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Alaska Division of Motor Vehicls v. Fernandes (10/31/97), 946 P 2d 1259
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.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, DEPARTMENT )
OF PUBLIC SAFETY, DIVISION ) Supreme Court No. S-7573
OF MOTOR VEHICLES, )
) Superior Court No.
Appellant, ) 4FA-95-839 CI
v. ) O P I N I O N
JOAQUIM S. FERNANDES, ) [No. 4899 - October 31, 1997]
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Ralph R. Beistline, Judge.
Appearances: Susan Paterson, Assistant
Attorney General, Fairbanks, and Bruce M. Botelho, Attorney
General, Juneau, for Appellant. Allen R. Cheek, Fairbanks, for
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
The Alaska Department of Public Safety (DOPS) suspended
Joaquim Fernandes's driver's license because he did not have
automobile liability insurance when he caused substantial property
damage while operating his vehicle. The superior court reversed
the suspension decision. We reverse the superior court's decision
and remand for reinstatement of the suspension.
II. FACTS AND PROCEEDINGS
On October 8, 1994, following a Fairbanks snowfall,
Joaquim Fernandes was unable to stop his vehicle. It struck a Jeep
Cherokee. The impact knocked the Cherokee into the oncoming lane,
where it struck a Suburban and a trailer. The collision destroyed
the Cherokee, which was worth $20,000. The Suburban sustained
damage of $150. Fernandes's vehicle sustained slight damage.
There were no physical injuries.
At the time of the accident, Fernandes had neither motor
vehicle insurance nor a certificate of self-insurance. See AS
28.22.011(a). Fernandes, however, accepted full responsibility for
the damage, and paid $20,632.50 in exchange for full releases.
Within ten days of the accident, Fernandes purchased an automobile
liability insurance policy.
The Department of Public Safety suspended Fernandes's
driver's license for ninety days under AS 28.22.041(a)(1), because
he was operating an uninsured vehicle. Fernandes objected to the
suspension on the ground he had substantially complied with the
self-insurance provisions of Alaska law. See AS 28.20.400.
Following an administrative hearing, DOPS Hearing Officer Kathy
Kutchins affirmed the suspension.
Fernandes appealed the administrative decision to the
superior court, arguing that the doctrine of substantial compliance
barred the suspension. The superior court reversed the
A. The Alaska Mandatory Automobile Insurance Act
The principal issue is whether Fernandes's post-accident
conduct excuses his pre-accident failure to comply with the Alaska
Mandatory Motor Vehicle Insurance Act (mandatory insurance laws),
AS 28.22. [Fn. 1] Fernandes personally indemnified all parties who
had suffered damages from the accident and purchased automobile
liability insurance soon after the accident.
The hearing officer suspended Fernandes's license because
Fernandes did not provide proof of insurance or a certificate of
self-insurance valid at the time of the accident. See AS
28.22.021. The superior court reversed, finding that Fernandes had
substantially complied with the mandatory insurance laws by
indemnifying all damaged parties.
The State argues that Fernandes did not comply with the
mandatory insurance laws because he was unable to show proof of an
insurance policy or a certificate of self-insurance valid when the
accident occurred. It also argues that Fernandes did not
substantially comply with the mandatory insurance laws. The State
admits that Fernandes has met the requirements of the Motor Vehicle
Safety Responsibility Act (financial responsibility laws), AS
Fernandes argues that the doctrine of substantial
compliance applies because he fulfilled the statutory purpose of
the law -- financial restoration of innocent victims of accidents.
The mandatory insurance laws require an operator of a
motor vehicle on a public highway to be insured under a motor
vehicle liability policy or a certificate of self-insurance. AS
28.22.011(a). [Fn. 2] The insurance or self-insurance must be in
place during the vehicle's operation, except under operating
conditions not pertinent here. The mandatory insurance laws also
required the vehicle operator, following an accident resulting in
bodily injury or property damage exceeding $500, to provide to DOPS
proof of insurance or a certificate of self-insurance. AS
28.22.021 (amended 1996). If, following an accident, the operator
fails to provide proof of insurance or self-insurance, DOPS must
suspend the operator's driver's license for at least ninety days.
