Opinion ID: 1241029
Heading Depth: 2
Heading Rank: 1

Heading: Application of the Statutory Bar to Industrial Power & Light

Text: In view of the court's pronouncement that the statutory bar is not to be given an expansive reading, or a broad and liberal construction, I think its application to IPL is incorrect. The statutory provision which imposes the bar reads as follows: Sec. 08.18.151. Legal actions by contractor. No person acting in the capacity of a contractor may bring an action in a court of this state for the collection of compensation for the performance of work or for breach of a contract for which registration is required under this chapter without alleging and proving that he was a registered contractor at the time he contracted for the performance of the work. Thus, to avoid the bar, registration must be effected, not at the beginning of [the contractor's] undertaking to accomplish the project it had planned, as the majority apparently rules, but rather at the time he contracted for the performance of the work, with the work referring back to the clause work ... for which registration is required under this chapter. [1] This specification of the point as of which registration must be accomplished is important, since the statute creates a severe forfeiture and as such should be strictly construed against the government or parties seeking to exact statutory penalties and in favor of persons on whom such penalties are sought to be imposed. 3 C. Sands, Sutherland Statutory Construction §§ 59.02, 59.03 (4th ed. 1974). It lets potential or incipient contractors know when they must obtain registration  i.e., before they can execute any contract for the performance of work covered by the chapter. This leaves them free to engage in any preliminary planning and/or exploratory work, up until the point at which they execute with another party a contract for the performance of work covered by the chapter. This makes sense in terms of the statutory purpose, in that it is these other parties to the contract whom the statute seeks to protect against unscrupulous or incompetent contractors. Thus, the question is whether IPL contracted for the performance of work for which registration is required under the statute, prior to September 30, 1975 (at which point IPL obtained a license). [2] To find that IPL did contract for the performance of work, work for which registration would be required under the chapter, prior to September 30, 1975, the superior court would have to find either that (1) IPL contracted for the performance of work for which registration is required in the contract of August 1, 1975, between itself and WM; or (2) IPL contracted for the performance of such work in some other contract, presumably with its own customers, prior to September 30, 1975. There does not appear to be sufficient support in the record to warrant summary judgment based upon this second option ( i.e., there is a genuine issue as to this material fact); and the majority specifically adopts the first option. Thus, the bar imposed against IPL because it could not prove that [it] was a registered contractor at the time [it] contracted for the performance of the work must be based on the August 1, 1975, contract. Although this contract clearly involves construction-type activities, they are all obligations imposed on WM. It strikes me as meaningless to require one party to a contract to register based on the other party's contractual obligations; in my view such an interpretation would require any purchaser of contractors' services ( e.g., a private home-buyer) to register. [3] Thus, IPL's registration requirement must be based on IPL's contractual obligations. [4] It is clear that no registration requirement was imposed on IPL by virtue of the provisions of the August 1, 1975, contract. As IPL points out, had it decided to place the units in Oregon rather than Alaska, WM would have had no cause of action against IPL for breach of contract; and, in such a case, registration in Alaska would have been entirely unnecessary. Thus, the August 1, 1975, contract did not require IPL to render any performance or do any contractor's work in Alaska for which registration would be a prerequisite. [5] The superior court did not make any findings to the contrary. [6] Its ruling was apparently based on the theory that, regardless of whether IPL entered into any contractual commitment to perform work for which registration would be required, registration was required because of IPL's plan or purpose. This is implicitly accepted by the treatment given the issue in the majority opinion. I think it is an overbroad statement that the contract between WM and IPL required IPL to register merely because it was certainly the beginning of Industrial Power's undertaking to accomplish the project it had planned. Unless there was some reason, in the contract itself, why, in the event registration was denied, IPL could not modify or abort the project without breaching its contractual commitments, then such a statement seriously impinges on the flexibility of business decision-makers. It is reasonable to require registration prior to a contractor's making any contractual commitments to do the type of work for which registration is required; it is not reasonable to impose such a requirement, without any contractual commitment to do such work having been made, on the basis of an out-of-state purchase or a plan for a particular project. Such a rule is too vague for practicable enforcement. To be on the safe side, prospective out-of-state contractors would have to register prior to doing any preliminary planning, and this would unduly discourage commerce with Alaska. The requirement of a contractual commitment provides a much more definite and concrete point for the imposition of the registration requirement, and thus makes sense in terms of policy and enforceability considerations, as well as being in accordance with the language of the statute.