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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaska National Insurance Company v. Northwest Cedar Structures, Inc. (03/09/2007) sp-6110
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
| ALASKA NATIONAL INSURANCE | ) |
| COMPANY, | ) Supreme Court No. S- 11747 |
| ) | |
| Appellant, | ) Superior Court No. 3AN-02-12171 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| NORTHWEST CEDAR | ) No. 6110 - March 9, 2007 |
| STRUCTURES, INC., BOND NO. | ) |
| 6875489 ISSUED BY UNITED | ) |
| PACIFIC INSURANCE COMPANY, | ) |
| TRAVELERS CASUALTY & | ) |
| SURETY COMPANY, STEVE E. | ) |
| PAVICH, and RODNEY R. | ) |
| ROBERTSON, | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Mark Rindner, Judge.
Appearances: Diane F. Vallentine and Mark P.
Melchert, Jermain, Dunnagan & Owens,
Anchorage, for Appellant. Charles G. Evans,
Law Offices of Charles G. Evans, Anchorage,
for Appellee Travelers Casualty & Surety
Company.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Fabe,
Justice, not participating.]
EASTAUGH, Justice.
MATTHEWS, Justice, concurring.
I. INTRODUCTION
A construction contractor failed to pay premiums to its
workers compensation insurer. The insurer sued the contractors
statutory surety bond, claiming the failure to pay was a breach
of contract in the conduct of the contracting business within the
meaning of the contractors licensing statute, AS 08.18. Because
the breach was not of a contract for the sort of activities the
licensing statute addresses, we hold that the insurer cannot
recover against the bond and therefore affirm the judgment below.
II. FACTS AND PROCEEDINGS
The parties stipulated in the superior court to the
relevant facts: Alaska National Insurance Company issued a
workers compensation insurance policy to Northwest Cedar
Structures, Inc., a construction contractor. Premium payments
for this insurance were initially estimated; the premium was
adjustable during the policy period and at the end of the policy
period an audit determined the final premium due, based on the
number of hours worked and the type of work performed by covered
employees. Northwest Cedar failed to pay Alaska National nearly
$80,000 in premiums due. Alaska National then sued Northwest
Cedar, its $10,000 contractors surety bond, and the insurer that
issued Northwest Cedars surety bond (United Pacific Insurance
Company, now owned by Travelers Casualty & Surety Company).
The superior court held Northwest Cedar in breach of
contract for failing to pay the workers compensation insurance
premiums and entered judgment for Alaska National against
Northwest Cedar, but ruled on cross-motions for summary judgment
that Alaska National could not recover against the statutory
surety bond because the legislature did not intend contractors
surety bonds to cover such general overhead expenses as rent,
telephone, electric, car lease, and workers compensation
insurance. It also reasoned that to be covered, the breached
contract must be a contract in the contracting business in the
course of a construction project.
Alaska National appeals. The only issue it raises is
whether it can recover against the statutory surety bond in
partial satisfaction of its judgment against Northwest Cedar for
breach of contract. Appellee Travelers Casualty & Surety Co.
does not challenge the breach of contract ruling and agrees that
the unpaid premiums exceed the amount of the $10,000 surety bond.
III. DISCUSSION
A. Standard of Review
We review grants of summary judgment de novo.1 We also
review legal determinations de novo and apply our independent
judgment to statutory interpretation, adopting the rule of law
most persuasive in light of precedent, reason, and policy.2
B. Breach of Contract in the Conduct of the Contracting
Business in AS 08.18.071(a)(3) Means Breach of a
Contract for Activities of the Sort Described in AS
08.18.171(4).
Alaska Statute 08.18.071 requires a general contractor
in Alaska to have a $10,000 surety bond that covers specified
types of claims.3 Alaska Statute 08.18.081(a) provides that
anyone having a claim against a contractor . . . for any of the
items referred to in AS 08.18.071 may bring suit upon the bond.
Alaska National argues that the superior court erred in ruling
that Northwest Cedars surety bond did not cover Northwest Cedars
breach of its contract to pay the workers compensation insurance
premiums. It contends that the court departed from the plain
meaning of AS 08.18.071(a)(3) and instead based its reading of
the statute on unsupported assumptions about the intent of the
legislature.
