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D.H. Blattner & Sons, Inc. v. N.M. Rothschild & Sons, Ltd. (9/20/2002) sp-5630
D.H. Blattner & Sons, Inc. v. N.M. Rothschild & Sons, Ltd. (9/20/2002) sp-5630
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 corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
D.H. BLATTNER & SONS, INC., )
) Supreme Court Nos. S-9729/9749
Appellant and )
Cross-Appellee, ) Superior Court Nos.
) 4FA-98-1749 & 98-2976 CI
v. )
) O P I N I O N
N.M. ROTHSCHILD & SONS, )
LTD., ) [No. 5630 - September 20,
2002]
)
Appellee and )
Cross-Appellant. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Richard D. Savell, Judge.
Appearances: R. Eldridge Hicks, Hicks, Boyd,
Chandler & Falconer, LLP, Anchorage, for
Appellant and Cross-Appellee. Spencer C.
Sneed and Jahna M. Lindemuth, Dorsey &
Whitney, LLP, Anchorage, for Appellee and
Cross-Appellant.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
FABE, Chief Justice.
I. INTRODUCTION
At issue in this appeal are a series of claims by two
creditors regarding their entitlement to the liquidated assets of
a defunct gold and silver mine in western Alaska. After the
mining operation failed, both D.H. Blattner & Sons, Inc. and N.M.
Rothschild & Sons, Ltd. brought separate lien enforcement and
foreclosure actions in the superior court. In cross-motions for
summary judgment, each party claimed that its own liens are valid
and have priority. The superior court ruled that to the extent
that Blattners liens are valid, they have priority over
Rothschilds liens. But the superior court awarded an amount
substantially less than Blattner initially requested and ordered
that the balance of the liquidated assets be paid to Rothschild.
Blattner appeals, alleging that the superior court
erred in its definition of work, its assignment of a protection
payment to only one type of lien, and its award of attorneys fees
to Rothschild. Rothschild cross-appeals, alleging that the trial
court erred by attaching Blattners lien to a Colorado bank
account and allowing the lien to secure wages for managerial
employees. This case requires us to apply cases and statutes
adopted in Alaskas territorial days to a modern mining operation.
We partially affirm the decision of the superior court and remand
the case for further proceedings consistent with this opinion.
II. FACTS AND PROCEEDINGS
In December 1994 USMX of Alaska, Inc. acquired two
state mining leases, known jointly as the Illinois Creek Gold
Mine, on land east of Kaltag in the Mt. McKinley and Nulato
Recording Districts. In 1995 USMX formulated a five and one-half
year plan to build and operate an open-pit gold and silver mine
and leaching pad on the site. Blattner won the bid for providing
the necessary mining and earthwork services, finalizing a
contract with USMX to that effect on March 11, 1996. Blattner
began work immediately. The work included: furnishing all labor
and supervision; providing tools; equipment, and heavy machinery;
construction and maintenance of temporary facilities; and other
steps necessary to develop the mine and leaching pad. The date
on which Blattner ceased working is in dispute.
USMX entered a credit agreement with Rothschild on July
11, 1996, under which Rothschild advanced USMX approximately
$19.5 million. USMX secured its loan through a deed of trust, to
which a pre-existing service contract between USMX and Blattner
was attached. USMX filed for protection under Chapter 11 of the
United States Bankruptcy Code on May 21, 1998 and limited its
mining operations to leaching and processing minerals that had
already been stockpiled in the heap. With the consent of both
Blattner and Rothschild, USMX in a separate action surrendered
the mine, heap, and all equipment to the State of Alaska on July
12, 1999. The proceeds from the sale of gold and silver acquired
from the heap have been deposited in a Norwest Bank Colorado
account. This account now contains approximately $2.3 million in
assets. After obtaining relief in United States Bankruptcy Court
from the automatic stay provisions of 11 U.S.C. 362, Blattner
began this lien enforcement and foreclosure action in superior
court on July 21, 1998. Rothschild obtained similar relief and
began its lien foreclosure on November 2, 1998. The two cases
were consolidated on January 15, 1999.
Blattner recorded four sets of mining liens and dump
liens,1 each of which alleged $1,923,483.55 in unpaid debt. The
first set of liens was recorded on January 22, 1998 and included
amounts due at that time for unpaid work at the mine. The second
set, recorded July 31, 1998, claimed equipment standby costs owed
to Blattner through July 1998 as part of the contract terms with
USMX. The third set of liens, recorded on December 1, 1998,
covered additional equipment standby costs from July to November
1998. On April 8, 1999, a fourth set of liens was recorded,
claiming accelerated fixed equipment costs that could no longer
be recovered because USMX now had breached and abrogated the
mining contract by moving to dismiss the bankruptcy proceedings.2
Through a stipulation agreement approved by the bankruptcy court
on August 10, 1998, Blattner and Rothschild each received an
adequate protection payment of $500,000. The trial court
appointed a receiver to take possession of the remaining liquid
assets, cash proceeds, and gold and silver from the mine, valued
at the time at $2,481,000.
Blattner filed a complaint requesting compensation for
the full balance due under the contract, which Blattner claimed
to be $1,923,483.55. Rothschild responded with a motion for
partial summary judgment, asserting that its deed of trust had
priority over Blattners liens and that Blattners dump lien was
limited to costs accrued in production of the dump. Blattner in
turn filed a cross-motion for partial summary judgment, asserting
that it possessed valid liens on the dump and the mining claims
for a total of $7,373,000. Quoting AS 34.35.930, the superior
court, Judge Richard D. Savell presiding, maintained that liens
should be liberally construed. The superior court then ruled
that to the extent that Blattners liens are valid, they have
priority over Rothschilds liens. The superior court held
Blattner to be a person entitled to file a lien under AS
34.35.140. The superior court further ruled that Blattner could
include in its dump lien labor other than that directly involved
in the extraction of minerals from the mine. However, the
superior court concluded that Blattner could not include non-
labor charges, such as those for materials, equipment rental, and
standby time, in its lien. Blattner was permitted to include
interest charges on allowable claims in its lien. The superior
court then restricted Blattners valid liens to the two dump liens
filed on January 27, 1998 during the earthmoving phase of the
mining operation. Furthermore, because mining work stopped on
January 10, 1998, the superior court held that Blattners dump
lien is limited by AS 34.35.145 to work performed only within the
previous nine months. The superior court also ruled that the
$500,000 protection payment must be applied against Blattners
dump lien rather than against other purported liens.
In its final judgment and findings of fact and
conclusions of law, Judge Savell found that Blattner was owed
$549,872 for labor costs but reduced this amount by the $500,000
Blattner had already been paid via the protection payment. The
court then added interest on the account,3 resulting in a total
award to Blattner of $74,538. This amount was to be obtained
from the deposit account in Colorado derived from the sale of
gold and silver from the dump. Rothschild was entitled to the
remainder of the deposit account. Rothschild sought and was
later granted attorneys fees of $230,500 pursuant to Alaska Civil
Rule 82(b)(1).
Blattner appeals and argues that the superior court
erred (1) in finding that Blattner ceased work at the mine in
November 1997; (2) in denying recovery for standby costs; (3) in
limiting the definition of work in AS 34.35.140 to work performed
by humans; (4) in limiting recovery to work performed at the mine
site; (5) in applying the $500,000 protection payment to
Blattners dump lien; and (6) in refusing to award Blattner
reasonable attorneys fees for foreclosing a lien. Rothschild
rejects each of these contentions and further argues in its cross-
appeal that the superior court erred in attaching Blattners dump
lien to the proceeds from the dump and in allowing Blattner to
recover for the wages of supervisory employees.
III. STANDARD OF REVIEW
Appeals from summary judgment are reviewed de novo;4
they are upheld when the record shows no genuine issues of
material fact and the movant is entitled to judgment as a matter
of law.5 Statutory interpretation is a matter of law for which
the court uses its independent judgment.6 A statute must be
interpreted in light of the purposes for which it was enacted,7
mindful of the common usage interpretation the language conveys
to others.8
IV. DISCUSSION
In his memorandum opinion dated November 30, 1999,
Judge Savell reached seven conclusions regarding Blattners and
Rothschilds motions for partial summary judgment. They are
presented verbatim below:
1. To the extent Blattner has asserted
valid and allowable claims in its dump lien,
that lien is superior to and preferred over
Rothschilds Deed of Trust.
2. Blattner is a person entitled to
file a dump lien under AS 34.35.140.
