Court Opinion

ID: 1040113
Source: CourtListenerOpinion
Date Created: 2013-09-06 17:13:39.209679+00
Date Added: 2024-06-11T12:49:41.431993
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      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, email
      corrections@appellate.courts.state.ak.us.

               THE SUPREME COURT OF THE STATE OF ALASKA

NORTH PACIFIC ERECTORS, INC., )
                              )                         Supreme Court No. S-14606
              Appellant,      )
                              )                         Superior Court No. 3AN-09-09085 CI
    v.                        )
                              )                         OPINION
STATE OF ALASKA,              )
DEPARTMENT OF                 )                         No. 6818 – September 6, 2013
ADMINISTRATION,               )
                              )
              Appellee.       )
                              )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, William F. Morse, Judge.

              Appearances: Paul J. Nangle, Paul J. Nangle & Associates,
              Anchorage, and Terry R. Marston II, Marston Legal, PLLC,
              Kirkland, Washington, for Appellant. David T. Jones, Senior
              Assistant Attorney General, Anchorage, and Michael C.
              Geraghty, Attorney General, Juneau, for Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              FABE, Chief Justice.

I.    INTRODUCTION
              This appeal arises from a contract dispute between North Pacific Erectors,
Inc. and the Alaska Department of Administration. North Pacific and the Department
contracted for a renovation and asbestos removal project in the Juneau State Office
Building. After work began, North Pacific requested additional payment for the asbestos
removal, claiming there was a differing site condition that made the project more
labor-intensive than it had expected. The Department denied the differing site condition
claim, and North Pacific filed an administrative appeal. A hearing officer recommended
that North Pacific was entitled to additional compensation. But the hearing officer’s
recommendation was rejected, and a final agency decision was issued denying North
Pacific’s claim for additional compensation. North Pacific challenged the agency
decision in superior court, arguing that the agency decision was procedurally flawed and
incorrectly resolved the contract issues. The superior court affirmed the agency decision.
              North Pacific appeals the superior court’s judgment, arguing that it has a
valid differing site condition claim, that the Department breached its duty to disclose
information about the project, and that the agency decision was procedurally flawed. We
conclude that even if North Pacific could prevail on its differing site condition claim or
its procedural claims, North Pacific’s failure to comply with the express provisions of
the contract requiring the contractor to keep records of all damages would bar recovery.
We therefore affirm the superior court’s decision affirming the agency decision.
II.    FACTS AND PROCEEDINGS
       A.     Facts
              1.      Bidding process
              In 2006 the Alaska Department of Administration solicited a bid for
asbestos abatement and the renovation of one floor in the Juneau State Office Building.
The Department’s bid solicitation notified potential bidders that they were responsible
for investigating the project site. The bid solicitation provided that by submitting a bid,
the contractor represented that it had “visited and carefully examined the site and is
satisfied as to the conditions to be encountered in performing the Work.” At a prebid
meeting, the Department provided an opportunity for contractors to visit the project site.

                                           -2-                                       6818

One bidder visited the project site.      It is uncontested that North Pacific and its
subcontractor did not visit the job site or participate in the prebid meeting before bidding
on the contract. Contractors would not have been able to see the pan deck surface1 at a
site visit, however, because fireproofing was still covering the pan deck at the site. But
some other areas of the pan deck were uncovered in the State Office Building. The
Department reported to the hearing officer that it was normal practice to show a
contractor any part of a job site or site condition upon request and that if there had been
such a request it would have set up an inspection of the exposed pan deck surface.
              North Pacific was the successful bidder for the renovation and asbestos
abatement project. The contract between North Pacific and the Department included the
same site investigation provision as the bid solicitation, which provided that the
contractor had “visited and carefully examined the site and is satisfied as to the
conditions to be encountered in performing the Work.” The contract also contained
detailed provisions establishing procedures for measuring and documenting damages and
maintaining cost records of claims for additional compensation.
              North Pacific hired a subcontractor for the asbestos abatement. Once work
began, North Pacific asserted that its asbestos abatement subcontractor was entitled to
additional compensation beyond the contract price for the project. North Pacific claimed
that the asbestos removal was significantly more difficult and time-consuming than it
could have foreseen because the pan deck surface was dimpled rather than smooth.
              2.     Dispute
              After the subcontractor began work on the project, its project manager
made a note in his daily report about the dimpled pan deck surface and described the

       1
              North Pacific describes the metal pan deck as “the material on which
concrete is poured to create the floors of each successive story of a building.”