The parties dispute the meaning of the statutory
bonding scheme. Both parties invoke plausible, but not
necessarily equally persuasive, public policy arguments to
support their readings of the statutory provisions.
This case turns on the relevant statutory language.
There is no contention here that the words of the bond or that
general principles of contract law provide greater protection to
Alaska National than do the relevant words of the statute.4
To determine whether Alaska National can pursue the
bond, we must determine whether the claim is for any of the items
referred to in AS 08.18.071.5 Alaska Statute 08.18.071(a)
specifies the items the bond must cover. Former AS 08.18.071(a)
required Northwest Cedars bond to cover these items:
(1) taxes and contributions due the state
and political subdivisions;
(2) persons furnishing labor or material or
renting or supplying equipment to the
applicant; and
(3) amounts that may be adjudged against the
applicant by reason of negligent or improper
work or breach of contract in the conduct of
the contracting business or by reason of
damage to public facilities occurring in the
course of a construction project.[6]
Only subsection .071(a)(3) arguably applies here. Is
the contractors breach of its promise to pay the workers
compensation premiums a breach of contract in the conduct of the
contracting business within the meaning of AS 08.18.071(a)(3)?
To interpret a statute we must consider its language, its
purpose, and its legislative history, in an attempt to give
effect to the legislatures intent, with due regard for the
meaning the statutory language conveys to others.7 In order to
interpret a statute contrary to its plain meaning, the plainer
the language, the more convincing contrary legislative history
must be. 8
Alaska National argues that AS 08.18.071(a)(3) is clear
and unambiguous. It contends that the words breach of contract
in the conduct of the contracting business are not limited to the
actual construction of improvements or performance of work on a
construction project pursuant to a construction contract, but
rather extend to the broader realm of contracts entered into in
connection with the conduct of [a contractors] contracting
business. Thus, Alaska National seems to suggest that any
contracts that are in some way related to a contractors business
must be covered by the bond. Travelers counters that Alaska
National employs . . . a technical reading of the statute that
ignores the legislative intent and leads to a harsh and
unrealistic result. Because we think it clear that Alaska
Nationals claim on the bond is outside the scope of subsection
.071(a)(3), we need not craft a comprehensive standard
establishing the line between covered and uncovered breaches of
contract. We consider here only whether Alaska Nationals claim
for unpaid workers compensation premiums is covered by Northwest
Cedars statutory bond.
Subsections .071(a)(1)(3) set out three classes of
expenses covered by the surety bond. They include (1) taxes and
contributions; (2) labor, material, or equipment; and (3) amounts
adjudged against the contractor for tortious conduct, breach of
contract, or damage to public facilities.
As to this third class, subsection .071(a)(3) refers to
negligent or improper work or breach of contract in the conduct
of the contracting business and to damage . . . occurring in the
course of a construction project. To cover, as Alaska National
proposes, the breach of the contract to pay workers compensation
premiums, we would have to read in isolation these words of
subsection .071(a)(3): breach of contract in the conduct of the
contracting business without considering their meaning in light
of the surrounding words. We are reluctant to read the quoted
words in isolation because the subsections other words seem to
describe this class of claims in terms of the contracting work
and provide interpretive context.
But even focusing narrowly on the words breach of
contract in the conduct of the contracting business provides
little support for the reading Alaska National advances. To
avoid rendering in the conduct of the contracting business
superfluous, we must read it as limiting the scope of breach of
contract.9 The former phrase must have been intended to
distinguish between those contract breaches to be covered by the
statutory bond and those not covered. Without this distinction
the bond would cover all breaches of contract by a contractor,
without regard to whether the contract has any connection to the
contractors contracting business. Subsection .071(a)(3) provides
some clues about this intended distinction. The phrase in the
conduct of the contracting business contains two such clues.
First, the contracting business singles out contracting. Because
the entire chapter applies to those engaged in the business of
contracting, contracting in subsection .071(a)(3) would be
superfluous unless it was intended to help limit the scope of
coverage to a subset of all business activities of contractors.
Second, in the conduct of the contracting business implies
activity (conduct) in the contracting business itself.
The words of the subsection therefore provide little
support for, or even disfavor, a reading that covers a breach of
a contract that is not central to the conduct of the contracting
business.