3. Blattners lien may include work of
the nature described in AS 34.35.140(a) and
any of the kinds of work mentioned in AS
34.35.125. Blattner need not prove that
covered work produced the minerals against
which the lien is claimed.
4. Blattners dump lien may only
include costs and charges for labor; non-
labor charges, such as for tools, materials,
equipment rental, and standby time, may not
be included and recovered under a dump lien.
5. Interest charges on Blattners
allowable claims may be included in a
judgment upon lien foreclosure.
6. The only dump liens claiming
charges for labor are the two filed and
recorded January 27, 1998. The lien may only
include unpaid charges for the work performed
within the nine months immediately preceding
January 10, 1998.
7. The $500,000 adequate protection
payment received by Blattner in August 1998
must be applied first to claims properly
included in and secured by Blattners January
27, 1998, dump lien.
For the reasons provided in the remainder of this
opinion, we affirm conclusions 1-3 and 5-7.9 With regard to
conclusion 4, we affirm the exclusion from the lien of charges
for materials but reverse on the exclusion of charges for tools
and equipment. We further hold that anticipated standby charges
are lienable for the nine-month period prior to January 10, 1998,
pursuant to AS 34.35.145.10
Judge Savell clarified and supplemented his findings on
May 16, 2000. The four conclusions of law provided:
1. The dump lien under AS 34.35.140
secures only amounts due for labor. The dump
lien under AS 34.35.140 does not secure
amounts due for materials, tools, supplies,
equipment, standby, or any other non-labor
items.
2. The dump lien under AS 34.35.140
secures only amounts due for labor in, on, or
about the mine site. The dump lien under AS
34.35.140 does not secure amounts due for
labor distant from the mine site.
3. The dump lien under AS 34.35.140
secures amounts due for the labor of all
persons who performed labor in, on, or about
the mine site, including those whose labor is
supervisory or managerial in nature.
4. The dump lien under AS 34.35.140
does not secure charges for profit or
overhead or any other non-labor charges.
We affirm conclusions 2 and 3. We partially reverse
conclusion 1 to include tools, supplies,11 and equipment costs
within the dump lien; anticipated standby costs may also be
included for the nine months prior to the cessation of work. We
affirm conclusion 4 to the extent that it excludes charges for
profit or overhead but reverse its blanket exclusion of all non-
labor charges.
A. Blattners Dump Lien, to the Extent that It Is Valid,
Attaches to the Colorado Bank Account.
As a threshold issue, we must determine whether the
dump lien claimed by Blattner attaches to the money in the
Norwest Bank Colorado account. Because the mine, dump, and all
equipment have been transferred, with the consent of both
Blattner and Rothschild, to the control of the State of Alaska,
the only remaining property in dispute is the approximately $2.3
million in the account.
Rothschild asserts that Blattners dump lien does not
attach to the Norwest Bank Colorado account because the funds in
the account do not fall under the scope of AS 34.35.140, which
provides to those who work on a dump or well a lien on the dump
or mass, and the gold, gold dust, or other minerals contained in
or extracted from it. Rothschild admits that the cash in this
account is derived from the sale of gold and silver from the dump
obtained from the mine.12 The processing of the dump to refine
the gold and silver for sale was performed by a third party at a
site not part of the mine.
Rothschild asserts that the dump lien created by AS
34.35.140 does not reach to the proceeds from the sale of
minerals extracted from the dump. Rothschild bases its argument
on the provision in AS 34.35.140(b) that the dump must remain in
one mass and the corresponding definition in AS 34.35.170(a)(1)
of dump or mass as minerals while in mass at the mine or on the
mining claim or adjacent to it. Rothschild contends that because
the dump lien only attaches to the dump while it is at the mine
site, once the dump leaves the mine site, even if only to be
processed, there can be no dump lien on the dump and consequently
no dump lien on the proceeds generated by processing the dump.
Under Rothschilds logic, any lien that Blattner has on the dump
has been effectively terminated, especially since what remains of
the physical dump is now under the control of the state.
Because of the wording of the stipulation agreements to
which both Blattner and Rothschild were parties, it is not
necessary for us to reach the legal issue raised by Rothschild.
Rothschild argues that, in addition to its dump lien, Blattner is
asserting a lien on the cash proceeds. Rothschild speculates
that Blattner is basing this new lien either on the stipulation
agreements allowing USMX to spend part of the dump proceeds to
maintain the account and service its bankruptcy proceedings or on
the stipulated order granting the receiver the ability to spend
money from the account. Blattner, though, claims no such liens.
The stipulation agreements contain provisions clearly meant to
protect any pre-existing liens that each party had on the dump
and to transfer those liens to the proceeds derived from the
dump. Indeed, a statement to this effect is contained both in
the USMX stipulations13 and in the receivership stipulation.14
Such statements would not be necessary, and in fact would be
inappropriate, if the dump lien did not attach to the account
covered by the stipulation agreements. This signals a respect
for old liens, not the creation of new ones. By signing on to
these stipulations, Rothschild conceded that Blattners dump lien
attached to the Norwest Bank Colorado account.
Furthermore, Rothschild previously expressed the belief
that Blattners liens, to the extent that they are valid, do
attach to the account. In a hearing in August 1998 before the
United States Bankruptcy Court for the District of Colorado, to
negotiate what would eventually become the Fourth Stipulation
Agreement and the $500,000 adequate protection payment,
Rothschild agreed with the characterization of the proceedings by
Blattner that the hearing was to make no findings on the priority
of the liens that either side had with regard to the dump.
Implicit in the conversation was the assumption that the liens
did in fact attach to the account. The same sentiment was
expressed in an evidentiary hearing in superior court when
Rothschild stated that the cash and the heap together are feeding
themselves . . . theres no deterioration of that batch of
collateral. This statement was made after a long discussion by
the lawyer for the receiver for the account about how money
generated by processing the heap shall be subject to the
respective liens of Blattner and Rothschild and how Blattners
primary concern is protecting its interest in the receivers $2
million of cash. In both instances, Rothschild made no argument
that Blattner did not have any right to the money in the account
in the first place. A reasonable conclusion would be that
Rothschild believed Blattner did have such rights.
Thus, we hold that Blattners dump lien, to the extent
that it is valid, attaches to the Norwest Bank Colorado account
derived from processing the heap because of the language in the
stipulation agreements and the conduct of the parties.
B. The Definition of Work Under AS 34.35.140
Most of the major issues in the case center around an
interpretation of AS 34.35.140, which governs liens on a dump or
a mass of minerals.15 Considering the historical importance of
mining for precious metals and the present importance of oil
drilling to the Alaska economy, there have been surprisingly few
cases in recent years involving the interpretation of this
statute. Indeed, most of the important cases remain from Alaskas
territorial days. Technological advances in the mining industry
and overall changes in the conduct of business in this state
since those times require us to adapt the language in those cases
to modern times. At the same time we must respect the underlying
principles embodied in those cases and the statutes upon which
they relied.
1. The definition of work under AS 34.35.140(a)
includes some equipment costs.
The provision for determining who can have a dump lien
is found in AS 34.35.140(a), which assigns such a lien to a
person who performs work on the dump for the amount due the
laborer in the production of the minerals. The issue before us
is how to interpret the terms person, work, and laborer.
The superior court ruled that Blattner was a person for
the purposes of AS 34.35.140 and therefore could sue to enforce a
lien. The court reasoned that the definition of person in the
general provisions of Alaskas statutes applies because AS
34.35.170, which defines terms in the mines and wells section of
which AS 34.35.140 is a part, does not define a person.
Consequently, the superior court concluded, one must look to AS
01.10.060(8), which provides definitions applicable to all Alaska
statutes, to see that the definition of a person includes
corporations. Because the Alaska Legislature did not restrict
the definition of a person to natural persons, the superior court
ruled that this more inclusive definition of a person applies.
The superior court noted that the legislature elsewhere
establishes the priority of mechanics and materialmans liens for
an individual16 defined as a natural person.17 No such definition
was provided with regard to dump liens. The superior court also
noted that the interpretation of corporations as being included
with the definition of a person is consistent both with a 1921
Ninth Circuit timber lien case interpreting Alaska law18 and with
other Alaska decisions allowing corporations to claim liens.19
Rothschild does not challenge the status of Blattner as
a person for the purposes of AS 34.35.140. Instead, Rothschild
contends that even if Blattner can recover a lien, the amount of
the lien cannot be more than the value of the work performed by
the individual laborers. This in essence limits the definition
of work under AS 34.35.140(a) to mining activities performed by
humans. Blattner, on the other hand, asserts that equipment-
related costs, including materials, should be included in the
definition of work. Blattner argues that such a holding is
necessary for a liberal interpretation of the phrase any other
kind of work in AS 34.35.140(a).20 Blattner further contends that
companies will be much less willing to provide their services,
especially for financially risky mining operations, if mining
companies are not allowed to recover liens for equipment and
related costs.
