Opinion ID: 2637027
Heading Depth: 4
Heading Rank: 1

Heading: There are genuine issues of material fact about whether McCormick substantially complied with AS 08.18's registration requirements.

Text: McCormick's only claim against Reliance was under the Little Miller Act. That statute requires that the primary contractor. . . on a public works project post a bond to the state or political subdivision thereof `for the protection of all persons who supply labor and material in the prosecution of the work provided for in the contract. . . .' [7] The Little Miller Act further provides: A person who furnishes labor or material in the prosecution of the work provided for in the contract for which a payment bond is furnished ... and who is not paid in full before the expiration of 90 days after the last day on which the labor is performed or material is furnished for which the claim is made, may sue on the payment bond for the amount unpaid at the time of suit. [8] A contractor may not sue under the Little Miller Act without alleging and proving that the contractor was a registered contractor at the time of contract formation. [9] Registration as a construction contractor under AS 08.18 requires: a registration fee, a surety bond, and public liability and property damage insurance. [10] Registration was intended by the legislature to ensure `competence and financial responsibility in those who undertake work as contractors.' [11] Because the legislature chose the closing of the doors of the courts as a fundamental tool to enforce its policy of ensuring competence and financial responsibility in those who undertake work as contractors, we have consistently enforced AS 08.18.151's requirement that a contractor must be registered at the time of contract formation in order to maintain an action for compensation. [12] But because statutes which cause forfeiture are not favored, [13] we have adopted the doctrine of substantial compliance. [14] We have held that AS 08.18.151's statutory bar may be abrogated by a contractor's substantial compliance with the registration requirements. [15] [S]ubstantial compliance involves conduct which falls short of strict compliance with the statutory registration requirements, but which affords the public the same protection that strict compliance would offer. [16] Substantial compliance generally requires that the contractor be registered [usually under a different name] and have bonding and insurance coverage, since these are the primary means by which the statute seeks to protect parties dealing with contractors. [17] But when a contractor is not registered at the time of contract formation, a court can still find substantial compliance if (1) the contractor's prior registration or other public information would give the public the same information that current registration would give (i.e., the contractor's insurance information); and (2) the contractor's bond and insurance remained effective during the period his or her registration lapsed. [18] It is undisputed that McCormick's registration with the state as a general contractor expired on December 31, 1998, and that McCormick was not registered when he contracted with Alaska Electric. McCormick contends that it was nonetheless error to dismiss his Little Miller Act claim on summary judgment based on his lack of registration, because he substantially complied with AS 08.18's registration requirements. We first address McCormick's argument that information about his bonding and insurance was readily available to the public even after his registration expired. McCormick asserts that [a] phone call to the Alaska Department of Labor, Division of Occupational Licensing would have revealed all [of] McCormick's information, including his bonding and insurance because the Department keeps these records for several years on their system, even when a contractor is currently unregistered. McCormick also notes that when he contracted with Alaska Electric, he had a valid contractor's license issued by the Municipality of Anchorage, and a business license issued by the state. Drawing all reasonable factual inferences in favor of McCormick, the non-moving party, as we must when reviewing a grant of summary judgment, [19] we conclude that evidence of (1) McCormick's prior registration with the Division of Occupational Licensing, (2) the valid contractor's license issued by the Municipality of Anchorage, and (3) the business license issued by the state was sufficient to raise a genuine factual dispute about the continuing availability of McCormick's bonding and insurance information to the public during the lapse in his registration. We next consider McCormick's argument that his bond and insurance actually remained in effect after his registration lapsed. We conclude that the evidence in the record does not establish as a matter of law that McCormick was not bonded during the relevant period. [20] McCormick upgraded his state license from specialty contractor to general contractor in March 1998. At the same time, he increased his surety bond from $5,000 to $10,000 by obtaining a rider to the bond his surety, the Star Insurance Company, had previously issued to him. The rider incorporated the agreements, limitations and conditions of the original bond. The original bond provided that liability under the bond shall be continuous until the certificate of registration is revoked or otherwise terminated by the Department of Commerce and Economic Development or until 30 days after the surety sends written notice of cancellation [to] the Department of Commerce and Economic Development, Division of Occupational Licensing, State of Alaska. Reliance argues that under the terms of the bond agreement, McCormick's bond was automatically canceled on December 31, 1998, when McCormick's state registration as a general contractor expired, and that McCormick was therefore not bonded when he worked on the runway project beginning in May 1999. But the Star Insurance Company, McCormick's surety, sent a notice of cancellation to the state Department of Commerce and Economic Development on August 10, 1999. That notice stated: The above bonding Company hereby notifies you that it has elected to cancel said bond in its entirety. This Notice is given to you in accordance with the cancellation provision in above mentioned bond and applicable state insurance statutes. The fact that McCormick's bonding company sent the notice reasonably permits an inference that it considered itself still bound when it sent that notice to the state in August 1999. If the bonding company had thought that the bond had already expired when the registration expired on December 31, 1998, it is arguable that the bonding company would have had no reason to send the August 10, 1999 notice informing the state that Star had elected to cancel the bond. This inference in turn raises a genuine factual dispute about whether McCormick was bonded when he worked on the runway project, and thus, whether he was in substantial compliance. We therefore reverse the grant of summary judgment against McCormick and remand for further proceedings. [21] Citing AS 36.25.020(a), Reliance argues that because McCormick filed suit before the expiration of 90 days after the last day on which the labor [was] performed ... for which the claim is made, it was not error to dismiss McCormick's Little Miller Act claim. [22] But because there is no evidence in the record that Reliance was prejudiced by McCormick's premature filing, requiring McCormick to commence a new and separate action in these circumstances would [be] to insist upon an empty formalism. [23] We therefore reject this argument as a basis for affirming the grant of summary judgment.