United States District Court, D. Alaska
David E. Olson, et al., Plaintiffs,
Mark O'Brien, et al., Defendants.
ORDER AND OPINION [RE: MOTION AT DOCKETS 94 &
W. SEDWICK SENIOR JUDGE.
docket 94 defendants Mark O'Brien, James Cantor, and
Richard Welsh (collectively, “Defendants”) move
to dismiss the complaint of plaintiffs David E. Olson and
Absolute Environmental Services, Inc. (collectively,
“Plaintiffs”) pursuant to Federal Rule of Civil
Procedure 12(b)(6). Plaintiffs oppose the motion at docket
102, supported by a declaration from Plaintiffs' counsel
at docket 103. Defendants reply at docket 109. At docket 114
the court authorized Defendants to file a surreply; they did
so at docket 119.
docket 110 Defendants move to strike Plaintiffs'
counsel's declaration. Plaintiffs oppose the motion at
docket 113. Defendants reply at docket 118. Because the court
does not rely on Plaintiffs' counsel's declaration,
Defendants' motion is denied as moot. Oral argument was
not requested and would not assist the court.
background of this case is set out in the court's order
at docket 77 and need not be repeated here. Suffice it to say
for present purposes that the Alaska Department of
Administration denied Plaintiffs' request for an
equitable adjustment to the contract price for the work they
performed on the State Office Building (“SOB”) in
Juneau. Plaintiffs brought an administrative appeal of the
denial, which was ultimately denied. Plaintiffs' present
complaint alleges that Defendants violated their civil rights
by committing various actions that compromised the integrity
of the appeal process.
appealed the administrative decision to the Alaska Superior
Court, arguing in part that the agency's decision was
procedurally flawed. In pertinent part the Superior Court
held that any procedural flaws in the administrative appeal
did not deprive Plaintiffs of a due-process-compliant hearing
and, substantively, Plaintiffs had no contractual right to
recover their additional costs.
appealed to the Alaska Supreme Court. The Alaska Supreme
Court affirmed the Superior Court's conclusion that
Plaintiffs lacked a substantive contractual right to recover
additional costs. In light of this conclusion, the court
refrained from addressing Plaintiffs' procedural claims,
holding that Plaintiffs cannot show they were harmed by the
procedural issues they identified.
docket 61 Defendants filed a motion to dismiss
Plaintiffs' complaint on claim preclusion and issue
preclusion grounds. At docket 77 the court granted the
motion, holding that Plaintiffs' complaint was barred by
claim preclusion. In light of this holding, the court found
it unnecessary to consider Defendants' issue preclusion
appealed, and the Ninth Circuit Court of Appeals reversed.
The Ninth Circuit noted that an exception to claim preclusion
applies “where the party against whom it is asserted
‘lacked [a] full and fair opportunity to litigate his
claims.'” The court held that this exception applies
here because Plaintiffs lacked a full and fair opportunity to
litigate their claims for damages regarding the
“alleged improprieties in the decision-making
process” of their administrative appeal. The Ninth Circuit
remanded the case to this court for consideration of
Defendants' issue preclusion arguments.
STANDARD OF REVIEW
12(b)(6) tests the legal sufficiency of a plaintiff's
claims. In reviewing such a motion, “[a]ll allegations
of material fact in the complaint are taken as true and
construed in the light most favorable to the nonmoving
party.” To be assumed true, the allegations,
“may not simply recite the elements of a cause of
action, but must contain sufficient allegations of underlying
facts to give fair notice and to enable the opposing party to
defend itself effectively.” Dismissal for failure to
state a claim can be based on either “the lack of a
cognizable legal theory or the absence of sufficient facts
alleged under a cognizable legal theory.” “Conclusory
allegations of law . . . are insufficient to defeat a motion
avoid dismissal, a plaintiff must plead facts sufficient to
“‘state a claim to relief that is plausible on
its face.'” “A claim has facial plausibility
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” “The
plausibility standard is not akin to a ‘probability
requirement, ' but it asks for more than a sheer
possibility that a defendant has acted
unlawfully.” “Where a complaint pleads facts
that are ‘merely consistent with' a defendant's
liability, it ‘stops short of the line between
possibility and plausibility of entitlement to
relief.'” “In sum, for a complaint to
survive a motion to dismiss, the non-conclusory
‘factual content, ' and reasonable inferences from
that content, must be plausibly suggestive of a claim
entitling the plaintiff to relief.”
initial motion to dismiss raised both claim preclusion and
issue preclusion. Claim preclusion prohibits a “party
from raising any claim or defense in the later action that
was or could have been raised in support of or in
opposition to the cause of action asserted in the prior
action.” One rationale for this rule is waiver.
“If a party does not raise a claim or a defense in the
prior action, that party thereby waives its right to raise
that claim or defense in the subsequent
action.” Under the exception-to-claim preclusion
that the Ninth Circuit applied here, a party does not waive
her right to raise a claim in a future action unless she had
a full and fair opportunity to raise that claim in the prior
preclusion, on the other hand, does not concern
waiver. “Instead, courts reason that if
another court has already furnished a trustworthy
determination of a given issue of fact or law, a party that
has already litigated that issue should not be allowed to
attack that determination in a second
action.” Issue preclusion applies only where the
litigant had a full and fair opportunity to litigate the
issue in the first action.
the first judgment here was issued by an Alaska court, this
court must apply Alaska law to determine whether issue
preclusion bars any of Plaintiffs' claims.To determine
whether issue preclusion applies under Alaska law, courts
apply the test set out in the Restatement (Second) of
Judgments § 27,  under which four factors must be met:
“(1) the party against whom the preclusion is employed
was a party to or in privity with a party to the first
action; (2) the issue precluded from relitigation is
identical to the issue decided in the first action; (3) the
issue was resolved in the first action by a final judgment on
the merits; and (4) the determination of the issue was
essential to the final judgment.” As discussed
below, these four factors are met in this case.
Plaintiffs were parties to or in privity with a party to the
concede that this requirement is satisfied. The first
action was brought by North Pacific Erectors, Inc.
(“NPE”). Plaintiff David E. Olson alleges that,
as the president and sole shareholder of co-plaintiff
Absolute Environmental Services, Inc. (“AESI”),
he is the assignee of NPE's civil rights claims against
Defendants. As such, Plaintiffs are in privity with
a party to the first action.
Issues decided in the first action are identical to issues in
action, Plaintiffs essentially reassert the procedural claims
that the Superior Court rejected in the first action.
Defendants' motion asserts that these claims are barred
by issue preclusion because the factual issues upon which
Plaintiffs' claims rely substantially overlap with
factual issues decided by the Superior Court in the first
action,  and the legal issue central to this
case-whether Defendants' actions violated Plaintiffs'
procedural rights-is identical to a legal issue that was
decided in the first action. In response, Plaintiffs argue
Defendants have not shown how any of the factual issues
identified in their motion are essential to any elements of
Plaintiffs' claims. Plaintiffs do not dispute, however,
that the Superior Court resolved the same legal issues that
they assert in this action. In reply, Defendants do not
counter Plaintiffs' factual argument by identifying any
factual issues decided in the first action that are necessary
to any causes of action alleged here. Instead, they focus on
the Superior Court's resolution of the essential legal
issue in this case.
court finds that the Superior Court decided at least two
issues that are identical to issues raised in this case.
First, the court agrees with Defendants that the Superior
Court decided whether Defendants violated Plaintiffs'
procedural rights in the administrative proceeding. Second,
the Superior Court also decided whether Defendants'
actions in the administrative ...