                                            -3-                                       6818
cleaning process for the “indentations” and “prot[ru]sions” in the pan deck that “cost[]
us considerable time.” The workers had to use toothbrushes to clean the bumpy surface,
but the contractor’s daily report did not contain any time estimate for the additional
cleaning efforts. The hearing officer found that “[t]his [initial] entry [was] the only entry
. . . made in the daily reports relating to the embossed pan deck.” By contrast, the
subcontractor repeatedly referred to other problems in the daily reports, including
problems with air pressure and containment, foam that failed to expand, and issues with
metal flashing.
              The subcontractor notified North Pacific about the pan deck problem, and
North Pacific then transmitted the information to the Department, requesting additional
compensation. The Department denied the initial request for additional compensation.
              North Pacific next filed a claim pursuant to the contract’s differing site
conditions clause. The clause provided:
              The CONTRACTOR shall promptly, and before such
              conditions are disturbed (except in an emergency as
              permitted by paragraph 6.19), notify the Contracting Officer
              in writing of: (1) subsurface or latent physical conditions at
              the site differing materially from those indicated in the
              Contract, and which could not have been discovered by a
              careful examination of the site, or (2) unknown physical
              conditions at the site, of an unusual nature, differing
              materially from those ordinarily encountered and generally
              recognized as inherent in work of the character provided for
              in this Contract. The Contracting Officer shall promptly
              investigate the conditions, and if the Contracting Officer
              finds that such conditions do materially so differ and cause an
              increase or decrease in the CONTRACTOR’s cost of, or time
              required for, performance of this Contract, an equitable
              adjustment shall be made and the Contract modified in
              writing accordingly.

                                            -4-                                        6818

             . . . In the event that the Contracting Officer and the
             CONTRACTOR are unable to reach an agreement
             concerning an alleged differing site condition, the
             CONTRACTOR will be required to keep an accurate and
             detailed record which will indicate the actual “cost of the
             work” done under the alleged differing site condition.
             Failure to keep such a record shall be a bar to any recovery
             by reason of such alleged differing site conditions. The
             Contracting Officer shall be given the opportunity to
             supervise and check the keeping of such records.
The contract expressly required that the contractor keep an “accurate and detailed
record” of the actual cost of work performed under the alleged differing site condition:
             If the CONTRACTOR believes additional compensation or
             time is warranted, then he must immediately begin keeping
             complete, accurate, and specific daily records concerning
             every detail of the potential claim including actual costs
             incurred. The CONTRACTOR shall provide the
             DEPARTMENT access to any such records and furnish the
             DEPARTMENT copies, if requested. Equipment costs must
             be based on the CONTRACTOR’s internal rates for
             ownership, depreciation, and operating expenses and not on
             published rental rates. In computing damages, or costs
             claimed for a change order, or for any other claim against the
             Department for additional time, compensation or both, the
             contractor must prove actual damages based on internal costs
             for equipment, labor or efficiencies. Total cost, modified
             total cost or jury verdict forms of presentation of damage
             claims are not permissible to show damages.
(Emphasis added.) After considering numerous exhibits, including the contract, bid
documents, and a construction report, the Department’s procurement officer found that
North Pacific was not entitled to additional compensation under the differing site
conditions clause.

                                          -5-                                     6818

       B.     Proceedings
              North Pacific brought an administrative appeal of the procurement officer’s
decision.    While this matter involves a contract between North Pacific and the
Department of Administration, AS 36.30.625(a) dictates that the Department of
Transportation and Public Facilities hears construction contract appeals.2 The
Department of Transportation and Public Facilities Chief Contracts Officer Mark
O’Brien designated a hearing officer to hold a hearing and prepare a recommended
decision. Alaska Statute 36.30.675 provides that the “hearing officer shall recommend
a decision to the . . . commissioner of transportation and public facilities.”3 Under the
statute, the commissioner has the broad authority to “affirm, modify, or reject the hearing
officer’s recommendation in whole or in part,” or “remand the matter to the hearing
officer.”4
              This case primarily involves five underlying decisions: (1) the hearing
officer’s initial recommended decision; (2) the Department of Transportation and Public
Facilities’s decision to remand the case to the hearing officer; (3) the hearing officer’s
recommended decision on remand; (4) the Department of Transportation and Public
Facilities deputy commissioner’s final decision; and (5) the superior court’s decision.
              1.     Initial hearing officer recommendation
              The hearing officer concluded that there was a differing site condition
entitling North Pacific to additional compensation. Even though the subcontractor “did
not segregate its labor costs,” and its “expert utilized a method of requesting damages

