
253
254
Id. at 21–26.
Id.
Docket 87 at 6–11.
See Docket 73-6.
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government Statements of Work, which were incorporated in the prime contract between
Ahtna and the United States, were not made part of the Subcontract. 255
Additionally, no prior agreement that included specifications may be implied
as part of the Subcontract. Federal courts sitting in diversity, as this Court does here, apply
state substantive law, including the law of contracts. 256 Under Alaska law, courts interpret
contracts to “give effect to the reasonable expectations of the parties.” 257 “When a written
statement sets out the terms of an agreement between contracting parties, the parol
evidence rule generally precludes the parties from using evidence of prior agreements to
contradict the written terms.” 258 However, “[b]efore the parol evidence rule can be applied,
three preliminary determinations must be made: (1) whether the contract is integrated,
(2) what the contract means, and (3) whether the prior agreement conflicts with the
integrated agreement.” 259 “An integrated agreement is an agreement which is ‘adopted by
the parties as a complete and exclusive statement of the terms of the agreement.’” 260
Here, the parol evidence rule applies and prohibits the Court’s consideration
of prior agreements. The Subcontract is the integrated agreement of the parties. By its
terms, it specifies that it is the complete and exclusive statement of the parties. 261 It
255
See id.; see also Docket 73-18 at ¶ 24.
Gasperini v. Ctr. for Humans., Inc., 518 U.S. 415, 428 (1996).
257
Mitford v. de Lasala, 666 P.2d 1000, 1005 (Alaska 1983).
258
Froines v. Valdez Fisheries Dev. Ass’n, Inc., 75 P.3d 83, 86 (Alaska 2003). The Court
assumes Alaska law applies to the Subcontract because the parties’ briefing cites Alaska law.
259
Alaska Diversified Contractors, Inc. v. Lower Kuskokwim Sch. Dist., 778 P.2d 581, 583
(Alaska 1989).
260
Lower Kuskokwim Sch. Dist. v. Alaska Diversified Contractors, Inc., 734 P.2d 62, 63
(Alaska 1987) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 210(1) (1981)).
261
Docket 73-6 at 11.
256
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Order Regarding Pending Motions
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includes an integration clause, which states that the agreement “represents the entire
agreement between the Contractor and the Subcontractor and supersedes any prior written
or oral representations.” 262 Furthermore, it is complete and specific; it contains detailed
provisions, incorporates exhibits, and includes a term identifying the provisions of the
prime contract “flow down” and apply to the Subcontract. 263 Next, the Subcontract does
not include technical specifications. 264 Therefore, extrinsic evidence that the parties agreed
the specifications in the government Statements of Work in the prime contract between
Ahtna and the United States conflicts with the absence of such terms in written
Subcontract. 265 Accordingly, the parol evidence rule bars evidence of the alleged prior
agreement between the parties that included technical specifications. The Subcontract
cannot be interpreted to include express specifications. A breach of contract claim based
on the inclusion of express specifications necessarily fails.
Furthermore, Ahtna may not proceed on the theory that Section 4 of the
Subcontract, the “standard of care clause,” might have required ASI to adopt or follow
certain specifications. As the Court will discuss, there is no dispute that the issues with the
slurry seal’s softness were the result of the material’s application in cold weather.
262
Id.
See generally id.; see also RESTATEMENT (SECOND) OF CONTRACTS § 209(3) (1981)
(“Where the parties reduce an agreement to a writing which in view of its completeness and
specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement
unless it is established by other evidence that the writing did not constitute a final expression.”).
264
See generally Docket 73-6.
265
See Froines, 75 P.3d at 86–87 (quoting Alaska Stat. § 45.02.202(2)) (“The parol
evidence rule forbids contradiction of partially integrated terms but allows them to be ‘explained
or supplemented . . . by evidence of consistent additional terms.’”).
263
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Accordingly, there is no causal connection between any specifications that Section 4 may
have required ASI to adopt and the defects in the slurry seal.