A larger view of AS 08.18 helps determine what the
legislature intended, and militates against the interpretation
Alaska National proposes.
Title 8 of the Alaska Statutes regulates a variety of
businesses and professions. Its chapters address forty
professions, from accountants10 to veterinarians.11 Chapter 18
regulates construction contractors and home inspectors. It
requires contractors to register and prohibits persons from
bidding or working as contractors until they have received
certificates of registration.12 It forbids a contractor
registered under one name from acting as a contractor under
another unregistered name,13 requires a contractors advertisements
and contracts to include the registration number,14 requires an
applicant for a certificate of registration to file a surety bond
satisfying statutory specifications,15 and, as seen above, permits
persons having claims against a contractor for any of the items
referred to in AS 08.18.071 to bring suit on the bond.16 Chapter
18 requires proof of insurance, including workers compensation
insurance to the extent required by the Alaska Workers
Compensation Act.17 It also provides for enforcing the
requirements,18 for citations,19 for suspension and revocation of
registration,20 for civil penalties,21 and for criminal penalties
and prosecution.22
The legislature, in adopting these requirements, must
have concluded that the contracting business required this
regulation. Absent a definitive expression of purpose in the
statute or the legislative history, the best explanation for the
scope of regulation can be derived from the statutory list of
activities that bring a person within the bonding and licensure
requirements of Chapter 18. That list is found in AS
08.18.171(4), which defines a contractor:
contractor means a person who, in the pursuit
of an independent business, undertakes or
offers to perform, or claims to have the
capacity to perform, or submits a bid for a
project to construct, alter, repair, move, or
demolish a building, highway, road, railroad,
or any type of fixed structure, including
excavation and site development and erection
of scaffolding; contractor includes a general
contractor, builder, mechanical contractor,
specialty contractor, and subcontractor.
This definition thus describes two core activities of the
profession: actually doing work of the sort described, and doing
specified things (undertaking, offering, holding out as able,
bidding) directed at forming contracts to do that work. Both
activities relate directly to either performing contracted-for
work or obtaining contracts to perform work. Neither aspect
implicates the sort of routine business activities common to many
other businesses. We assume that the legislature chose to
regulate contractors because it was concerned about the risks
resulting from the activities identified in subsection .171(4).
Reading the definition of contractor together with
former AS 08.18.071(a)(3) suggests that the legislature intended
to limit statutory contract breach claims, and thus claims
against the bonds, to breaches of contracts that are directly
related to the sorts of listed activities that caused the
legislature to conclude that regulation was necessary. The
definition of contractor helps distinguish the sorts of
activities bonds were intended to cover from the sorts common to
other, less-regulated businesses. Supporting this distinction is
the definitions equal interest in formation of construction
contracts; this suggests that the contracts discussed in
subsection .071(a)(3) are also the contracts that are the subject
of subsection .171(4). Applying this distinction, a contractors
breach of contract to pay workers compensation premiums should be
excluded from coverage, as the contract is not directly related
to the conduct of the work of the contractor.
Alaska National argues that the language of the final
clause of subsection .071(a)(3), damage to public facilities
occurring in the course of a construction project, distinguishes
it from the language found in the prior clause, in the conduct of
the contracting business. Alaska National reasons that the
legislature, if it had intended the coverage of the breach of
contract provision to be narrow, would have used the language
found in the final clause.
But, as we saw from the statutory definition of
contractor, the chapter addresses both the conduct of performing
a contract and the conduct of obtaining, or attempting to obtain,
a contract.23 The legislature, in drafting subsection .071(a)(3),
could have logically distinguished between physical damage to
public facilities occurring during a project (even a project
between private parties and not for public works) and non-
physical harm suffered by a party to a construction contract.
In any event, this argument at most suggests that
occurring in the course of a construction project may be narrower
than in the conduct of the contracting business. It does not
suggest that in the conduct of the contracting business
encompasses performance or formation of contracts that are not
construction contracts.