       2
             See AS 36.30.625(a); AS 36.30.990(6) (“construction” includes projects
“altering” and “repairing” a public building).
       3
              AS 36.30.675(a).
       4
              AS 36.30.675(b).

                                            -6-                                      6818

which is prohibited by the contract,” the hearing officer “decline[d] to enforce strictly
the construction contract limitations” because he found that the Department “should have
disclosed this condition [of the pan deck surface] to all bidders.” The hearing officer also
explained that the “contract contemplates when differing site conditions are discovered,
the Contracting Officer and the parties will seek to make a resolution at that time during
the contract performance,” concluding that both parties failed to follow “the requirements
of the contract to resolve the dispute over the differing site conditions during
performance of the contract.” The hearing officer recommended that North Pacific was
entitled to an award of $158,821 for “cost overruns attributed to the embossed pan deck.”
              2.     Agency remand of the hearing officer recommendation
              The Department of Transportation and Public Facilities remanded the
hearing officer’s recommended decision, explaining that “the recommended decision
fails to address a number of fundamental issues bearing on liability and damages.”5 On
remand, the agency instructed the hearing officer “to reconsider this matter in light of
relevant legal principles and to issue a revised decision conforming to applicable law.”
In particular, the agency directed the hearing officer to address the site inspection clause,
which provided that the contractor had “visited and carefully examined the site and is
satisfied as to the conditions to be encountered in performing the Work,” and the
“seemingly unambiguous proof requirements” in the contract.
              3.     Hearing officer recommendation on remand
              On remand, the hearing officer again decided that North Pacific was entitled
to additional payment. The hearing officer recommended three conclusions of law: (1)
that the Department of Administration was obligated to disclose the condition of the

       5
          See id. (authorizing the agency to remand the hearing officer’s
recommended decision).

                                            -7-                                        6818
embossed pan deck and failed to do so; (2) that the pan deck was a differing site
condition; and (3) that the Department’s failure to comply with the contract precluded
it from relying on the strict damages provisions. On these grounds, the hearing officer
recommended an award of $156,539 in damages, slightly less than his initial
recommendation of $158,821.
             First, the hearing officer concluded that the Department was obligated to
disclose the condition of the pan deck surface because the Department had information
that “an ordinary bidder would not reasonably acquire . . . without resort to [the
Department]” and the Department was aware that the contractor had no knowledge or
reason to obtain the information. Reasoning that North Pacific had bid and performed
the abatement work without “vital information,” the hearing officer concluded that the
Department’s failure to disclose the pan deck condition “was a breach of its contractual
obligations” and justified recovery.     The officer explained that the Department’s
knowledge “(a) came from prior projects and an intimate and unique understanding of
the actual conditions in the facility and (b) was well-based in fact and first-hand
involvement.”
             Second, the hearing officer determined that the pan deck was a differing site
condition because the contractor was unaware of the condition, the contractor could not
have anticipated the condition from a site inspection or from general experience, and the
pan deck surface varied from the norm.
             Third, based on the Department’s failure to disclose the condition, the
hearing officer “decline[d] to enforce strictly the construction contract limitations in
Section 15.1.4” that required “complete, accurate, and specific daily records” regarding
“every detail of the potential claim including actual costs incurred.”

