Supreme Court No. S-12896 Superior Court No. 3SW-04-85 CI Appeal from the Superior Court of the State of Alaska, Third Judicial District, Seward, Sharon Gleason, Judge.
The opinion of the court was delivered by: Carpeneti, Justice.
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, e-mail email@example.com.
Before: Fabe, Chief Justice, Eastaugh, Carpeneti, and Winfree, Justices. [Matthews, Justice, not participating.]
Members of a fraternal organization brought suit against other members asserting claims for breach of a settlement agreement and a derivative action on behalf of the fraternal organization. The superior court dismissed the derivative suit and later granted summary judgment for defendants on the grounds that, because a previous contempt action raising the same claims was dismissed, the damages claims for breach of settlement were barred by res judicata. Because Alaska law does not recognize a derivative right of action for non-profit members, we affirm the superior court's dismissal of that claim. However, we conclude that the order on the contempt motion in the first action was not a judgment on the merits of plaintiffs' claims for damages and therefore the claims for damages for breach of the settlement agreement were not precluded by res judicata. The fact that the judgment in the contempt action did not reach the merits also prevents the application of issue preclusion, or collateral estoppel, to these claims. Accordingly, we remand for further proceedings.
II. FACTS AND PROCEEDINGS
In November 2002 two of the appellants, Robert Fulton and Robert Summers, settled a previous suit against appellees Stephen L. Cox and Leslie R. Little and others. That suit concerned the suspension of several members of various Masonic lodges in Alaska, including Fulton and Summers. Cox was a leader of the Alaska Grand Lodge at the time. The final appellant, Fred Angleton, is a former Grand Master of the Alaska Masonic Lodge and advisor to Fulton and Summers and, though not a party to the first suit, was named in the settlement of that suit because the plaintiffs wished to protect him from any potential retaliation for his involvement in the dispute.
The parties reached a settlement at a judicial settlement conference on November 27, 2002, and Superior Court Judge Dan A. Hensley placed the terms of the agreement on the record orally. The settlement's essential terms were that, in exchange for dismissal of all claims, defendants would pay plaintiffs $10,000 cash within 30 days and immediately restore the plaintiffs to their status as Master Masons. Cox and Little would send letters to Masonic and related groups informing them of the reinstatement, and withdraw a 2002 Grand Master edict expelling Masons who file lawsuits; they would then seek a review and vote regarding the Grand Master's power to suspend and expel members. No Masonic charges would be brought against plaintiffs or any members who assisted the plaintiffs in the litigation "for any reason arising in connection on . . . or before the date of this settlement." No parties would speak in a disparaging way about any other parties at the Grand Lodge. Plaintiffs' counsel further stated this is meant to be, obviously, a summary claim in that any -- assum[ing] the current resolution, any breach would be actionable only in the context of the settlement agreement for rectification of that breach and would not invalidate the remainder of the agreement.
It was very important to the suspended members that the defendants' promises be effective immediately because they wished to attend annual elections at the Seward Masonic lodge six days later on December 3, 2002. However, Cox took the position that Fulton and Summers were not effectively reinstated until after a stipulation for dismissal was entered. Judge Hensley settled this dispute at a show cause hearing the afternoon of the election, ordering that defendants were bound to readmit the plaintiffs immediately.
Throughout December 2002 and January 2003, Cox and Little acted in ways that may have violated the settlement agreement. For example, they voided the December 3 election at which Fulton and Summers were voted into office. They decided that Fulton and Summers could not be reinstated until the entire membership of the Grand Lodge voted. Angleton was suspended in connection with his assistance to Fulton and Summers, and members were instructed to exclude Fulton and Summers from lodge membership-only functions, which included funerals of Fulton's friends.
On February 6, 2003, Summers, Fulton, and Angleton were reinstated by the newly elected Grand Master at the annual Grand Lodge meeting. In their annual report, Cox and Little discussed the litigation without using names, stating that the members who brought the suit failed their brethren and that the Masonry should be devoid of lawsuits. Little added that three members of the Grand Lodge "sought to set aside their obligations as Masons. The pain these actions have caused Masonry will, unfortunately, reach throughout the North ...