The superior court gave two explanations for holding
that the lien was limited to charges for labor. Neither of these
explanations supports the conclusion reached by the superior
court. First, the court reasoned that to include equipment and
material costs in the lien would ignore the distinction in
coverage and priority between mine liens in AS 34.35.125 and the
dump lien. This is an overly narrow interpretation of AS
34.35.140. The language of AS 34.35.140(a) explicitly
incorporates all of the definitions of work contained in AS
34.35.125, along with other categories of labor, into its list of
the types of work for which dump liens can be claimed. In other
words, the definition of work in section .140 should be more
expansive than that in section .125, not less so.21
The other basis for the superior courts decision was
Walbridge v. New York Alaska Gold Dredging Co., a territorial
case which noted that liens were meant to cover a person who is
compelled to earn his daily bread by honest toil.22 The Alaska
case23 and the Oregon case24 on which the Alaska case relied
distinguished between a supervisory employee and a physical
laborer. While these cases, then, may say something about
different types of labor, we do not agree with the superior
courts reliance on them for the proposition that there is a
distinction between the individual physical laborer and the tools
that laborer uses.
The legislative history of AS 34.35.140(a) provides us
with little guidance for determining whether the scope of work
covered under the statute includes equipment costs.25 Similarly,
existing Alaska case law is of little assistance.26 Therefore, we
are forced to turn to other jurisdictions for guidance in
interpreting the proper scope of a dump lien. While no other
state has a dump lien separate from a mechanics lien,27 the
decisions of other state courts do articulate principles that are
applicable to the present case. To the extent that the issue is
addressed under mechanics lien statutes, cases in other
jurisdictions support the contention that equipment costs can be
included in a lien. The Oregon Supreme Court held that labor
costs in a lien context include equipment and other related costs
because these costs, even if nonlienable if taken separately,
were anticipated by the buyer in fixing the reasonable value of
the particular labor involved.28 In other words, the buyer hired
the construction subcontractor in large part because it could
provide the heavy machinery necessary for completion of the
project. As such, the lien should cover the charges for
equipment actually used in and necessary to the project.29
Similar conclusions were reached by Wyoming,30 Oklahoma,31 and
Minnesota32 courts.
Absent precedent to the contrary, we decide the scope
of work under AS 34.35.140(a) on the basis of reason, policy
considerations, and the language of the statute.33 In developing
a contemporary mine, heavy machinery has, to a significant
extent, replaced physical labor. Gone are the days of an army of
pickaxes. To the extent that the legislature may long ago have
meant to protect physical laborers by providing a lien on the
dump produced by their labor in case they were not paid for those
efforts, so should todays provider of heavy machinery be
compensated for the work those machines supply. When Blattner
was hired to develop the mine, it was hired not just to provide
physical labor but machinery as well. Because a corporation is
considered a person under AS 34.35.140, equipment costs must be
internalized into the labor that the corporation provides. For
Blattner to be adequately compensated for the efforts it is
expending, Blattner must therefore be allowed to include
equipment costs in the amount due the laborer under AS
34.35.140(a).34 These expenses are a vital part of the labor
Blattner provides.
Blattner, however, may not include the entire cost of
its heavy machinery in the dump lien. Alaska Statute 34.35.160,
describing the requirements for filing liens, including dump
liens, states that the party claiming the lien must provide an
amount that it is claiming for the lien. If there is an amount
stipulated for damages in the contract between the two parties,
that amount is used. In the absence of an express contract, the
claim must state the reasonable value of the work and services.35
There is no express contract contained in the record providing
the compensation information necessary here.36 Upon remand, the
superior court should determine what, if anything, the service
contract between Blattner and USMX provided as to compensation
for equipment usage. It may be that the contract rate
intermingles lienable and unlienable components to such an extent
that it is of no use in determining the measure of the lien. If
it is not practicable to determine the lienable amount of
equipment charges in accordance with the terms of the contract,
the superior court shall determine the lienable amount in
accordance with the reasonable value of the work and services
measure required by AS 34.35.160(c).
Blattner argues that it should be allowed to recover
its equipment costs according to an accelerated cost basis in
which the value of the machinery is compressed into the truncated
contract that resulted from USMXs bankruptcy. To allow Blattner
to recover the full contract value of the equipment would remove
from Blattner the obligation to mitigate its damages. In the
lien it filed on January 22, 1998, Blattner alleged that work had
stopped on January 10, 1998. Yet, Blattner apparently took no
action regarding the status or use of its machinery other than to
file subsequent liens for standby costs. The superior court held
that equipment costs could not be included in the dump lien and
thus did not address the issue whether Blattner failed to
mitigate the damages caused by Rothschilds breach. Alaska law
requires that parties to a contract mitigate damages in
situations of breach.37 A determination of Blattners obligation
to mitigate damages and whether this obligation was met is left
for remand.
Assuming there are no damages provisions in an express
contract between Blattner and either USMX or Rothschild and
assuming that Blattner failed to mitigate its damages, Blattner
may only recover the quantum meruit value of the equipment costs38
based on reasonable hourly schedules for the period of time in
which the equipment was used.39 The value of the equipment costs
should be amortized over the full five-and-a-half years of the
anticipated contract, with Blattner able to recover only for that
period during which its lien is valid. Some determination will
also need to be made as to what depreciation and other equipment
costs are due to this particular project. Blattner claims this
amount is $3,726,268. Blattner also claims a lien of $1,459,000
on residual equipment value. We reject Blattners claim for
residual equipment value because it falls outside the scope of a
quantum meruit recovery.
Because the superior court held that non-labor charges
could not be included in the dump lien, it did not make a
determination of the validity of Blattners expense claims. An
accounting of the various charges reasonably attributable to the
labor supplied for the development of the USMX mine and leaching
pad will be necessary upon remand.
2. Blattners dump lien is limited to work performed
in the nine months preceding January 10, 1998 and
does not include subsequent standby costs.
Alaska Statute 34.35.145 limits the scope of a dump
lien to work performed within a period of nine months immediately
before the cessation of the work. Noting that the lien Blattner
filed on January 22, 1998 stated that work had stopped on January
10, 1998, the superior court held that Blattners dump lien only
secured the amount for labor performed between April 10, 1997 and
January 10, 1998. We affirm this holding.
Blattner disputes the date of cessation of work on the
grounds that it was engaged in standby work at the mine until
February 26, 1999 and thus is owed $121,000 per month plus
interest in standby charges for that time period. Blattner
maintains that February 26, 1999 is the date work ceased because
that was the day on which USMXs bankruptcy petition was
dismissed.40 Hence, according to Blattner, it was the day USMX
abrogated its contract and thus the first instance when Blattner
could reasonably and lawfully conclude that mining operations had
ceased. Blattner does not contend that it performed any work
other than standby work on the mine following January 10, 1998.
Consequently, the only real issue is whether standby charges can
be incorporated into a dump lien. The trial court dismissed
standby charges as non-lienable because they were incurred after
the mine ceased operating.
Blattner contends that in Alaskas harsh winter climate,
standby charges for the winter must be contemplated in virtually
any construction contract. Standby charges are those expenses
incurred while the services contracted for, in this case the use
of heavy machinery, are idle. Blattner points out that the trial
court, based on its finding that Blattner worked continuously on
the mine between March 1996 and November 1997, apparently
accepted that Blattner worked during the winter of 1996-1997,
when actual earthmoving and leaching were suspended. However,
the mere fact that Blattner was allowed to incur standby costs in
the past does not mean that it can continue incurring these
charges indefinitely into the future.