Our interpretation of subsection .071(a)(3) is thus
consistent with the seeming purpose of the registration and
bonding requirements.24 The legislature presumably imposed these
requirements because it was concerned about the risks resulting
from the sorts of work contractors agree to do, and from their
efforts to obtain contracts to do that work.25
Alaska National offers its own interpretation of the
purpose of the contractors registration statute to support a
broad reading of AS 08.18.071(a)(3). As it points out, we have
previously stated that [r]egistration was intended by the
legislature to ensure competence and financial responsibility in
those who undertake work as contractors. 26 But even though the
surety bond is intended to help ensure financial responsibility,
it does not follow that the legislature intended that the
statutory bond back every financial dealing of a contractor.
Alaska National also looks to AS 08.18.081(a) to
support its interpretation of subsection .071(a)(3). Subsection
.081(a) specifies priorities for five classes of claims against
surety bonds.27 The fourth class is claims for breach of
contract.28 But subsection .081(a) simply sets claim priorities;
it does not purport to define, or redefine, the types of claims
listed in subsection .071(a). And, as it happens, its words
offer no help in interpreting the words of subsection .071(a)(3).
Alaska National also argues that the priorities set in
subsection .081(a) effectively preclude insurance companies from
exhausting these surety bonds. But the first question is whether
breach of a contract for insurance is covered at all. Moreover,
all breach of contract claims have equal priority, so paying an
insurer limits the bonds ability to cover other contract claims,
including those of project owners harmed by breach of a
construction contract. Finally, subsection .081(a) specifies no
priority for negligent or improper work.
Alaska National asserts that legislative history
supports a broad reading of AS 08.18.071. The 1968 Report of the
Judiciary Committee on House Committee Substitute for SB 161
indeed states that the bond was intended to guarantee payment for
any breach of contract and any damage done to public facilities.29
(Emphasis added.) Although the report literally states that any
breach of contract is covered, the accuracy of a literal reading
of the report is undermined by the fact the report also states
that the bond unqualifiedly covers any damage done to public
facilities. The statute is clear that damage done to public
facilities is not covered unless the damage occurs in the course
of a construction project.30 There is no indication the
legislature wanted to protect everyone who might incidentally
contract with contractors for purposes not directly connected
with the type of work described in AS 08.18.171(4). We therefore
regard the report as generally summarizing the subject of the
bill, not as attempting to specify its exact scope. We therefore
give the report no weight in interpreting the text of the
statute.
It is logical to conclude that the legislature intended
subsection .071(a)(3) to limit breach of contract bond coverage
to construction contracts. If the subsection were construed more
broadly, the bond would be easily exhausted, leaving some
creditors unprotected.31 Per AS 08.18.071(b), a general
contractor must have a $10,000 surety bond and a specialty
contractor must have a $5,000 surety bond. Such bonds are
relatively modest given the amounts potentially at stake if there
are claims of negligent or defective work or breach of contract
to perform work; such bonds would be reduced, if not exhausted,
if they must also broadly cover all business-related contracts.
The surety bond is not a project-specific performance bond; it
must cover all claims pending at one time, and the surety is not
liable in an aggregate amount exceeding the bond.32
We conclude that the words breach of contract in the
conduct of a contracting business in AS 08.18.071(a)(3) were
intended to protect contracting parties for whom the danger of
breach is central to the activity of contracting especially
parties whose ability or incentive to investigate contractors is
limited. Alaska National contends that because Northwest Cedar
was qualified for coverage through the assigned risk pool, also
called the Alaska Plan, Alaska National did not have the option
of refusing to cover Northwest Cedar.33 But insurers generally
have an opportunity to manage and spread risk of non-payment of
premiums; their ability to avoid or spread the risk and cost of
contract defaults exceeds that of most individuals who contract
with contractors. That workers compensation premiums are paid by
many employers and that insurance companies are for-profit
organizations capable of minimizing the risk of premium default
helps confirm that the surety bond was not intended to cover such
transactions.
Alaska National points out that a contracting business
must have workers compensation insurance to carry out
construction projects. It argues that because workers
compensation insurance is essential to the business of
contracting, the failure to pay premiums for such insurance is a
breach of contract occurring in the conduct of the contracting
business.34 Most employers must have workers compensation
insurance, subject to statutory exceptions.35 But many other
services are also important or essential to conducting a
contracting business, or indeed, any business, and some are
mandated by statute. That does not mean a contract for those
other services is covered by subsection .071(a)(3).