Summary judgment narrowing the permissible theory on which Ahtna may
assert a breach of contract claim is warranted. Ahtna may not assert a breach of contract
claim that is based on ASI’s alleged failure to follow specifications in mixing the slurry
seal.
2.
The Court declines to address ASI’s argument with respect to Ahtna’s
now-amended UTPCPA claim (Count V)
Second, ASI moves for summary judgment dismissing Ahtna’s UTPCPA
claim (Count V). 266 ASI argues that Ahtna cannot establish an essential element of its
claim—that ASI represented that the materials it used complied with specifications in the
Subcontract. 267 However, Ahtna’s First Amended Complaint, lodged at Docket 53-3,
alleges a substantially different claim under the UTPCPA and no longer includes a claim
based on representations related to the materials ASI used. 268 Instead, Ahtna’s amended
claim concerns the weather conditions under which ASI placed slurry seal. 269 Given the
difference between the claim on which ASI seeks summary judgment and the amended
claim, the Court will not address ASI’s summary judgment argument.
266
267
268
269
Docket 75 at 26.
Id. at 26–27.
See Docket 53-3 at 12–14.
Id.
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3.
There is no dispute that applying the slurry seal in unsuitable weather
caused the alleged defects
ASI argues that the Court should find that there is no material issue of fact
regarding the cause of the soft cape and slurry seals and that this issue was due to placement
in cold weather. 270 Ahtna does not directly respond.
ASI contends that there is no material dispute of fact as to the cause of the
defects in the cape seal and slurry seal and cites to its expert’s report. 271 Although Ahtna
does not directly respond, the Court must independently review the record to determine
whether it supports ASI’s argument for summary judgment. 272 The Court reviewed the
report compiled by Ahtna’s expert, Dr. Shatnawi. 273 His report notes that ASI’s failure to
follow a mix design before placing the slurry seal created a high risk of failure. 274
Dr. Shatnawi then discusses how placing the surface treatments in unsuitable weather
conditions may lead to the instability of the asphalt emulsion and its separation. 275 And he
concludes that “[t]he consequences of ASI’s failure to exercise due care when applying
cape seal in the winter months resulted in the aforementioned premature stress.” 276
Dr. Shatnawi agrees that the application of the slurry seal in cold weather
was a cause of the soft slurry seal. And while his report discusses the mix design, he never
270
Docket 75 at 30.
Id. at 29.
272
See Heinemann v. Satterberg, 731 F.3d 914, 917 (9th Cir. 2013); Fed. R. Civ.
P. 56(e)(3).
273
See Docket 73-3.
274
Id. at 12.
275
Id. at 12–13.
276
Id. at 14.
271
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Order Regarding Pending Motions
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draws the conclusion that ASI’s alleged lack of adherence to a mix design was the cause
of the slurry seal softness. Therefore, there is no dispute of fact that the cause of the slurry
seal defects was its placement during cold weather. Ahtna’s breach of contract claim is
narrowed as discussed above.
4.
Summary judgment dismissing Ahtna’s breach of contract claim as a
whole is not appropriate
ASI also moves for summary judgment dismissing the breach of contract
claim insofar as it is premised on a theory that the Subcontract was breached because ASI
placed the slurry in cold weather. 277 It requests that the Court find that Ahtna had the
contractual responsibility to determine the suitability of the weather and that ASI
repeatedly warned Ahtna that cold weather was an issue during the period of
performance. 278
Ahtna responds that the record does not contain evidence that proceeding
with the work would result in uncured slurry seal and that no language in the Subcontract
placed the responsibility for determining the suitability the weather on Ahtna. 279
Summary judgment is not warranted as to Ahtna’s breach of contract claim
on this theory. The record shows that there were temperature requirements for the
placement of slurry seal in the Statements of Work incorporated as part of the prime
contract between Ahtna and the United States. 280 By contrast, the Subcontract does not
277
278
279
280
Docket 75 at 29–31.