Alaska case law supports the availability of liens for
standby charges. In Fremming v. Southeastern Alaska Mining Co.,
the Alaska territorial district court held that a watchman and
caretaker was a workman for lien purposes because the work of a
watchman and caretaker may not only be convenient to [the] future
development, operation, work, or mining, but may in many
instances be necessary to it.41 In Southeastern Alaska Mining
Corp. v. Zavodsky, the Ninth Circuit affirmed on appeal its
decision that a watchman and caretakers work was necessary or
convenient as required by the 1915 lien statute and that he could
therefore claim a mining lien, even though the mine had not been
operational for five years prior to the time he began to serve
his duties.42 However, because the watchman at issue was hired to
preserve the mining machinery on the property,43 this case leads
to the conclusion that a lien can be obtained for standby work
only where that work is anticipated by the employer. In order
for standby charges to be lienable, they must work toward the
future development of the mine.44 Standby charges, even where
ordered by the employer, do not generate a lien where the standby
charges are not contemplated in the plan for development and
improvement of the mine.45
The events surrounding the first lien filing, though,
defeat Blattners claim for standby charges after January 10,
1998. When it recorded its first lien on January 22, 1998,
Blattner was aware that the mining operations were falling apart.46
In January 1998 Blattner had been ordered by USMX to suspend its
operations, which is apparently the source of its claim to have
stopped work on January 10, 1998. Having claimed that it had
ceased work, Blattner was no longer a laborer and thus could no
longer claim a lien for the amount due the laborer under AS
34.35.140(a). Blattner did assert in its first lien filing that
the lien would increase due to equipment maintenance,
demobilization costs and standby time, but charges for these
items are framed as being separate from the work which Blattner
claims to have ceased and thus present a separate question of
lienability.
Furthermore, Blattners later liens were solely for
either equipment standby time or for unreimbursed fixed equipment
costs, suggesting that Blattner wanted to recover for the
depreciation and inactivity costs of its expensive machinery.
Because they were not anticipated in the plan for development of
the mine, these charges are not work as contemplated by the
Alaska dump lien statute. Having known that the mining
operations were in serious trouble, Blattner should not be
allowed to prolong indefinitely the charges it levied on USMX by
neglecting to put the machinery to other uses. As with the
discussion of quantum meruit recovery, Blattner was under an
obligation to mitigate its damages once work on the mine ceased.
Though the initial plan for developing the mine contemplated a
five-and-a-half year timeframe, any work on the mine had stopped
by the time Blattner filed its first lien.47 There are no
findings by the superior court that Blattner subsequently
undertook any actions to mitigate its damages. Evidence may be
presented on remand that efforts at mitigation either were made
or were impractical, but charges for equipment standby time do
not create an independent basis for recovery. The denial of a
lien for standby charges does not necessarily preclude the
possibility of contract damages for Blattner,48 but a lien can
only cover improvements or anticipated improvements to the mine.49
The measure of the value of the work and services to the mine as
defined by AS 34.35.140 and AS 34.35.125 is either a contract
measure or, if there is no such measure or it is unworkable, the
reasonable value of the work and services.50 We hold that
Blattner ceased work on the mine on January 10, 1998 and can only
recover charges under its dump lien for work performed in the
preceding nine months.
3. Blattner can only include in its dump lien those
supervision and management charges derived from on-
site labor.
Blattner asserts it should also be able to include in
its dump lien expenses related to supervision or management of
the mining operations. The superior court held that because AS
34.35.140(a) incorporates AS 34.35.125 into its definition of
work, Blattner may recover for supervisory work necessary or
convenient to the development and operation of the mine.
Rothschild contends that this creates an almost limitless
definition of work, whereby supervisors in remote locations could
obtain liens with priority over those obtained by the manual
laborers at the site.51 We hold that supervisory labor can be
included in a dump lien, but only when the labor is performed at
or adjacent to the mine site.
The statute at issue, AS 34.35.140(a), requires that
the work for which the lien is acquired be performed upon, in, or
about the mine. In some of its lien claims, Blattner asserts
that all of the work, including supervision, was performed in,
on, or about the [mine]. However, Blattner also asserts in its
brief that it should be allowed to include in its lien expenses
for such workers as Fairbanks payroll clerks and Anchorage
expeditors who assist with shipments. Blattner thus clearly
seeks the inclusion of charges for some off-site labor. Blattner
contends that the phrase upon, in, or about the mine should be
read to encompass off-site work performed in a broad geographic
area.
If equipment-related expenses are to be included in the
amount due the laborer,52 it is hard to imagine why supervision
and management charges would not be included. Certainly,
supervision and management expenses can be incorporated into the
contract for services in the same way as are equipment-related
expenses. The construction and maintenance of the mine could not
take place without some form of supervision. As mining
technology becomes increasingly advanced, with additional
emphasis on computers and heavy machinery, more labor can be
classified in some sense as supervisory.
However, these supervisory charges cannot be extended
infinitely to cover all of Blattners expenses. If the phrase
upon, in, or about the mine is to be of any import, it must be to
place some sort of limitation on the scope of labor for which a
dump lien can be levied. While Blattners payroll clerks and
expeditors may aid in the development of the mine, they do not
perform the direct work on the mine that the dump lien is meant
to protect.
In describing who can assert a dump lien, AS 34.35.140
lists those who perform work in the production, piling up, or
storing of a dump or mass of mineral.53 The statute, then, refers
not so much to those activities tangentially necessary to the
development of the mine as to work performed on the physical mine
itself or the physical dump extracted from the mine. This is
consistent with the types of work listed in AS 34.35.125 and
subsequently incorporated into AS 34.35.140(a). This list
includes work opening up, developing, sinking, drilling,
drifting, stoping [sic], mucking, stripping, shoveling, mining,
hoisting, firing, cooking, [and] teaming.54 This list of
activities focuses on direct labor on the physical mine. The
statute further lists as work those activities tending to or
assisting in the development, extraction, separation, or
reduction to a commercial value of the minerals and activities
involving work on a water right, ditch, flume, pipe line,
tramway, tram, road, or trail, used in connection with the
opening up, or to facilitate the opening up, operation, or
development of the claim or well, or the extraction of the
minerals.55 This list of activities similarly implies work done
directly on the mine itself. While AS 34.35.125 includes as work
any other class or kind of work necessary or convenient to the
development, operation, working, or mining of the claim or well,
this does not imply an absence of a direct connection to the
development of the mine. Rather, the phrase is better
interpreted as incorporating into the definition of work those
activities similar to the ones listed but not specifically
mentioned.
The type of work implied by this restriction includes
supervisory work performed at the mine site because this work is
performed directly on the mine and has a direct impact on the
construction and maintenance of the mine.56 As such, supervisory
labor falls within the spirit of the activities meant to be
protected in AS 34.35.125 and AS 34.35.140(a). It does not,
however, include the labor of off-site payroll clerks,
expeditors, or other general employees of the company. The work
that these people perform may to a certain extent be necessary to
the development of the mine but their work is peripheral to the
physical mine itself and more akin to the standard overhead costs
that any business incurs.
This distinction between direct and indirect labor is
consistent with case law in Alaska and other jurisdictions. In
Walbridge v. New York Alaska Gold Dredging Co., the Alaska
district court held that a person employed by the board of
directors as a superintendent and general manager of the business
and properties owned by the corporation in the Bethel precinct57
could not exercise a lien on the mine or on the dump resulting
from the mine because his activities were more in the nature of
an executive officer . . . than a person who is compelled to earn
his daily bread by honest toil.58 In reaching this decision, the
court relied upon an Oregon case denying a lien to a
superintendent and general manager because allowing liens for non-
physical labor would allow the upper management to vote
themselves salaries, and hence liens, even though they did not
perform actual labor upon the mine.59 The Walbridge court further
relied upon a United States Supreme Court case holding that a
foreman who planned and personally superintended and directed the
work, with a view to develop the mine and make it a successful
venture, could possess a lien on the mine.60 The Supreme Court
was careful to distinguish the labor of the foreman from that of
a general superintendent.61 The distinction between a foreperson
and a general superintendent is analogous to the limitation of
the dump lien to direct work on the mine that we establish today.
This holding is also consistent with those from other
jurisdictions.62
While we hold that supervisory charges must be
restricted to on-site services, we do see a need for limited
flexibility in the determination of what counts geographically as
being on-site. More specifically, supervisory work need not be
performed on the property legally owned by the owner of the mine;
rather, it also includes work performed on land that is adjacent
to the site of the mine, especially where convenient for the
development of the mine. In McConnell v. Empire Tin Mining Co.,
the court held that a laborer employed by a mining company to
maintain a mill and water ditch for the mines possessed a lien on
the mines, even though the mill was about two miles away from the
mines, because the work was integral to the development of the
mine and because this was probably the closest suitable site for
such mill.63
Although the present case does not involve a public
construction project,64 we choose to adopt the logic of Board of
Trade, Inc. v. State, Department of Labor, where we held that the
definition of on-site includes those locations in close
geographic proximity to the project footprint.65 The
determination of whether adjacent or nearby activities can be
considered part of the project must be made on a case-by-case
basis and take into account whether the activity could have been
carried out at an alternative site closer to the project.66 The
interpretation contained in the Alaska Administrative Code
provides a reasonable elaboration of this issue when it specifies
that in order for a location or activity to be considered on-site
it must be dedicated exclusively or nearly so to performance of
the contract.67 The code specifically exempts from the definition
of on-site activities at those locations which are governed by .
