Opinion ID: 2509227
Heading Depth: 3
Heading Rank: 2

Heading: Auction Block's Role in the October 5 Transaction

Text: On appeal, Deaver advances numerous factual and legal arguments to support his contention that it was error to dismiss his action against Auction Block: (1) the halibut were number one quality when he delivered them to Auction Block; (2) as a matter of fact, the transaction between Deaver and Auction Block was not an auction; (3) as a matter of law, only a buyer may issue fish tickets; (4) as a matter of law, when a fisher receives a fish ticket, the company listed on the fish ticket is the buyer; (5) when a company issues a fish ticket to a fisher and invoices a third party for the price, the company issuing the fish ticket is the buyer; (6) a company that is licensed and bonded by the state to buy fish is a merchant under the Uniform Commercial Code (UCC); and (7) unless there is an effective rejection, a merchant buyer under the UCC must pay according to the terms of the fish ticket. Some of these contentions present legal or factual disputes that were not expressly resolved below. The superior court's finding that Auction Block was an auctioneer and not a buyer rendered it unnecessary to decide some of the issues Deaver raises here. We think that a single narrow legal issue controls this appeal: does the undisputed fact that Auction Block issued Deaver an Auction Block fish ticket when Deaver delivered his halibut to Auction Block make Auction Block the primary fish buyer of Deaver's fish? If so, it was error to dismiss Deaver's action against Auction Block. As Auction Block recognized in its superior court brief, the commercial fishing industry in Alaska is highly regulated. [4] This extensive regulation reflects the state's strong interest in the management of a renewable resource. [5] But it also reflects a state social policy of protecting commercial fishers. Thus, AS 44.25.040(a) requires a primary fish buyer to post a surety bond for the express purpose of securing payment to fishers for the raw fish they deliver. [6] According to its title, AS 44.25.040 is intended to provide [s]ecurity for collection of wages and payment for raw fish. [7] The statute was originally enacted in 1977 and codified as AS 16.10.290, as part of an act relating to security for the collection of wages and payment for raw fish. [8] In 1993 the governor, by Executive Order No. 85, transferred from the Department of Labor to the Department of Revenue administration of the bonding program that serves as security for the collection of wages and payment for raw fish. [9] Alaska Statute 16.10.290 then became AS 44.25.040. [10] Alaska Statute 44.25.040 requires a primary fish buyer to file a surety bond running to the state conditioned upon the promise to pay independent registered commercial fisher[s] for the price of the raw fishery resource purchased from them.... [11] The primary fish buyer must post this surety bond unless the buyer has more than the amount of the bond in lienable property within the state. [12] The statute defines primary fish buyer to mean a person engaging ... in the business of originally purchasing or buying any fishery resource.... [13] The legislature amended the statute in 1989 to extend the coverage of the bond to unemployment insurance contributions, [14] but in doing so gave priority to claims of persons furnishing labor and to claims of independent registered commercial fishermen. [15] Alaska Statute 44.25.041 exempts specified purchasers and entities. Buyers that do not actually purchase fish or hire employees do not have to post a bond, nor do restaurants, grocery stores, and established fish markets. [16] There is no statutory exemption for auctioneers who are primary fish buyers. [17] We read AS 44.25.040 to require a person or firm acting as a primary fish buyer to be licensed and to post the specified bond. We also read it as treating the surety bond of the primary fish buyer as security for fulfilling the purchase terms promised to the fisher. It therefore implicitly gives the fisher a claim against the buyer of the fish if the fisher is not fully paid. Also relevant to our inquiry are the state regulations imposing duties on fishers delivering raw fish to processors or buyers and on the persons to whom raw fish are delivered. [18] Per 5 AAC 39.130, when a fisher delivers a load of fish to a buyer not licensed to process fish, the buyer issues a fish ticket. [19] The fish ticket must be imprinted with a permit number and must include the buyer's name. [20] Only a buyer who has posted the required surety bond may obtain these fish tickets from the state; only then can it act as a buyer. [21] The fish ticket regulation, 5 AAC 39.130, states that a person who is the first purchaser of raw fish may operate only after receiving authorization and fish tickets from the department. [22] The regulation also provides that forms will not be processed and fish tickets will not be issued without certification that surety bonds as required by [AS 44.25.040] have been posted.... [23] Thus, the statutes and regulations require a primary fish buyer to post the statutory bond before the buyer can issue fish tickets and operate as a buyer. [24] Was Auction Block the primary fish buyer in the October 5 transaction? Auction Block argues that it, per its agreement with Deaver, was merely the auctioneer and not the buyer of Deaver's fish, and that Seafood Products was the primary fish buyer. Auction Block characterized itself below as only the nominal `buyer' in the transaction. Auction Block argues that it provided services to Deaver  offloading the fish, arranging for their shipment, and processing the necessary administrative paperwork and fisheries reporting requirements  but did not buy his fish. Auction Block points to evidence that indicates it was acting as an auctioneer; this evidence includes the submission of bids by Seafood Products and other bidders and the