ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc.
322 P.3d 114
| Alaska | 2014Background
- ConocoPhillips supplied crude to Williams under an Exchange Agreement that required Williams to reimburse ConocoPhillips for Quality Bank degradation charges, including retroactive adjustments, and contained an "adequate-assurances" clause and a signed‑writing modification clause.
- During a FERC/RCA rate‑making process, ConocoPhillips demanded assurances; Williams wired $31,268,645 in October 2002 and sent a letter stating ConocoPhillips’s receipt and retention would constitute acceptance of Williams’s terms, including interest on the principal at a FERC‑prescribed rate.
- ConocoPhillips replied (Oct. 29, 2002) acknowledging receipt and retention as a “preliminary partial settlement,” objecting to one term (a joint‑negotiating linkage) but not stating an interest rate; it previously had proposed LIBOR in an earlier letter.
- No further discussion occurred; after the regulatory proceedings concluded, ConocoPhillips invoiced Williams and credited the $31m plus interest at LIBOR (about $5m), not the higher FERC rate Williams claimed (about $10m).
- Williams sued; the superior court initially granted summary judgment holding a contract had formed under UCC §2‑207(1) requiring FERC interest, rescinded that order on reconsideration but again entered judgment for Williams on alternative grounds; both parties appealed.
Issues
| Issue | Plaintiff's Argument (Williams) | Defendant's Argument (ConocoPhillips) | Held |
|---|---|---|---|
| Does UCC Article 2 (§2‑207) govern formation of a modification to the Exchange Agreement, or does Article 9 or §2‑209 displace §2‑207? | §2‑207 applies to this modification of a goods sale; §2‑209 supplements §2‑207 and its signed‑writing requirement was satisfied or waived. | Article 9 governs because the $31m created a security interest; or if §2‑209 applies, it preempts §2‑207 and requires a signed writing expressly agreeing all terms. | §2‑207 applies to the modification alongside §2‑209; §2‑209’s signed‑writing requirement was satisfied or waived. |
| Did ConocoPhillips’s Oct. 29 letter constitute a “definite and seasonable expression of acceptance” under UCC §2‑207(1), forming a contract that adopted Williams’s proposed FERC interest term? | Yes — ConocoPhillips mirrored Williams’s acceptance language (“received and retained”), objected only to one term, and otherwise indicated the parties were done negotiating, so silence on interest amounted to assent. | No — ConocoPhillips expressly rejected a term and voiced disagreement with unspecified terms; silence on interest cannot create assent; §2‑209/common law mirror‑image rules prevent formation absent a signed agreement on all terms. | The court held the Oct. 29 communication was a §2‑207(1) acceptance; a contract formed and included the FERC interest term. |
| If §2‑207(1) did not form a contract, could conduct create a contract under §2‑207(3) or would quantum meruit/other gap‑filling rules govern interest? | Alternatively, conduct after negotiation created an implied‑in‑fact contract giving FERC interest; if not, quantum meruit would yield at least market commercial‑paper interest. | No contract was formed; if anything, Article 9/gap rules would limit or deny interest credits. | Court did not reach or rely on §2‑207(3) or quantum meruit because it affirmed the §2‑207(1) ruling. |
| Were the superior court’s awards of attorney’s fees and costs proper given procedural deadlines and reasonableness challenges? | Williams sought and obtained an extension to file fee/cost motions; it was prevailing and entitled to fees under the parties’ agreement; amounts were reasonable. | ConocoPhillips contended the fee/cost motions were untimely and the court abused discretion granting extensions and awarding full fees without reductions for unsuccessful theories. | The court affirmed: extensions were within discretion (excusable neglect/no prejudice) and the fee award was not an abuse of discretion. |
Key Cases Cited
- Witt v. State, Dep’t of Corr., 75 P.3d 1030 (Alaska 2003) (summary judgment standard; review de novo)
- Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507 (Alaska 1980) (silence to terms can imply assent in context)
- Step‑Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91 (3d Cir. 1991) (§2‑207 applies to non‑mirroring writings and contract modifications)
- Idaho Power Co. v. Westinghouse Elec. Corp., 596 F.2d 924 (9th Cir. 1979) (§2‑207 rejects common‑law mirror‑image rule)
- Alliance Wall Corp. v. Ampat Midwest Corp., 477 N.E.2d 1206 (Ohio App. 1984) (examples where return documents are not §2‑207(1) acceptances when key terms remain in dispute)
- Valdez Fisheries Dev. Ass’n v. Froines, 217 P.3d 830 (Alaska 2009) (factors for evaluating reasonableness of attorney’s fees)