                                           -8-                                      6818

              4.     The deputy commissioner’s final agency decision
              At North Pacific’s request, the Department of Transportation and Public
Facilities commissioner recused himself and delegated his final decision-making
authority to the deputy commissioner.6 North Pacific does not challenge this delegation
of authority. In June 2009 the deputy commissioner issued the final agency decision.
“Because the hearing officer’s proposed conclusions [were] at variance with the law,”
the deputy commissioner declined to accept the hearing officer’s conclusions. Rather,
the deputy commissioner concluded that under the applicable law North Pacific had
failed to carry the burden for additional compensation.7
                     a.     North Pacific’s differing site condition claim
              To analyze the differing site condition claim, the deputy commissioner
applied a three-part test from a construction law treatise: (1) the contractor “did not
know about the relevant condition encountered; (2) it could not have anticipated the
condition from site inspection, reasonable investigation, or general experience; and

       6
              2 Alaska Administrative Code (AAC) 12.740(a) (2012) gives
commissioners the authority to, in their discretion, “delegate their authority under
AS 36.30 to an employee in a department or agency.” This “delegation of authority must
be in writing.” Id.
       7
               An assistant attorney general, with assistance from Chief Contracts Officer
O’Brien, prepared the draft agency decision. Because there was no transcript of the
hearing prepared at the time, the assistant attorney general primarily relied on the hearing
officer’s findings of fact, the exhibits introduced at the hearing, and an email message
from the hearing officer sent in response to an inquiry from O’Brien. The deputy
commissioner later testified that, after reviewing the draft decision and discussing it with
his staff, he signed the agency decision. The deputy commissioner did not personally
read the hearing officer’s recommended decision or the hearing record.

                                            -9-                                       6818

(3) the condition varied from the norm in similar contracting work.”8 The deputy
commissioner stated that North Pacific “demonstrated it lacked actual knowledge of the
embossing” on the pan deck and therefore met the first prong of the test for a differing
site condition claim.
             But under the second prong of the test, North Pacific had to show that it
could not have anticipated the condition.9 “This is a heavy burden” according to the
deputy commissioner. The deputy commissioner noted that “[a]s a rule, contractors must
‘conduct pre-bid inquiries or reasonable site inspections since recovery on . . . [this]
claim is available only if a condition is unknown. A condition is not unknown if it would
have been revealed upon inquiry or a reasonable site investigation.’ ”10 But “[h]ere, in
spite of [the State]’s admonitions, [North Pacific] did not conduct a site investigation.”
Therefore, the deputy commissioner explained, North Pacific “is charged with the
knowledge a reasonable investigation would have revealed.” The deputy commissioner
explained that a reasonable investigation should have at least entailed a request for
photos or other information on the pan deck. The deputy commissioner also pointed out
that North Pacific could have obtained information from the five previous subcontractors
that had performed asbestos removal for the Department. The agency concluded that

      8
             See, e.g., 4A PHILIP L. BRUNER & PATRICK J. O’CONNOR , JR ., BRUNER &
O’CONNOR ON CONSTRUCTION LAW § 14.53, at 800-01 (2009); see also Fru-Con Constr.
Corp. v. United States, 44 Fed. Cl. 298, 311 (Fed. Cl. 1999) (quoting Lathan Co. v.
United States, 20 Cl. Ct. 122, 128 (Cl. Ct. 1990)); Municipality of Anchorage v. Frank
Coluccio Constr. Co., 826 P.2d 316, 323 (Alaska 1992); 64 A M . JUR . 2D Public Works
and Contracts § 166 (2011).
      9
            See Frank Coluccio Constr. Co., 826 P.2d at 323; see also Fru-Con Constr.
Corp., 44 Fed. Cl. at 311.
      10
         The deputy commissioner quoted Appeal of Shumate Constructors, Inc.,
VABCA No. 2772, 90-3 BCA ¶ 22,946.

                                          -10-                                      6818

“reasonable investigation would have revealed the exposed pan deck and its embossing.”
Thus, North Pacific’s own failure to reasonably anticipate the condition caused the
“unplanned expense and delay.”
              The deputy commissioner relied on several facts to conclude that a
reasonable investigation would have revealed the uncovered pan deck. Many of these
facts are based on the hearing officer’s factual findings. But the deputy commissioner
made an error of fact in his decision. The deputy commissioner mistakenly found that
“at the alternative site [the Department] had offered to show comparable ceiling pan deck
[that] was exposed and its surface was clearly visible to any prospective bidder who
chose to observe it.”11 But the Department did not actually offer to show a portion of
exposed pan deck. Rather, as the hearing officer found, “there was no exposed pan deck
in the area [the Department] showed to the contractor, but had the contractor requested
to see it, there were other areas at the [State Office Building] site in which the pan deck
is exposed and the embossed pan deck is clearly visible.”
              The Department acknowledges that the deputy commissioner’s “decision
referred to [the] incorrect information” from an email exchange between O’Brien and the
hearing officer. O’Brien inquired of the hearing officer:

       11
              The deputy commissioner made the same mistake in a footnote in his
decision:
              We note [the Department] had offered to provide access to
              the exposed deck after normal business hours. As owner of
              a functioning office building undergoing asbestos abatement,
              [the Department] is entitled to adopt reasonable measures to
              minimize operational disruptions within the building and
              possible risks to employee well-being. On the evidence
              presented, we do not find [the Department]’s offer
              unreasonable.

                                           -11-                                      6818

                     During the prebid conference were other bidders
              offered the opportunity to observe the embossed pan deck at
              an alternate location? I see reference to an “alternate
              location” but I couldn’t tell if that was offered at the prebid,
              or whether it was assumed that a contractor could have asked
              on their own to view it at an alternate location.
The hearing officer responded that
              [f]rom the evidence all bidders were offered a site inspection.
              The site inspection would not have revealed the embossed
              pan deck because it was covered with fire proofing. All
              bidders were offered the chance to inspect pan deck that was
              not covered, which was at another location in the S[tate]
              O[ffice] B[uilding], so not technically the site, and the
              inspection had to be at a different time of the day and after
              normal office hours.
Thus it is undisputed that, based on this exchange, the deputy commissioner incorrectly
stated that the Department had affirmatively offered participants at the prebid meeting
an opportunity to view an uncovered pan deck.
              The deputy commissioner also cited an uncontested fact in the hearing
officer’s decision that stated “[o]nly one contractor, during the pre-bid conference, asked
to see the area from which asbestos would be removed” and “[a] ceiling tile was removed
so the contractor could see the area.”       Aside from the factual error, the deputy
commissioner relied on North Pacific’s failure to conduct a site investigation or to
request any photos or other related information on the site to reject the claim. In short,
the deputy commissioner concluded that North Pacific had not met the second prong of
the differing site conditions test because a “reasonable investigation would have revealed
the exposed pan deck and its embossing.”

                                           -12-                                      6818

             The third prong of a differing site condition is whether the condition varied
from the norm in similar contract work.12 The deputy commissioner acknowledged that
North Pacific “offered evidence supporting the basic proposition that embossed decks
are generally uncommon outside Juneau” but noted that North Pacific “offered no
evidence demonstrating that embossed pan decks installed in 1970[]s era buildings are
outside the norm.” The deputy commissioner concluded that North Pacific had failed to
demonstrate that the pan deck surface was outside the norm, and that North Pacific
therefore did not have a valid differing site condition claim.
                    b.     North Pacific’s superior knowledge claim
             The deputy commissioner next addressed North Pacific’s contention that
the Department had a duty to disclose relevant information regarding the pan deck
surface. Because North Pacific could have acquired the relevant information on the pan
deck through an independent investigation, the deputy commissioner decided that North
Pacific had failed to show that the Department had breached a duty to disclose. The
deputy commissioner reasoned that because the Department’s staff experience was
limited to Juneau and based on previous asbestos abatement projects involving dimpled
pan decks, they had no reason to believe the pan deck surface was unique.
             The deputy commissioner considered and rejected the hearing officer’s
recommendation for damages. The deputy commissioner stated that he did not find the
Department’s investigation of the claim to be unreasonable. In addition, the deputy
commissioner pointed to the fact that North Pacific had failed to maintain an accurate
daily record of alleged damages as required by the contract.

      12
               See Fru-Con Constr. Corp., 44 Fed. Cl. at 311; Earthmovers of Fairbanks,
Inc. v. State, Dep’t of Transp. & Pub. Facilities, 765 P.2d 1360, 1364 (Alaska 1988)
(recognizing that federal case law may be useful in analyzing disputes between the
government and contractors).