. . general business operations, even if the activities focus on
construction of a particular project.68 We conclude that the
logic behind this interpretation should apply to the present case
in determining what activities are to be considered on-site for
purposes of the dump lien. More exact determinations will be
necessary upon remand.
C. Blattners $500,000 Protection Payment Applies Against
Its Dump Lien.
Blattner argues that it should be allowed to assign the
$500,000 adequate protection payment, received from USMX via a
stipulation agreement with Rothschild on August 2, 1998, to the
mining liens that Blattner possessed under AS 34.35.125. The
superior court discussed the $500,000 protection payment not in
terms of whether it could be assigned to particular liens but in
terms of whether the payment could be assigned to unsecured as
opposed to secured debt. Noting that the payment was made
pursuant to a bankruptcy hearing, and thus under the guidelines
set forth in 11 U.S.C. 363, the superior court held that the
protection payment must be applied first against secured claims
so as to replace the lost value of collateral suffered by the
secured party. Consequently, the superior court held that
Blattner must use the protection payment to reduce the amount
owed under its dump lien.
Blattner does not challenge this finding on appeal.
Apparently conceding that the protection payment must be applied
to a secured claim, Blattner contends that it is allowed to use
the protection payment to reduce the mining liens it possessed at
the time but which now have been extinguished by the transfer of
the mine to state ownership, leaving the dump lien claim at its
full amount.69 In support of its argument, Blattner relies upon
Jalasko Associates, Inc. v. Newbery Energy Corp., which states
that absent a requirement to the contrary by the debtor, a
creditor [is permitted to] apply a debtors payment to any of the
debtors obligations.70
The facts of the present case, however, make it
necessary to determine whether from a legal standpoint Blattner
could apply its protection payment to the lien of its choice. It
is true that Blattner filed both a mining lien and a dump lien.
However, the two liens were not really separate, as Blattner
argues, because each claimed the same work. Indeed, in every
instance, the mining lien and the dump lien were part of the same
document, with both the dump and the mining liens covering the
same amount and demand pursuant to AS 34.35.160.
The superior court held, and Blattner alleges, that the
lien filings included a claim for a mechanics lien. This is not
reflected in the record, as the liens filed make no express
reference to a mechanics lien. Instead, only mining and dump
liens are explicitly claimed.71 On remand, the superior court
will need to re-examine the costs recoverable under the different
liens, including any mechanics liens that might be found. If
there are differences in the type of debt properly recoverable by
Blattner under each lien, an allocation of funds to the repayment
of one lien would not necessarily reduce the recoverable debt
under the other liens.
If no such differences can be found, the adequate
protection payment of $500,000 will be used to reduce the overall
debt owed to Blattner. Absent differences in the source of the
debt to be recovered, Blattner in essence would have recorded two
different liens by which it sought to recover the same
indebtedness.72 The $500,000 adequate protection payment was to
be directed toward reducing the principal in the outstanding debt
owed by USMX to Blattner. Because the source of the indebtedness
was apparently the same for both liens, any reduction in
indebtedness for the mining lien should result in a corresponding
reduction in indebtedness for the dump lien. Blattners claim is
therefore effectively moot. To allow Blattner to apply the
$500,000 protection payment to its mining lien and still retain
the full indebtedness on its dump lien would be to allow Blattner
to profit by a phantom $500,000.
D. Blattner May Recover Reasonable Attorneys Fees for
Enforcing its Dump Lien.
The superior court awarded $230,500 in attorneys fees
to Rothschild under Alaska Civil Rule 82(b)(1). It did not
explain the reasoning behind this award. The superior court
later awarded Rothschild an additional $43,307.35 in costs.
Trial courts are granted great discretion in awarding attorneys
fees.73 An award of attorneys fees is only overturned if it is
manifestly unreasonable,74 a standard equivalent to an abuse of
discretion.75 However, because this case is being remanded on a
variety of issues, the underlying suppositions on which the
superior court initially awarded attorneys fees are no longer
valid. Consequently, this award must be vacated.
Furthermore, the applicable authority for attorneys
fees in this case is not Civil Rule 82(b)(1), the authority
relied upon by the superior court, but rather AS 34.35.005(b).
Civil Rule 82 is not applicable where a statute provides for
other means of awarding attorneys fees.76 Such other means exist
in the present situation. A separate statute for recovery of
attorneys fees for enforcing a lien, AS 34.35.005(b), provides:
In an action to enforce a lien, the court shall allow as part of
the costs all money paid for drawing the lien and for filing and
recording the lien claim, and a reasonable attorney fee for the
foreclosure of the lien. We have previously noted that AS
34.35.005(b) applies to the dump lien statute in AS 34.35.140.77
Because Blattner is bringing an action to enforce a dump lien, it
is entitled to the recovery of preparation costs and attorneys
fees as outlined in AS 34.35.005(b). The $500,000 Blattner has
received as a protection payment shall be considered a part of
Blattners lien recovery in determining reasonable attorneys fees
since the payment was meant to offset Blattners lien claim.
Blattner need not prevail on all of its claims in order to
satisfy the requirements of AS 34.35.005(b).78 Rather, we
interpret AS 34.35.005(b) as providing for a mandatory award of
attorneys fees whenever a party is successful in enforcing a lien
created by AS 34.35.005 to AS 34.35.425.79 A determination of
reasonable fees is to be made upon remand.80
V. CONCLUSION
There are six central issues at dispute in this case.
We hold as follows: Because of the stipulation agreements entered
into by both Blattner and Rothschild, Blattners dump lien
attaches to the Norwest Bank Colorado account; Blattner can
include the cost of heavy machinery in its dump lien under AS
34.35.140; Blattner cannot include unanticipated standby charges
in its dump lien; supervisory charges can be included only if
they are on-site; Blattner, subject to remand for further
findings on applicable liens, must apply the $500,000 protection
payment against the amount for which it claims a dump lien; and
Blattner is entitled to reasonable attorneys fees for enforcing
its lien. We REMAND to the superior court for proceedings
consistent with this opinion.
_______________________________
1 Because the mine covered two recording districts, each
lien filing i.e., each set of liens included an identical lien
filing in each recording district. In order to avoid confusion,
Blattners two lien filings on each of four occasions will be
referred to collectively as Blattners dump lien, except where
differentiation of the lien filings is necessary. The issue of
the four occasions on which liens were filed addresses standby
costs, which will be discussed in Part IV.B.2.
2 The bankruptcy cases were dismissed on February 26,
1999 on the motion of USMX.
3 Rothschild does not challenge the award of interest on
lien charges.
4 Sonneman v. State, 969 P.2d 632, 635 (Alaska 1998).
5 Ellingstad v. State, Dept of Natural Res., 979 P.2d
1000, 1004 (Alaska 1999).
6 Progressive Ins. Co. v. Simmons, 953 P.2d 510, 512
(Alaska 1998).
7 Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 904 (Alaska 1987).
8 Id. at 905.
9 Conclusions 2 and 5 are not challenged upon appeal.
Conclusion 7 is subject to remand for further findings on the
types of liens possessed by Blattner.
10 Other standby charges may be recoverable under a
contract measure. This issue, however, is not presently before
the court.
11 We understand supplies to be different from materials.
Supplies are those items necessary to the maintenance of the
working environment, such as food and fuel. Materials are those
items and resources used in the construction of the contracted-
for project; examples would include lumber and cement.
12 Later in its brief, Rothschild alleges that there is no
evidence to support the superior courts finding that the proceeds
in the account came entirely from the heap and were not comingled
[sic] with minerals or proceeds from any other source. In a
motion for summary judgment, all factual inferences must be drawn
in favor of the party opposing summary judgment. Makarka v.
Great American Ins. Co., 14 P.3d 964, 966 (Alaska 2000).