It is fair to conclude that the legislature singled out
contractors for bonding and registration requirements because it
thought the activities described in AS 08.18.171(4) pose
significant risks. Given that purpose, we are not persuaded that
the legislature required contractors to have surety bonds in
order to cover the sort of routine contract breaches common to
most businesses. A contract for workers compensation insurance
is not unique to the contracting business. It is little
different than a contract for other overhead expenses common to
many businesses in Alaska. As the superior court correctly
concluded, the surety bond requirement was not intended to cover
such general expenses as rent, telephone, electric, car lease
that are not subject to the unique risks and uncertainties of the
contracting business. Many other businesses must also have
workers compensation insurance. In addition to workers
compensation insurance, contractors likewise must have casualty
insurance, telephone service, and vehicles, but that does not
mean that their need to obtain those services and products caused
the legislature to regulate them and require bonds.
Alaska National asserts that limiting the bonds breach
of contract coverage to breach of construction contracts would
render the breach of contract provision largely superfluous. But
it concedes that such a narrow reading would nonetheless require
the bond to cover the contractors complete failure to perform the
work or its failure to pay subcontractors. Even if these were
the only two contract breaches covered by the statute, they
demonstrate that the provision is not superfluous.
Finally, Alaska National contends that the availability
of a registration bond to guarantee a contractors agreement to
pay premiums has the effect of keeping costs for workers
compensation insurance lower. It suggests that these policy
concerns are even more acute here because Northwest Cedar
obtained its workers compensation policy through the assigned
risk pool, also known as the Alaska Plan. The Alaska Plan is a
state-created plan that provides workers compensation coverage to
employers who cannot otherwise obtain a policy.36 Because losses
under the plan must be distributed throughout the assigned risk
pool, Alaska Nationals inability to recover from the Northwest
Cedars bond will theoretically increase premiums for all
employers under the Plan.37 Alaska National argues that the
result will be increased premiums for those employers in Alaska
that cannot otherwise obtain workers compensation insurance
coverage, a result contrary to the Legislatures goals [in
creating the Alaska Plan].
Our focus here is on determining the legislatures
purpose when it enacted the Title 8 bonding and registration
requirements in 1968;38 the legislatures goals in authorizing
assigned risk pools under Title 21 almost a decade later39 are not
relevant to this inquiry. Furthermore, even assuming the effect
on Alaska Plan premiums would not be trivial, we are not
convinced that the policy goals of the Alaska Plan or any other
part of the workers compensation system should trump any
competing policy goals furthered by reading the bonding statute
requirement as we do here. Any policy concerns potentially
relevant to the workers compensation system do not outweigh the
need to avoid exhausting modest statutory surety bonds on general
overhead expenses.40 Finally, consideration of such policy
concerns is inappropriate when, as here, the meaning of a statute
is reasonably clear.41
IV. CONCLUSION
For these reasons, the judgment of the superior court
is AFFIRMED.
MATTHEWS, Justice, concurring.
A.
The question in this case is whether the language of AS
08.18.071(a)(3), breach of contract in the conduct of the
contracting business, refers to any breach of contract by a
contractor relating to its contracting business or, more
narrowly, only to breaches directly related to the performance of
a building contract.1 I think this is a close question because
the statutory language could reasonably be read to encompass
either definition. If we were to adopt the first meaning,
contracts for a wide variety of overhead items office equipment,
rent, insurance would be covered by a contractors bond. Under
the narrow definition, only contract breaches directly related to
a specific project, such as a failure to complete a building on
time, would be covered. I slightly favor the narrow definition
for one of the reasons relied on by todays opinion.
Like other businesses, contractors must make a wide
variety of contracts. But only contractors can undertake and
perform building contracts. Since other businesses are not
required to post bonds, it seems likely that the legislature
meant contractors bonds to cover only those activities unique to
contractors. This is the point made by the opinion of the court
on pages 8 through 10 and it seems sufficient to tip the scales
in favor of the narrow definition.
B.
The superior court relied heavily on Balboa Insurance
Co. v. Senco Alaska Inc.2 in concluding that workers compensation
insurance premiums are not covered by a statutory contractors
bond. I think that it is worth noting that Balboa has been
overruled by a statutory change and therefore has doubtful
precedential effect.