testimony of trial witnesses. The parties' pre-trial stipulation of uncontested facts also indicates that the parties intended Auction Block to act as the auctioneer. Those stipulated facts and the trial evidence would reasonably permit a fact finder to find that Auction Block and Deaver had agreed that Auction Block was Deaver's auctioneer of the halibut Deaver delivered on October 5. Indeed, the superior court did not clearly err in making that finding. But the issue whether Auction Block was a primary fish buyer under AS 44.25.040 does not depend on disputed facts, for two reasons. First, Auction Block's status as an auctioneer for the October 5 halibut landing is not inconsistent with its status as the primary fish buyer for purposes of the statute and regulation. Auction Block seems to assume that a finding that it was the auctioneer must mean that its conduct in issuing Deaver an Auction Block fish ticket when he delivered the halibut to Auction Block was of no legal significance. We disagree. Treating Auction Block as the buyer to carry out statutory and regulatory purposes does not preclude Auction Block from relying on the parties' contractual intentions for other purposes. Thus, even if Auction Block, as the primary fish buyer, must satisfy the statute by paying Deaver in full for his fish, it may still invoke its contracted-for auctioneer status to defend against any claims not precluded by the statute. For example, Deaver's first amended complaint sought not only a money judgment for the difference in the $2.60 price specified on the fish ticket and the $2.21 reduced price he received for the RSW fish, but also unspecified damages in an amount to be proven for Auction Block's alleged breach of the duty of good faith and fair dealing. As to that claim, it seems likely that Auction Block's contracted-for status, rather than its status as a statutory buyer, controls. Second, even assuming the roles of auctioneer and statutory buyer in the same fish-purchase transaction are fundamentally inconsistent, it would not follow that the parties' contractual arrangement surmounts the demands of public policy. Parties cannot by private contract avoid the requirements of this kind of protective statutory and regulatory scheme or thwart its purpose. [25] The statute, by providing some protection against nonpayment or under-payment, was enacted to protect fishers who may be compelled by exigencies to enter into improvident agreements with fish buyers or to deal with buyers whose own finances may be shaky. The remedy the legislature provided would be obviated if a buyer could compel a fisher to contract away this statutory protection. Therefore, if the initial recipient of the fish is deemed the primary fish buyer, its contractual role as auctioneer cannot relieve it of its statutory duties. It is therefore irrelevant that Deaver arguably agreed to contract terms that are inconsistent with the statute. The public policy reflected by the statute must control; to hold otherwise would leave non-parties to the contract without effective recourse. Crew entitled to shares of the catch proceeds could be harmed if unwise agreements defeat statutory protections. An owner's attempt to maximize price could leave crew members no effective recourse if the ultimate recipient of the fish were not amenable to claims in Alaska or were without assets. Auction Block contends that its auction services are beneficial to fishers, and may help them obtain a higher price for their fish. Regardless, Auction Block may not avoid the duties imposed on it by statute and regulation, or limit the remedy the statute provides. Auction Block is effectively asking us to create an exemption the legislature did not enact. Moreover, even assuming auctions may benefit fishers, this transaction illustrates how an auction format may harm them if a dispute arises. If the auctioneer receives the fish and issues a fish ticket, no other subsequent purchaser would be considered the primary fish buyer. Consequently, the ultimate purchaser would have no obligation to post the statutory surety bond. Auction Block observes that Seafood Products was itself a licensed primary fish buyer and had posted its own statutory surety bond. Auction Block was nevertheless the buyer in this transaction. Seafood Products was not the primary fish buyer nor was it the initial recipient of Deaver's fish. It did not issue its own fish ticket to Deaver. Furthermore, even assuming an ultimate purchaser has posted a bond per AS 44.25.040(a), the briefing before us in this case does not establish that Seafood Products's bond would apply to a transaction in which the ultimate purchaser was not the primary fish buyer. We decline to reach that issue in this case; two of the entities potentially most interested in that issue, Seafood Products and its surety, are not parties to this appeal. Moreover, efforts of the auctioneer to determine that the successful bidder is financially responsible are not an adequate substitute for the statute's security requirement or for the state's ultimate authority to discipline firms acting as licensed primary fish buyers. Finally, an auction arrangement potentially permits exactly the sort of transaction that led to adoption of the bond requirement in the first place: purchase of the fish by an out-of-state buyer which may resist administrative or judicial jurisdiction in Alaska, and which may not have the means to pay the fisher in full or on time. [26] Because the surety bond statute and fish ticket regulation govern initial sales of raw fish, a factual finding that Deaver and Auction Block intended to enter into a contract for auction services does not dispose of Deaver's claim. The material facts relevant to this appeal are Deaver's delivery of the halibut to Auction Block, and Auction Block's issuance to Deaver of an Auction Block fish ticket listing the halibut Deaver delivered to Auction Block, and listing Auction Block as the buyer.