                                          -13-                                      6818
             North Pacific appealed the agency decision to the superior court, arguing
that the decision was procedurally flawed and that the agency had incorrectly resolved
the contract claims.
             5.	       The superior court decision
             The superior court conducted a limited trial de novo on North Pacific’s
procedural objections to the administrative process. As to the contract claims, the
superior court intended “to play its traditional role as an intermediate appellate court.”
While the superior court was “troubled” by some of the procedural issues, it ultimately
held that the final agency decision “was not legally flawed” and the State’s “resolution
of the legal questions raised by [North Pacific] was reasonable.”
                       a.	   The superior court’s limited trial de novo on North
                             Pacific’s procedural claims
             The superior court held a limited trial de novo to consider North Pacific’s
procedural arguments regarding (1) the timing of the deputy commissioner’s decision,
(2) the decision-making role of the deputy commissioner, (3) the role of Department of
Transportation and Public Facilities staff in the decision, (4) the alleged deprivation of
a hearing, and (5) the alleged ex parte contact. After trial, the superior court made
thorough findings of fact on the agency appeals process, the agency’s factual error,
communications between the deputy commissioner and the staff, and the lack of bias in
the agency decision-making process. Finally, the superior court concluded that the
agency decision was not procedurally flawed.
                             i.	   Timing of the deputy commissioner’s decision
             North Pacific pointed out that the deputy commissioner’s decision was
issued 48 days after the hearing officer’s recommended decision. North Pacific argued
that the passage of 48 days after the issuance of the first recommended decision triggered
AS 44.64.060(e), which governs the timing of agency action on decisions issued by

                                          -14-	                                     6818

administrative law judges within the Office of Administrative Hearings.13 Alaska
Statute 44.64.060(e) requires the final decision maker to take action within 45 days of
the administrative law judge’s proposed decision.14 If the final decision maker does not
act within 45 days, then the administrative law judge’s proposed decision becomes the
final decision.15
              The superior court first concluded that AS 44.64.060(e) applies to
administrative law judges and not hearing officers under the Department of
Transportation and Public Facilities.16 The superior court then determined that even if
the statute was applicable, the time frame was directory and not mandatory. The superior
court further reasoned that “[i]t makes little sense to penalize a party” by requiring it to
be bound by the recommended decision, simply because the agency responsible for
timely action was tardy and that North Pacific “was not prejudiced in any way by the
delay of three additional days.”

       13
              AS 44.64.060(e) (procedure for hearings in the Office of Administrative
Hearings).
       14
              AS 44.64.060(e)(1)-(5).
       15
              AS 44.64.060(f).
       16
               See AS 36.30.627(a) (establishing procedures for appeals “from a decision
of the procurement officer of a claim involving a construction contract”); AS 36.30.680
(stating that “a decision by the commissioner of transportation and pub lic facilities
involving procurement of construction shall be sent to all parties by personal service or
certified mail within 45 days after receipt by the commissioner of transportation and
public facilities of the hearing officer’s decision”).

                                           -15-                                       6818

                            ii.	    Role of the deputy commissioner
              North Pacific argued that there was institutional bias in the decision-making
process and that the communications between agency staff and the hearing officer were
inappropriate. North Pacific further claimed that the deputy commissioner, as the final
decision maker, improperly relied on his staff in rendering the final decision. Rejecting
these arguments, the superior court concluded “that all the commissioner needs to do to
comply with AS 36.30.675 and .680 is to issue the final decision.”
                            iii.	   Role of institutional subordinates within the
                                    Department of Transportation and Public Facilities
              North Pacific argued that Chief Contracting Officer O’Brien and the
agency’s assigned assistant attorney general could not play any role in the process
leading to the final decision.      The superior court determined, however, that the
involvement of institutional subordinates did not taint the agency’s neutrality or
“overstep any statutory assignments of authority.”17 The superior court further found
that North Pacific had “not proved by a preponderance of evidence that [the deputy
commissioner], [Chief Contracting Officer] O’Brien and [the assistant attorney general]
were individually or collectively personally biased against [North Pacific].”
                            iv.	    Alleged deprivation of a hearing
              North Pacific argued that it was deprived of a hearing because the final
decision maker had minimal exposure to the raw information from the hearing.
Specifically, North Pacific objected to the deputy commissioner’s failure to review the

       17
              See AS 36.30.675(b) (“The commissioner of administration or the
commissioner of transportation and public facilities may affirm, modify, or reject the
hearing officer’s recommendation in whole or in part, may remand the matter to the
hearing officer with instructions, or take other appropriate action.”); AS 36.30.685(a)-(b)
(allowing the final decision of the commissioner of transportation and public facilities
to be appealed to the superior court).