AS 28.22.041(a)(1). [Fn. 3]
Compliance thus requires proof that valid insurance or a
valid certificate of self-insurance was in place when the accident
The statute requiring suspension contains an exception
which applies if three conditions are met. AS 28.22.041(h)
(amended 1996). [Fn. 4] As of 1994, the exception applied if: (1)
the accident resulted in property damage of less than $1,000 and
all damage occurred only to the person required to show proof of
insurance, AS 28.22.041(h)(1); (2) the person without insurance at
the time of the accident provided proof of insurance within fifteen
days of the accident, AS 28.22.041(h)(2); and (3) the person
without insurance showed that the failure to have insurance was due
to circumstances beyond the person's control, AS 28.22.041(h)(3).
Fernandes did not meet two of these three conditions.
The accident resulted in property damage to others of more than
$1,000, and Fernandes did not show that his failure to have
insurance was due to circumstances beyond his control.
Fernandes did not satisfy the strict requirements of AS
28.22.021, nor did he satisfy the requirements of the exception
found in AS 28.22.041(h).
B. Substantial Compliance with the Mandatory Insurance Laws
Fernandes argues that even if he did not strictly comply
with the statute, he substantially complied. "[S]ubstantial
compliance involves conduct which falls short of strict compliance
with the statutory . . . requirements, but which affords the public
the same protection that strict compliance would offer." Nenana
City Sch. Dist. v. Coghill, 898 P.2d 929, 933 (Alaska 1995)
(holding that a teacher whose teaching certificate had lapsed was
in substantial compliance with the regulations because the public
was otherwise similarly protected). See also Jones v. Short, 696
P.2d 665, 667 n.10 (Alaska 1985) (holding that if a contractor
whose registration has expired still protects the public, the
contractor has substantially complied with the registration
The mandatory insurance laws primarily protect the public
by compensating innocent victims who have been injured by the
negligence of financially irresponsible motorists. See 1989
Informal Op. Att'y Gen. 375, 376. To substantially comply with AS
28.22, Fernandes had to show that he had provided the public with
the same level of protection that would have existed had he
complied with the statute. See Nenana City Sch. Dist., 898 P.2d at
934; Jones, 696 P.2d at 668.
Fernandes demonstrated his financial responsibility by
compensating each motorist for the damage incurred. [Fn. 6] He
therefore complied with the financial responsibility laws, AS
28.20. Fernandes, however, did not provide the level of protection
required by the mandatory insurance laws, AS 28.22.
A person without motor vehicle insurance need not provide
proof of insurance if the person meets all three requirements of
the exception found in AS 28.22.041(h). In our view, this
statutory exception defines the contours of substantial compliance
with the mandatory insurance requirement of AS 28.22.011(a). The
requirements of the statutory exception protect the public by
excepting from mandatory license suspension only motorists who
prove the failure to have insurance at the time of the accident was
beyond their control, and who are involved in minor accidents.
As seen above, Fernandes meets only one of the three
requirements. Fernandes demonstrated no justification for his
failure to have insurance in place when the accident occurred, and
the damage substantially exceeded the maximum permitted by AS
28.22.041(h). Therefore, Fernandes did not substantially comply
with AS 28.22.021.
Fernandes also argues that he substantially complied with
the self-insurance provisions of AS 28.20.400. A self-insurer must
be continuously able to pay a judgment of $125,000. AS 28.20.400.
[Fn. 7] In addition, the Division of Motor Vehicles requires a
self-insurer to deposit $125,000 with the commissioner of Public
Safety. Fernandes has shown that he has $46,710.61 in an Individual
Retirement Account (IRA) and owns real property assessed for tax
purposes at $182,643. After the accident, Fernandes was forced to
partially liquidate his IRA to compensate the victims. Because the
real property was subject to homestead exemptions and fluctuations
in the property markets, it did not provide the security of a
negotiable instrument held by the commissioner of Public Safety.
Moreover, Fernandes has made no attempt to comply with the law by
setting aside specific assets for the purpose of self-insurance.
Therefore, Fernandes has not maintained the same protection which
compliance with the self-insurance statute and regulations affords
If we were to accept Fernandes's argument, the
requirement of applying for a certificate of self-insurance would
be effectively eliminated for any individual with net worth
We conclude that Fernandes has not substantially complied
with the mandatory insurance laws or the self-insurance statute.