The Balboa court held that the seller of an air
compressor to a contractor had no claim on the contractors bond
where the compressor was not incorporated into or used up on any
particular project.3 This seems surprising since AS
08.18.071(a)(2) then, as now, covered persons supplying equipment
to a contractor. But the court read subsection (5) of the
exemptions section of the statute, AS 08.18.161, to exclude the
transaction.4 That section provided that [t]his chapter does not
apply to . . . (5) the sale or installation of finished products,
materials, or articles of merchandise which are not actually
fabricated into and do not become a permanent, fixed part of a
structure. The Balboa court read this provision as referring to,
and thus disqualifying from bond coverage, sales of construction
equipment to a contractor.5
But this extremely narrow reading is no longer
possible. In 2003 the legislature amended the lead-in language
of section .161 so that it now begins with the phrase [t]o the
extent that this chapter governs contractors, this chapter does
not apply to.6 This amendment indicates that subsection (5)
refers to sales by a potential contractor rather than to a
contractor. Under the amendment a seller is not required to
register as a contractor based on sales described in subsection
(5). But sales to a contractor are not excluded by section .161
from bond coverage.
Judged at least by the 2003 amendment, the Balboa court
construed the registration statute too narrowly. This mistaken
reading potentially taints the inferences that the court drew
concerning the intended coverage of the bonding provision.
Therefore, in my view, Balboa should no longer be considered to
have precedential value either as to its direct holding or as to
its dicta concerning the intended scope of bond coverage.
For the reason expressed in Part A of this concurring
opinion, I agree to affirm the decision of the superior court.
_______________________________
1 In re Life Ins. Co. of Alaska, 76 P.3d 366, 368 (Alaska
2003).
2 Id.
3 Although the legislature has amended AS 08.18.071 twice
since the breach at issue here, see ch. 134, 1415, SLA 2003 and
ch. 106, 3, SLA 2004, the amendments do not affect the issue
presented in this case. We therefore generally refer to the
current version of the statute. We refer to the former version
as needed.
4 When a surety bond is given to satisfy a statutory
obligation, the relevant statutory provisions are incorporated
into the bond. See 11 Lee R. Russ & Thomas F. Segalla, Couch
on Insurance 163:39 (3d ed. 2005) (noting that [a]lthough there
is some authority to the contrary the general rule is to read
statutory requirements into bond coverage). In this case, the
surety bonds coverage language incorporates, almost verbatim, the
language of AS 08.18.071(a). The outcome here therefore turns on
the meaning of the statute.
5 AS 08.18.081(a).
6 Former AS 08.18.071 (2002). AS 08.18.071(a)(3) now
reads, amounts that may be adjudged against the applicant by
reason of negligent or improper work or breach of contract in the
conduct of the contracting business or home inspection activity,
as applicable, or by reason of damage to public facilities
occurring in the course of a construction project. (Emphasis
added.) The underlined words were added in 2003. Ch. 134, 14,
SLA 2003.
7 In re Estate of Maldonado, 117 P.3d 720, 725 (Alaska
2005) (quoting Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d
1227, 1234 (Alaska 2003) (internal quotation marks omitted).
8 Alderman v. Iditarod Props., Inc., 32 P.3d 373, 393
(Alaska 2001) (quoting State v. Alex, 646 P.2d 203, 20809 n.4
(Alaska 1982)).
9 See Kodiak Island Borough v. Exxon Corp., 991 P.2d 757,
761 (Alaska 1999) (We must . . . presume that the legislature
intended every word, sentence, or provision of a statute to have
some purpose, force, and effect, and that no words or provisions
are superfluous. (quoting Rydwell v. Anchorage Sch. Dist., 864
P.2d 526, 530-31 (Alaska 1993))).
10 AS 08.04.005.690.
11 AS 08.98.010.250.
12 AS 08.18.011(a).
13 AS 08.18.051(a).
14 AS 08.18.051(b).
15 AS 08.18.071(a).
16 AS 08.18.081(a).
17 AS 08.18.101.
18 AS 08.18.116.
19 AS 08.18.117.
20 AS 08.18.121.
21 AS 08.18.131.
22 AS 08.18.141.
23 AS 08.18.171(4).
24 See Jones v. Short, 696 P.2d 665, 667 (Alaska 1985)
([P]roper interpretation of the registration provisions is one
which carries out the legislative intent.).
