In SMJ General Construction, Inc. v. Jet Commercial Construction, LLC,[1] the supreme court held that parties which agree to release each other from preexisting contractual obligations in a settlement are not subsequently obligated to abide by those same contractual obligations. SMJ was contracted by Jet to support a construction project. Disputes arose between SMJ and Jet, leading to a mediation as mandated by the contract’s dispute resolution clause. The mediation resulted in a settlement that, inter alia, absolutely released the parties from any and all claims, demands, and obligations arising from the initial contract. In a suit that SMJ subsequently brought against Jet, the latter argued that the former’s claims were not properly before the court because of the initial contract’s dispute resolution clause. The supreme court reversed the lower court’s decision, holding that the direct and unambiguous language of the settlement released the parties from obligations incurred under the initial contract. The court reasoned that, in the absence of obligations under the initial contract, the parties had no duty to arbitrate their claims. The supreme court reversed, holding that parties which agree to release each other from preexisting contractual obligations in a settlement are not subsequently obligated to abide by those same contractual obligations.
[1] 440 P.3d 210 (Alaska 2019).