[Fn. 8] IV. CONCLUSION
We REVERSE the decision of the superior court and REMAND
with instructions to remand to DOPS for reinstatement of the
hearing officer's decision.
When the superior court acts as an intermediate appellate
court, we review the merits of the underlying administrative
decision, giving no deference to the lower court's determination.
State, Dep't of Revenue v. Merriouns, 894 P.2d 623, 625 (Alaska
1995) (citations omitted).
Additionally, because questions of law regarding the
Mandatory Motor Vehicle Insurance Act do not involve agency
expertise, we review the agency's application of statutory law
substituting our independent judgment. See Dominish v. State,
Commercial Fisheries Entry Comm'n, 907 P.2d 487, 492 (Alaska 1995)
(citing Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
AS 28.22.011(a) provides:
(a) The operator or owner of a motor
vehicle subject to registration under AS 28.10.011 when driven on
a highway, vehicular way or area, or on other public property in
the state, shall be insured under a motor vehicle liability policy
that complies with this chapter or a certificate of self-insurance
that complies with AS 28.20.400 unless
(1) the motor vehicle is being driven or
moved on a highway, vehicular way, or a public parking place in the
state that is not connected by a land highway or vehicular way to
(A) the land-connected state highway
(B) a highway or vehicular way with an
average daily traffic volume greater than 499; and
(2) the operator has not been cited
within the preceding five years for a traffic law violation with a
demerit point value of six or more on the point schedule determined
under regulations adopted by the department under AS 28.15.221.
AS 28.22.041(a)(1) provides:
(a) Except as provided in (h) of this
section, if a person fails to provide proof required under AS
28.22.021 and 28.22.031 [requirement and method of proof of motor
vehicle insurance], the department shall suspend the driver's
license of that person for the following periods:
(1) not less than 90 days if, within the
preceding 10 years, the person has not had a driver's license
suspended for violation of AS 28.22.011 [motor vehicle insurance
requirement] or former AS 28.22.200.
AS 28.22.041(h) provides:
(h) Subsection (a) does not apply to a
person who is required to provide proof under AS 28.22.021 if the
(1) is involved in an accident that
results in property damage of less than $1,000 and the damage
occurs only to the property of the person required to show proof of
(2) not later than 15 days after the
accident, provides proof of motor vehicle liability insurance that
complies with this chapter or a certificate of self-insurance that
complies with AS 28.20.400 to the department; and
(3) establishes by a preponderance of
the evidence that the failure to have in effect motor vehicle
liability insurance or to self-insure as required by this chapter
at the time of the accident was due to circumstances beyond the
control of the person.
Fernandes does not cite these exceptions on appeal. He
seemingly relies on them indirectly in asserting that the superior
court correctly found that the mandatory insurance laws contained
exemptions and exceptions that gave the hearing officer authority
to consider substantial compliance.
Some states' mandatory insurance laws have exceptions for
those uninsured persons who obtain releases of liability and then
acquire motor vehicle insurance. See Barnes v. Kansas Dep't of
Revenue, 714 P.2d 975, 978 (Kan. 1986). Alaska's mandatory
insurance laws provide no such exception.
AS 28.20.400 provides:
(a) . . . A person in whose name fewer
than 25 vehicles are registered qualifies as a self-insurer and
shall be issued a certificate of self-insurance, if the person
provides proof satisfactory to the department that the person has
and will continue to have the ability to pay a judgment for
property damage, bodily injury, or both, in the amount of at least
(b) The department may issue a
certificate of self-insurance when it is satisfied that the person
has and will continue to have ability to pay judgments obtained
against the person. The certificate may be issued authorizing a
person to act as a self-insurer for either property damage or
bodily injury, or both, or within the limits the department
(c) Upon not less than 10 days' notice
and a hearing pursuant to the notice, the department may upon
reasonable grounds cancel a certificate of self-insurance. Failure
to pay a judgment within 30 days after judgment becomes final is a
reasonable ground for the cancellation of a certificate of self-
We also find no merit to Fernandes's argument that the hearing
officer did not provide a decision upon which meaningful review can
be based. Although the hearing officer's notes were brief, the
hearing officer correctly applied the mandatory insurance laws and
the self-insurance provision. AS 28.22; AS 28.20.400. The hearing
officer issued an appropriate written opinion following Fernandes's