However, this requires sufficient evidence from which the court
can draw its conclusions. Rothschild supports its claim of error
with an affidavit given subsequent to the February 28, 2000
hearing that generated the disputed order. Rothschild explains
its lack of prior briefing by asserting that it had no way of
anticipating that the commingling issue would be raised.
However, in a March 30, 2000 order denying reconsideration of
summary judgment in light of the affidavit, Judge Savell pointed
to statements made by Rothschilds lawyer at the February hearing
in which the lawyer asserted that there had been no commingling
of funds. Given the information before it and the lack of
evidence to the contrary at the time it ruled on the summary
judgment motions, it was not clear error for the trial court to
find that there was no commingling of funds.
13 The parties reserve all rights with respect to, and
acknowledge and agree that, their claims, rights and liens, if
any, in the Cash Collateral shall continue with the same
priority, dignity and effect, post-petition, as these claims,
rights or liens existed on the Petition Date in the production
from operations. Nothing herein, however, shall be construed or
considered an agreement as to the extent, validity, priority or
dignity of any of the parties claims or liens, if any. All
rights with respect thereto are reserved.
14 Any monies generated by further processing of the
existing heap shall be subject to the respective liens of
Blattner and Rothschild to the same extent and with the same
priority such liens presently have with respect to the existing
heap and proceeds therefrom. This exact language was also
included in the superior court order approving the November 1998
budget to administer the processing of the heap pursuant to the
ongoing bankruptcy proceedings.
15 AS 34.35.140 provides:
(a) A person who, at the instance of
another who has the right of possession of a
mine, or mining claim, oil or gas well,
performs upon, in, or about the mine or well
any of the kinds of work mentioned in AS
34.35.125, or who performs any other kind of
work in the production, piling up, or storing
of a dump or mass of mineral, has a lien on
the dump or mass, and the gold, gold dust, or
other minerals contained in or extracted from
it, to secure the amount due the laborer in
the production of the minerals.
(b) The lien attaches to the dump or
mass, and to the gold, gold dust, or other
mineral, whether they are deposited on the
ground in a mass, or dumped into bunkers or
hoppers, or stored in tanks or reservoirs, or
placed in sluice boxes at the mine, and
attaches to the gold, gold dust, and other
minerals so long as they are in one mass and
can be identified as being produced by the
labor of the lienor.
(c) The lien provided for in this
section is prior and preferred over a deed,
mortgage, bill of sale, attachment, or other
claim whether given before or after the work
for which the lien is claimed is started.
16 AS 34.35.060(c).
17 AS 34.35.120(10).
18 McDonald-Weist Logging Co. v. Cobb, 278 F. 167, 168
(9th Cir. 1921).
19 See, e.g., Donnybrook Building Supply Co. v. Alaska
Natl Bank of the North, 736 P.2d 1147, 1153-54 (Alaska 1987)
(holding the mechanics lien under AS 34.35.050-.120 to be the
exclusive remedy for a company supplying building materials);
Frontier Rock & Sand, Inc. v. Heritage Ventures, Inc., 607 P.2d
364, 365-66 (Alaska 1980) (allowing assertion of mechanics and
materialmans liens by a contracting company); Dannemiller v.
AMFAC Distribution Corp., 566 P.2d 645, 653 (Alaska 1977)
(allowing a corporate supplier of plumbing and electrical
materials to record a materialmans lien under AS 34.35.050).
20 Both by statute and by precedent, the intent and
purpose of lien laws are to be liberally construed once the
determination of who qualifies as a lienholder is strictly
construed. AS 34.35.930 (The intent of this chapter is remedial
and its provisions shall be liberally construed.); H.A.M.S. Co.
v. Electrical Contractors of Alaska, Inc., 563 P.2d 258, 262-63
(Alaska 1977) (holding that portions of Alaska lien statutes
which articulate mandatory conditions precedent to the very
creation and existence of the lien are to be strictly
interpreted, whereas those portions which are remedial in nature
are to be construed liberally).
21 The primary difference between the two sections is that
section .125 places a lien on the mine or mining claim, whereas
section .140 places a lien on the dump or mass. AS 34.35.125; AS
34.35.140(a).
22 8 Alaska 36, 41 (D. Alaska Terr. 1928), reversed on
other grounds by New York Alaska Gold Dredging Co. v. Walbridge,
38 F.2d 199 (9th Cir. 1930) (relying upon Durkheimer v.
Copperopolis Copper Co., 104 P. 895, 897 (Or. 1909)).
23 Walbridge, 8 Alaska at 39-40.
24 Durkheimer, 104 P. at 42.
25 The legislature changed the language of its dump lien
statute in 1933 from a recovery for the full amount of wages to a
recovery for the amount due the laborer. (Compare the current AS
34.35.140 to Compiled Laws of the Territory of Alaska 1913, sec.
164. The 1913 Alaska statute was taken from 36 Stat. L. 848,
which also contains the phrase for the full amount of wages.)
This possibly suggests a desire for a more expansive
interpretation of what fell under a dump lien under the new
statute, though there is nothing in the legislative history to
support this interpretation.
The current law is adapted from 26-2-5 ACLA 1949,
which uses the phrase the amount due the said laborer. (The
language throughout the statute has been modernized slightly, but
with no apparent change in the meaning of the statute. It is not
clear when these minor changes in the language took place.) This
version of the statute was adopted in 1933. CLA 1933, 2005.
There is nothing in the legislative history to suggest why the
amount due for the lien was changed from for the full amount of
wages to the amount due the laborer. The change took place as
part of a larger bill on a variety of lien issues. The bill
passed unanimously in both houses, though there were some House
of Representatives amendments on an unrelated issue.
26 In Mitchell v. Beaver Dredging Co., the court, in
reference to the 1933 Session Laws that included the dump lien
statute, stated that [o]n the whole the acts of the Legislature
have the very definite purpose of assisting the miner and laborer
to recover his wages. 8 Alaska 566, 572 (D. Alaska Terr. 1935).
This perhaps suggests that a change in the language and scope of
dump liens was not the primary focus of the legislature, as the
reference to wages is preserved. At the same time, though, the
passage from Mitchell is a rather general statement and does not
necessarily imply that the change of wages to amount due the
laborer was completely without meaning. Furthermore, the lien
before the court in Mitchell was either a mechanics or a miners
lien (both were referenced) and not a dump lien.
The remaining Alaska case law on this issue is no more
helpful in determining how to interpret the definition of work in
AS 34.35.140(a). Donaldson v. Henning held that materials and
equipment use could not be included in a dump lien. 4 Alaska
642, 651 (D. Alaska Terr. 1913) (disallowing lien charges for
purchase of a cable and use of a boiler). However, when this
case was decided, the statute read as applying to wages instead
of to the laborer, so this case has no precedential value for
interpreting the change in the statutory language. Similarly,
McConnell v. Empire Tin Mining Co., decided in 1916, maintained
that the purpose of a dump lien is the protection of the miner
and the securing to him of his lien for wages. 5 Alaska 506, 509
(D. Alaska Terr. 1916). This case also cannot dictate a post-
1933 interpretation of the dump lien statute.
27 Oklahoma has a statute specific to oil and gas wells
which includes a lien on the proceeds from the sale of oil or gas
produced therefrom. Okla. Stat. tit. 42, 144. This statute,
which applies both to those who provide services and to those who
provide materials for the development of the mine, also places a
lien on fixtures and equipment owned by the mining company,
making it impossible to separate the elements that would apply
strictly to a dump-specific lien as compared to more common
mechanics or materialmans liens.
28 Timber Structures, Inc. v. C.W.S. Grinding & Mach.
Works, 229 P.2d 623, 631 (Or. 1951).
29 Timber Structures, 229 P.2d at 630-31:
Labor, within the meaning of the lien
statute, is no less labor because it is
carried on with the use of expensive
machinery instead of hand tools, and its
reasonable value is not determined simply by
the out-of-pocket payments by the employer to
the employee. Plaintiff, as a subcontractor,
furnished labor for this particular building
of a special kind for the special purposes
and needs of the structure. The question is
what is the reasonable value of this
particular labor, not some other. To be able
to furnish this sort of labor, plaintiff was
required to construct a plant, buy and
install machinery, purchase power to operate
the machinery, carry insurance, pay taxes,
employ engineers, and incur other expenses.
It also had to consider the profit and loss
angle of its operations. All of such
expenses are a part of making this particular
labor available and are increments of its
value.
(Emphasis in original.)