25 See, e.g., Asdourian v. Araj, 696 P.2d 95, 98 (Cal.
1985) (The general purpose of the [contractor license] law is to
guard the public against the consequences of incompetent
workmanship, imposition and deception.) (internal quotation marks
omitted)).
26 Gross v. Bayshore Land Co., 710 P.2d 1007, 1012 (Alaska
1985) (quoting Sumner Dev. Corp. v. Shivers, 517 P.2d 757, 763
(Alaska 1974)).
27 AS 08.18.081(a)(1)(5).
28 AS 08.18.081(a)(4).
29 See Balboa Ins. Co. v. Senco Alaska, Inc., 567 P.2d
295, 296 (Alaska 1977) (quoting Report of the Judiciary Committee
on HCS for Senate Bill No. 161, 1968 House Journal at 545).
30 AS 09.18.071(a)(3) covers damage to public facilities
occurring in the course of a construction project.
31 Although Balboa Insurance Co. v. Senco Alaska, Inc.,
567 P.2d 295, 297 (Alaska 1977), expressed a similar observation,
that case is not directly controlling because the statute
interpreted in Balboa has since been amended.
32 AS 08.18.081(a).
33 See 3 Alaska Administrative Code (AAC) 30.030
(requiring all insurers to participate in assigned risk pool and
provide coverage to eligible employers otherwise unable to secure
workers compensation insurance).
34 AS 08.18.071(a)(3). Alaska National contended at oral
argument that workers compensation certainly is in a very real
sense consumed in the course of a construction project and hence
should be treated much like labor or materials that are consumed.
It is unclear if Alaska National means this literally, or is
simply arguing by analogy. In either case, we agree with the
majority of modern courts that workers compensation insurance is
not like labor or materials. See United States ex rel. Cobb-
Strecker-Dunphy & Zimmerman, Inc. v. M.A. Mortenson Co., 894 F.2d
311, 313 (8th Cir. 1990) (discussing cases construing the Miller
Act).
35 AS 23.30.045, .230.
36 See 3 AAC 30.010 et seq.
37 See 3 AAC 30.030(f)(5).
38 Ch. 100, 2, SLA 1968.
39 See ch. 252, 1, SLA 1976 (allowing director of
insurance to require insurers to participate in assigned risk
pool); 3 AAC 30.010 et seq. (effective 1977) (creating Alaska
Plan).
40 This conclusion makes it unnecessary to speculate about
whether shifting the risk of workers compensation insurance
premium defaults to surety bond issuers would increase the cost
of the statutory bonds for all contractors.
41 Alaska National also argues in reliance on Washingtons
interpretation of its registration statute. Washingtons statute
predated Alaskas, but it has been amended several times after our
legislature enacted AS 08.18 in 1968, and our legislature did not
have the benefit of Washington appellate decisions issued after
1968. We do not find Washington law helpful in interpreting AS
08.18.071 in this case.
1 I use the term building contract here as shorthand for
contracts to undertake projects listed in the statutory
definition of the word contractor in AS 08.18.171(4). The listed
projects may only be undertaken by a registered contractor. AS
08.18.171(4) provides:
[C]ontractor means a person who, in the
pursuit of an independent business,
undertakes or offers to perform, or claims to
have the capacity to perform, or submits a
bid for a project to construct, alter,
repair, move, or demolish a building,
highway, road, railroad, or any type of fixed
structure, including excavation and site
development and erection of scaffolding;
contractor includes a general contractor,
builder, mechanical contractor, specialty
contractor, and subcontractor[.]
2 567 P.2d 295 (Alaska 1977). The superior court
referred to Balboa as the most relevant case to the present
question.
3 Id. at 296-97.
4 Id. at 297.
5 Id.
6 AS 08.18.161(5) currently provides:
To the extent that this chapter governs
contractors, this chapter does not apply to
. . .
(5) the sale or installation of finished
products, materials, or articles of
merchandise that are not actually fabricated
into and do not become a permanent, fixed
part of a structure[.]
(2003 amendments are underlined.)
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