Id. at 30.
Docket 87 at 11–12.
See, e.g., Docket 73-2 at 21–22.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
Case Nos. 3:21-cv-00228-JMK, 3:22-cv-00219-JMK
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Order Regarding Pending Motions
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contain temperature requirements for the placement of slurry seal and no terms of the
Subcontract designate one party responsible for ensuring suitable weather conditions exist
during placement of slurry seal. 281
Ahtna’s breach of contract claim is for breach of the Subcontract, not the
prime contract. That Ahtna was required under the prime contract to ensure placement at
appropriate temperatures does not demonstrate that Ahtna was responsible under the
Subcontract for ensuring the placement of slurry seal under suitable temperature
conditions.
However, Ahtna may proceed on the theory that Section 4 of the Subcontract,
the “standard of care clause,” might have required ASI to place the slurry seal under certain
weather conditions. Section 4 of the Subcontract requires that ASI perform services under
the standard of care ordinarily used by members of the industry. Neither party has provided
evidence to substantiate the standard of care used by members of the industry. Summary
judgment dismissing Ahtna’s breach of contract claim as a whole is not warranted as ASI
has not demonstrated there is an absence of material fact concerning the standard of care.
5.
A dispute of fact exists as to Ahtna’s claim for breach of the implied
covenant of good faith and fair dealing (Count II)
ASI seeks summary judgment on Ahtna’s claim that it violated its duty of
good faith and fair dealing. Ahtna does not directly respond. Ahtna’s First Amended
281
See Docket 73-2.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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Complaint asserts that ASI violated this duty in part because it refused to correct the
allegedly defective work it performed. 282
The covenant of good faith and fair dealing is implied in all contracts in
Alaska. 283 “The covenant requires that neither party will do anything which will injure the
right of the other to receive the benefits of the agreement.” 284 “A party must act in
subjective good faith, meaning that it cannot act to deprive the other party of the explicit
benefits of the contract, and in objective good faith, which consists of acting in a manner
that a reasonable person would regard as fair.” 285
ASI asserts that there is no dispute that Ahtna’s May 24, 2021, letter
demanding that ASI remove and replace the material was based on erroneous conclusions,
that ASI offered to do so based on a change order, and reaffirmed its commitment to
address punch list items, at no cost to Ahtna. 286 In view of these facts, it argues, ASI did
not cause Ahtna to be deprived of any benefit of the Subcontract by seeking owed
compensation before fulfilling the punch list items. 287
Summary judgment is not warranted here. ASI has not carried their burden
to show there is no dispute of fact and that it is entitled to judgment as a matter of law. Its
discussion does not make clear, with citations to materials in the record and legal authority,
282
Docket 53-3 at 10–11.
Lockwood v. Geico Gen. Ins. Co., 323 P.3d 691, 697 (Alaska 2014).
284
Jackson v. Am. Equity Ins. Co., 90 P.3d 136, 142 (Alaska 2004) (quoting Guin v. Ha,
591 P.2d 1281,1291 (Alaska 1979)).
285
Casey v. Semco Energy, Inc., 92 P.3d 379, 384 (Alaska 2004).
286
Docket 75 at 31.
287
Id. at 31–32.
283
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that it was entitled to seek payment before remediating the alleged slurry issues. And the
Court declines to search the record and applicable law for the materials necessary to decide
an inadequately briefed claim. 288 Consequently, the Court cannot grant summary judgment
on Ahtna’s claim for breach of the covenant of good faith and fair dealing.
6.