30 United Pac. Ins. Co. v. Martin & Luther General
Contractors, Inc., 455 P.2d 664, 674 (Wyo. 1969) (allowing
equipment-related costs in the calculation of a lien and noting
that the basic principle underlying all mechanics lien statutes
is one of equity, that unconscionable and unjust enrichment
should be prevented in the field of construction).
31 Schraeder v. Gormley, 259 P. 869, 872 (Okla. 1927)
(holding that a company hired to provide a rig for oil drilling
operations possessed a lien on the well for the equipment it
provided); William M. Graham Oil & Gas Co. v. Oil Well Supply
Co., 264 P. 591, 599 (Okla. 1927) (To hold that the statute gives
to the one a lien for commodities furnished which become a part
of the property, either by consumption in the use thereof, or by
attachment as a part of the equipment or machinery or otherwise,
and that it denies to the other who likewise furnished
commodities [in this case, the costs of renting drilling
machinery] equally as essential and necessary as furnished by the
one, though such commodities furnished by the other be not
consumed nor become a part of the properties developed by
attachment, and retain individuality, and be capable of further
use upon completion of the immediate purposes for which they were
purchased, is to say that the lawmaking body of the state acted
in a most discriminatory manner in the enactment of the statute,
when it is known as a matter of common knowledge that a large
quantity of such necessary and essential commodities never become
a part of the leasehold either by consumption or attachment
thereto.).
32 Martin v. Wakefield, 43 N.W. 966, 967 (Minn. 1889)
(Remedial statutes are to be liberally construed to advance the
remedy. The legislature could not have intended to exclude the
use of those appliances or instrumentalities which are absolutely
necessary to the performance of the various departments of labor
enumerated in the statute. We are therefore of opinion that
manual labor, as used in this connection, includes the use and
earnings of all implements, instrumentalities, or agencies, such
as axe, cant-hook, team, or the like, which are actually used in
and necessary to the performance of such labor by the lumberman
or logger.).
33 See Alderman v. Iditarod Properties, Inc., 32 P.3d 373,
380 (Alaska 2001) (On questions of law, our duty is to adopt the
rule of law that is most persuasive in light of precedent,
reason, and policy.) (citing Guin v. Ha, 591 P.2d 1281, 1284 n.6
(Alaska 1979)); Tesoro Alaska Petroleum Co. v. Kenai Pipe Line
Co., 746 P.2d 896, 904-05 (Alaska 1987) (Our starting point in
[interpreting a statute] is the language of the statute itself
construed in light of the purposes for which it was enacted. . .
. The goal of statutory construction is to give effect to the
legislatures intent, with due regard for the meaning the
statutory language conveys to others. In this respect, we have
repeatedly stated that unless words have acquired a peculiar
meaning, by virtue of statutory or judicial construction, they
are to be construed in accordance with their common usage.)
(citations omitted).
34 These costs include those expenses for supplies, such
as food and fuel, necessary to the maintenance of the worksite
and not incorporated into the contracted-for project. Without
the necessary supplies, neither the human workers nor the heavy
equipment could function properly. The cost of supplies is
therefore an integral part of the amount due the laborer under AS
34.35.140(a) and, as such, can be included in the dump lien.
This inclusion of supplies in the dump lien does not extend to
materials, defined as those items and resources incorporated into
the construction of the mine or well itself, or any surrounding
buildings.
Blattner does not assert before this court a claim for
materials supplied to the mining operation, though such an
argument was raised before the superior court and rejected. To
the extent that this claim is still valid, Blattner is not
permitted to recover for the cost of materials in its dump lien.
The furnishing of materials is, by statute, specifically
contemplated in a materialmans lien. See AS 34.35.050(3). A
materialmans lien attaches to the structures resulting from
construction and hence is fundamentally different from a dump
lien, which attaches to the mass of mined minerals. See id.; AS
34.35.140(a). Although we hold that equipment costs are included
in Blattners dump lien, there is no interpretation of the dump
lien statute and its language of performing work that would allow
incorporation of the cost of materials. Thus, the prospect of
any recovery at all for the cost of materials can only be
accomplished through a materialmans lien on the physical
structures remaining at the mine. However, Blattner concedes
that the only remaining interest in real property in dispute
concerns the proceeds from the dump. Consequently, a claim for
the cost of materials cannot be included in the present action.
35 AS 34.35.160(c).
36 While certain contract specifications for performance
of the work and associated costs exist, the record does not
provide sufficient information upon which to base a claim for
damages in case of breach of contract. The record does contain a
proposed contract by USMX used to solicit bids for the project,
but there is no indication that this is the same as the contract
agreed to by Blattner. The proposed contract states that payment
will be made for that part of the Work actually completed,
including: (a) engineering; plus (b) material or equipment under
fabrication in Contractors own plant; plus (c) materials or
equipment under fabrication in subcontractors plants; plus (d)
materials or equipment which have already been shipped; plus (e)
construction, if any, completed to date on Site; less any
payments previously made to the Contractor. Further, documents
in the record, mostly letters between USMX and Blattner, involve
negotiations over the terms of the contract, but no indication is
given that this documentation is complete, nor does there appear
to be any discussion of calculation of damages. Such a fact-
intensive inquiry we leave to the superior court upon remand.
37 Alaska Childrens Servs., Inc. v. Smart, 677 P.2d 899,
902 (Alaska 1984) (The duty to mitigate damages is a well-
recognized rule of contract law in Alaska.).
38 See Krossa v. All Alaskan Seafoods, Inc., 37 P.3d 411,
419 (Alaska 2001) (When parties to a contract dispute do not have
a valid contract, plaintiffs may generally recover in quantum
meruit for services rendered. The measure of recovery in quantum
meruit is the reasonable value of the services rendered to the
defendant. (citations omitted)).
39 This time period will be discussed in the next section.
40 It is worth noting that under the nine-month rule set
forth in AS 34.35.145, the February 26, 1999 date advocated by
Blattner would likely be less favorable than the January 10, 1998
date adopted by the superior court if standby costs are held to
be non-lienable. Blattner does not challenge the applicability
of AS 34.35.145 to the present case.
41 8 Alaska 309, 310 (D. Alaska Terr. 1931).
42 60 F.2d 24, 26 (9th Cir. 1932). The phrase necessary
or convenient is now included in AS 34.35.125, which has been
partially incorporated into AS 34.35.140(a), at least as far as
types of lienable work are concerned. The relevant portion of AS
34.35.125 provides: A person who, at the instance of the owner, .
. . performs any other class or kind of work necessary or
convenient to the development, operation, working, or mining of
the claim or well . . . has a lien on the mine or mining claim,
oil, gas, or other claim or well as security for the payment of
the work.
43 See Zavodsky, 60 F.2d at 25-26.
44 See id. at 26 (The fact that work had been suspended
does not, in our opinion, restrict the application of the lien
statute. It can be assumed that the very purpose of the
employment by appellant of Fremming was to have the property
guarded and protected until such time as mining operations might
be resumed.); cf. Colonial Supply Co. v. Smith, 272 P. 879, 880-
81 (Okla. 1928) (holding that one employed to guard idle oil well
tools possessed a lien for his services); Skinner v. Quadrangle
Oil Co., 212 P. 684, 686 (Kan. 1923) (holding that a lien could
include waiting time because under the contract this time must be
considered as a part of the labor necessary to drill the well).
45 See United States for Use of E. & R. Constr. Co., Inc.
v. Guy H. James Constr. Co., 390 F. Supp. 1193, 1246 (D. Tenn.
1972), affd by United States v. Guy H. James Constr. Co., 489
F.2d 756 (6th Cir. 1974) (Those items of plaintiffs claims which
involve damages for stand-by time of equipment are not properly
recoverable under the Miller Act.); Kerr-McGee Oil Indus., Inc.
v. W.J. McCray, 361 P.2d 734, 737 (Ariz. 1961) (overturning a
lien for standby machinery because the machinery did not
contribute to the improvement of the property and hence was not
within the manifest purpose of the statute); Nelson v. Boise
Petroleum Corp., 32 P.2d 782, 783-84 (Idaho 1934) (holding that
an employee was not entitled to a lien for time in which he was
idle, though he could still recover contract damages); Blake v.
Crystaline Lime Co., 221 P. 1100, 1101 (Idaho 1923) (holding that
persons employed but not performing work were not entitled to a
lien for time after completion of actual work).
