Girdwood Mining Company v. Comsult LLC, 329 P.3d 194

Girdwood Mining contracted with Comsult (2003) under a Management Agreement (management services) and a Fundraising Agreement (raise capital). They later executed a 2004 Memorandum of Understanding terminating both agreements and providing separate compensation: promissory notes for Management and stock plus a royalty for Fundraising.
Comsult sued Girdwood in 2007 to collect on an unpaid promissory note; Girdwood confessed judgment in 2008 and did not assert illegality of the agreements as a defense.
In 2009 Girdwood sued Comsult seeking declaratory judgment that the Fundraising Agreement (and related Memorandum grants) violated Alaska securities law and seeking equitable rescission/cancellation of stock and royalty interests.
The superior court granted summary judgment to Comsult on two grounds: (1) AS 45.55.930(g) bars a person from basing a suit on a contract made in violation of securities law, and (2) res judicata barred Girdwood’s claims because it could have raised them defensively in the 2007 action.
The Supreme Court reviewed both legal rulings de novo, assumed for purposes of argument that the Fundraising Agreement violated securities law, and reversed the superior court on both grounds and remanded for further proceedings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether AS 45.55.930(g) bars Girdwood’s suit to invalidate an allegedly illegal contract and rescind compensation	Girdwood: statute bars suits that seek to enforce illegal contracts, not suits that seek to declare a contract illegal and obtain rescission under common-law principles	Comsult: any suit that seeks relief relating to an illegal contract is "based on" the contract and thus barred	Court: statute bars suits that seek to enforce terms of an illegal contract, but does not bar suits that seek to invalidate an illegal contract and obtain rescission under extra‑contractual/common‑law rules; reverse summary judgment.
Whether Girdwood’s claims are barred by res judicata because it did not assert illegality defensively in the 2007 suit	Girdwood: 2007 suit and present suit arise from distinct transactions (promissory note for Management vs. stock/royalty for Fundraising); independent instruments; claims are different	Comsult: both suits stem from the same Memorandum and thus are transactionally linked; failure to raise defense is preclusive	Court: the factual groupings are sufficiently distinct (different agreements, different consideration, independent instruments); res judicata does not preclude Girdwood’s present claims; reverse summary judgment.

ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc., 322 P.3d 114 (Alaska 2014) (summary-judgment standard and de novo review of legal questions)
Cragle v. Gray, 206 P.3d 446 (Alaska 2009) (statutory interpretation standard)
Patrawke v. Liebes, 285 P.3d 268 (Alaska 2012) (res judicata review principles)
Insight Assets, Inc. v. Farias, 321 P.3d 1021 (Utah 2013) (action ‘‘based upon’’ a contract when enforceability of the writing is asserted as basis for recovery)
Regional Props., Inc. v. Fin. & Real Estate Consulting Co., 678 F.2d 552 (5th Cir. 1982) (issuer may seek to void consulting contract under federal securities statute)
McElroy v. Kennedy, 74 P.3d 903 (Alaska 2003) (transactional test for same cause of action)
Sengupta v. Univ. of Alaska, 21 P.3d 1240 (Alaska 2001) (limits on defensive preclusion and parties’ flexibility to choose forum)