Summary judgment is not appropriate as to either of Ahtna’s claims
related to the performance bond (Counts III and IV)
Finally, ASI argues that Ahtna’s claim against the UFCC performance bond
and its claim for bond bad faith should be dismissed because the undisputed facts show
that Ahtna refused to allow ASI or UFCC to remediate the work as provided for in the bond
agreement, unilaterally contracted with another contractor without notifying UFCC, and
deprived the surety of an opportunity to minimize its liability. 289
First, ASI contends that dismissal of Ahtna’s claim against the performance
bond is warranted because UFCC properly denied the claim on the bond after Ahtna
unilaterally breached the terms of the bond. 290 UFCC maintained that the bond was null
and void after Ahtna failed to provide UFCC with its contractually-guaranteed opportunity
to minimize its liability. 291 Ahtna does not reply directly, but its prior motion for summary
judgment makes clear that it believes that UFCC breached the terms of the bond by failing
to arrange for the completion of the work, hire another contractor to complete the project,
288
289
290
291
See Indep. Towers of Washington v. Washington, 350 F.3d 925, 929 (9th Cir. 2003).
Docket 75 at 34–37.
Id. at 36–37.
Id.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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or arrange for a new contract for the project’s completion once Ahtna gave written notice
of ASI’s default and terminated the contract. 292
UFCC’s Bond Number 54-197228 provides that, in the event of notice that
the principal is considering default, the surety—here, UFCC—may arrange to perform and
complete the contract itself (section 5.1), perform and complete the contract through agents
or independent contractors (section 5.2), or obtain bids or proposals from qualified
contractors to do the same (section 5.3). 293
UFCC ultimately denied the bond claim in part because, in its view, Ahtna
had not allowed UFCC an opportunity to complete the contract under the Section 5.1 of
the bond and thus had unilaterally breached the bond agreement. 294 It also concluded that
the slurry was performing as expected and denied the bond claim in part on that basis. 295
Following Ahtna’s May 12, 2021, notice of its intent to declare ASI in default
and terminate the Subcontract, Ahtna did not provide UFCC or ASI an opportunity to
complete the contract under Section 5.1 of the bond agreement. 296 When ASI proposed a
remediation plan to address the issues with the slurry on August 25, 2021, the record
reflects that Ahtna did not respond and instead terminated the Subcontract on
September 29, 2021. 297
292
293
294
295
296
297
Docket 73 at 26–28.
Docket 75-28 at 2.
Docket 75-22 at 13.
Id.
Docket 73-12.
Docket 73-15; Docket 73-16.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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However, in its summary judgment motion, it cites no legal authority in
support of its assertion that Ahtna’s unilateral breach of the bond rendered it void. As the
movant, ASI bears the burden of establishing there is no genuine dispute of fact and it is
entitled to judgment as a matter of law. 298 ASI has not done so here.
Second, ASI argues that Ahtna’s claim for bond bad faith should be
dismissed, but it fails to specify what grounds justify dismissal. 299 The Court declines to
surmise the basis for ASI’s request. Summary judgment dismissing the bad faith bond
claim is DENIED.
IV.
CONCLUSION
For the foregoing reasons, the Court orders as follows:
1.
Ahtna’s Motion to Amend at Docket 53 is GRANTED.
2.
ASI’s Motion to Amend at Docket 69 is GRANTED IN PART AND
DENIED IN PART.
3.
ASI’s Motion in Limine to Strike the Affidavit of Randy Rogers at
Docket 86 is GRANTED IN PART AND DENIED IN PART.
4.
Ahtna’s Motion in Limine to Exclude the Rebuttal Report of
Mr. Duval at Docket 72 is DENIED.
5.
298
299
Ahtna’s Motion for Summary Judgment at Docket 73 is DENIED.
Fed. R. Civ. P. 56(a).
Docket 75 at 34–37.
Ahtna Design-Build, Inc. v. Asphalt Surfacing, Inc., et al.;
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6.
Ahtna’s Motion for Partial Summary Judgment at Docket 74 is
7.
ASI’s Motion for Partial Summary Judgment at Docket 75 is
GRANTED.
GRANTED IN PART AND DENIED IN PART.
IT IS SO ORDERED this 7th day of February, 2024, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
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