46 Blattner contends that the trial court believed that
the mine remained in operation at least until USMX filed for
bankruptcy protection on May 21, 1998. This might be a more
appropriate date for termination of the standby work by Blattner
were it not for Blattners own admission that it ceased work on
January 10, 1998. See Kerr-McGee, 361 P.2d at 738 (holding that
work ceased when both parties were of the belief that there was
nothing further to be performed even though the well had not been
completed). If the May 21, 1998 date were to have been adopted,
the nine-month limit of AS 34.35.145 would be applied to that
date.
47 Indeed, the trial court held that Blattner had ceased
work in November 1997, though it allowed recovery for the lien
from the nine months prior to the January 10, 1998 date set forth
in the first lien.
48 The contract between Blattner and USMX includes a
monthly charge of $121,000 for periods when the equipment is in
standby mode. The issue of whether Blattner can recover contract
damages for its standby costs is not before this court.
49 See Zavodsky, 60 F.2d at 26.
50 AS 34.35.160(c).
51 Rothschild admits that this would only be applicable if
the corporate entity of Blattner had not filed a lien claim.
52 AS 34.35.140(a).
53 AS 34.35.140(a).
54 AS 34.35.125.
55 Id.
56 See Amarex, Inc. v. El Paso Natural Gas Co., 772 P.2d
905, 910 (Okla. 1987) (Managerial functions qualify as labor
within the mechanics lien statute. . . . Even under a strict
construction of the statute, there appears to be no reason why
the services performed in the operation of an oil and gas well
should not be within the labor and services provision of 42 O.S.
1981 144.).
57 8 Alaska 36, 37 (D. Alaska Terr. 1928), revd on other
grounds by New York Alaska Dredging Co. v. Walbridge, 38 F.2d 199
(9th Cir. 1930).
58 Walbridge, 8 Alaska at 41.
59 Walbridge, 8 Alaska at 39 (citing Durkheimer v.
Copperopolis Copper Co., 104 P. 895, 897 (Or. 1909)).
60 Walbridge, 8 Alaska at 40 (citing Mining Co. v.
Cullins, 104 U.S. 176, 177 (1881)).
61 Walbridge, 8 Alaska at 40 (citing Flagstaff Silver
Mining Co., 104 U.S. at 178).
62 Compare White v. Constitution Mining & Mill. Co., 55
P.2d 152, 158 (Idaho 1936) (holding that a worker who was
employed in looking after and taking care of the property and . .
. personally planned, mapped out, laid out, and determined the
work to be performed at the mine, and inspected the property for
the purpose of determining that the mine was being properly cared
for and preserved possessed a lien on the mine), and Hahn v.
Anaconda Gold Mining Co., 128 N.W. 128, 128-29 (S.D. 1910)
(allowing a lien for a superintendent and general manager who
during a greater portion of his said employment . . . was
required to be upon the mining claims of defendant), with
Wintermote v. MacLafferty, 233 F. 95, 96 (9th Cir. 1916)
(disallowing a lien for an executive whose duties in the company
included supervision of workers, repairing machinery, and
directing sales), Hulsey v. LaMance, 242 P.2d 554, 556 (Ariz.
1952) (holding that an employee who maintained equipment and
showed land to potential investors did not qualify for a laborers
lien against the mining property), and Manpower, Inc. v.
Phillips, 179 N.E.2d 922, 925-26 (Ohio 1962) (holding that a
company that furnished laborers who worked under direction of
contractor was not itself a laborer within the mechanics lien
statute).
63 5 Alaska 506, 508-09 (D. Alaska Terr. 1916).
64 Consequently, the Little Davis-Bacon Act (AS 36.05.010-
110), the applicable definition of public construction as being
on-site (AS 36.95.010(3)), and the interpretation of on-site in 8
Alaska Administrative Code (AAC) 30.910 (2000) are not binding on
the present case.
65 968 P.2d 86, 92 (Alaska 1998).
66 Id. at 92-93.
67 8 AAC 30.910(a); see also 8 AAC 30.910(b) ([L]aborers,
mechanics, or field surveyors who are engaged by a person or
business that is hired or contracted by a prime construction
contractor or subcontractor to provide services which are
integral and necessary to the construction project shall be
considered on-site in the performance of those duties which the
contractor or subcontractor was required to perform.).
68 8 AAC 30.910(c).
69 Rothschild asserts that Blattner did not make this
argument at trial and thus should be precluded from making it
here. Arguments not raised in the trial court are waived on
appeal except where plain error has occurred. Wettanen v.
Cowper, 749 P.2d 362, 364 (Alaska 1988). However, while not a
focus of its argument below, Blattner sufficiently raised the
issue by asserting mechanics and mining liens against which
Blattner now argues the $500,000 payment should apply.
70 663 P.2d 946, 948 (Alaska 1983).
71 Each lien contained in the record begins with the
following statement:
The undersigned, D.H. Blattner & Sons,
Inc. . . . claims a mining lien upon the
mineral property more commonly known as the
Roundtop Upland Mining Lease, as more
particularly described below; and separately
and in addition, claims a mining lien upon
the dumps or masses produced from, or piled
or stored upon, said leased real property,
including the minerals contained therein or
extracted therefrom (hereinafter the dump or
mass).
Each lien claim also ends with a similar statement:
The Claimant therefore claims a lien
against the property that is leased, and
separately claims a lien against the masses
or dumps for the amount due, plus costs,
reasonable attorneys fees, and interest.
These passages refer to two, and only two, distinct
liens, describing them in terms akin to a mining lien and a dump
lien. Though some of the work described elsewhere in the liens
might be recoverable under a mechanics lien, such a lien does not
appear to have been claimed. Furthermore, Judge Savell limited
Blattners lien claims to the two [liens] filed and recorded
January 27, 1998, which contain the above passages and no
separate reference to a mechanics lien.
72 Indeed, as the superior court notes, both the mine and
the dump were transferred to state control on July 12, 1999, so
the only thing that Blattner and Rothschild are disputing is the
distribution of the amount in the Norwest Bank Colorado account
resulting from the sale of gold and silver acquired from the
dump. Yet, Blattner recorded its liens from January 22, 1998 to
April 8, 1999, when the mine and dump were potentially being
contested, so the transfer of the dump and mine to state control
does not per se defeat Blattners argument here.
Rothschild alleges that the protection payment was
intended to protect against the depletion of the cash proceeds
and that consequently Blattner could not apply the payment to the
mining lien and possibly not even to the dump lien. This
misconstrues the situation. The cash proceeds from the mine and
dump are only a proxy for the debt owed by USMX to Blattner for
which Blattner has claimed mining and dump liens. To the extent
that these liens are valid, the payments made to Blattner are to
be used to reduce the indebtedness secured by these liens.
73 Girves v. Kenai Peninsula Borough, 536 P.2d 1221, 1227
(Alaska 1975) (asserting that trial courts have wide discretion
in determining attorneys fees); Owen Jones & Sons, Inc. v. C.R.
Lewis Co., 497 P.2d 312, 314 (Alaska 1972) (holding that the
determination of who is the prevailing party and who should be
awarded attorneys fees is within the discretion of the trial
judge).
74 Girves, 536 P.2d at 1227; Froelicher v. Hadley, 442
P.2d 51, 53 (Alaska 1968).
75 United Servs. Auto. Assn v. Pruitt, 38 P.3d 528, 531
(Alaska 2001); Froelicher, 442 P.2d at 53.
76 Alaska Civil Rule 82(a) provides: Except as otherwise
provided by law or agreed to by the parties, the prevailing party
in a civil case shall be awarded attorneys fees calculated under
this rule. (Emphasis added.) See also Gamble v. Northstore
Partnership, 28 P.3d 286, 288 (Alaska 2001) (holding that Civil
Rule 82 may be overridden by statute or agreement); Bobich v.
Hughes, 965 P.2d 1196, 1200 (Alaska 1998) (holding that a
statutory provision for attorneys fees in an overtime
compensation case trumped Civil Rule 82).
77 See Brand v. First Fed. Sav. & Loan Assn of Fairbanks,
478 P.2d 829, 833-34 (Alaska 1970).
78 Brand, 478 P.2d at 834 (holding that the trial court
had in that instance properly set off the fees for one partys
lien enforcement claims against the successful claims of the
other party).
79 See Boyd v. Rosson, 713 P.2d 800, 802 (Alaska 1986)
(holding that full fees should be awarded to successful lien
claimants [under AS 34.35.005(b)] so long as the fees are
reasonable); Brand, 478 P.2d at 833-34.
80 See Boyd, 713 P.2d at 802.