                                           -16-	                                     6818

record before rejecting the hearing officer’s decision. Although the superior court
acknowledged that this argument had “more than a little surface appeal,” it nonetheless
rejected North Pacific’s argument for two reasons: (1) “the oral testimony was not the
entire record,” and the agency decisions were based on the hearing officer’s decision and
the available exhibits; and (2) the “problem is that to enforce an adequate role by the
final decision maker would almost always require exploration into the deliberative
process.” As a result, the superior court concluded that North Pacific had “been provided
a hearing process that complie[d] with due process.”
                           v.     Alleged ex parte contact
             North Pacific claimed the final agency decision was based on ex parte
communications between O’Brien and the hearing officer and thus violated due process.
Again, the superior court rejected North Pacific’s argument. While the superior court
found that O’Brien requested clarification from the hearing officer and that the hearing
officer responded,18 the court concluded that there was no traditional ex parte contact
because the communication did not involve a party to the case. The superior court
further concluded that the erroneous factual finding that was likely caused by the
exchange did not substantially impact the agency decision.
                    b.	    The superior court’s appellate review of the alleged
                           errors of contract interpretation
             After reviewing North Pacific’s differing site condition claim, the contract,
and the reasoning of the hearing officer and the deputy commissioner, the superior court
considered whether North Pacific “could have learned of the condition of the pan deck
by a site inspection or other reasonable inspection.” The superior court concluded that
the Department of Transportation and Public Facilities had a reasonable basis in deciding

      18
             See supra Part II.B.4.a.

                                          -17-	                                     6818
             a) that [North Pacific] should have inspected the site; and b)
             that had it attended the pre-bid meeting and asked the
             simplest question (but the most important to its bid): May we
             see a sample of the exposed pan deck?; and c) that [the
             Department] would have provided an effective prompt and
             informative response, that is, [the Department] would have
             revealed a portion of exposed embossed pan deck for
             inspection. By asking that question [North Pacific] would
             have received an appropriate response and [North Pacific]
             would not be where it is today.
Thus, the superior court affirmed the agency’s conclusions denying North Pacific’s
differing site condition claim.
                    c.     Attorney’s fees
             The State requested attorney’s fees and costs as the prevailing party. North
Pacific opposed, arguing that AS 09.60.010 19 barred an award of attorney’s fees to the
State because North Pacific had raised constitutional due process issues. Finding that the
State was the prevailing party, the superior court awarded it thirty percent of the actual
reasonable fees incurred under Alaska Civil Rule 82 as well as costs under Alaska Civil
Rule 79.
III.   STANDARDS OF REVIEW
             The superior court acted in part as an intermediate court of appeal and in
part as an initial fact-finder. “When the superior court acts as an intermediate court of
appeal from an agency decision we review the agency decision directly.”20 We will

       19
            AS 09.60.010(c) (costs and attorney’s fees in actions concerning the
enforcement of a right under the United States Constitution or the Alaska Constitution).
       20
             Pyramid Printing Co. v. Alaska State Comm’n for Human Rights, 153 P.3d
994, 997-98 (Alaska 2007) (citations omitted).

                                          -18-                                      6818
uphold an agency decision if it is supported by substantial evidence.21 “We apply the
reasonable basis standard of review to questions of law involving agency expertise, and
the substitution of judgment standard to questions outside the agency’s expertise.”22
              “Where the superior court conducts a partial trial de novo, we review the
court’s findings and conclusions.”23 We review the superior court’s factual findings
under the clearly erroneous standard and the superior court’s legal conclusions de novo.24
              Generally we review an award of Civil Rule 82 attorney’s fees for an abuse
of discretion.25 “As to reviewing an award under AS 09.60.010(c), ‘[t]he independent
standard of review . . . applies to considering whether the trial court properly applied the
law when awarding attorney’s fees.’ ”26
IV.	   DISCUSSION
       A.	    The Department Did Not Breach The Duty To Disclose Superior
              Knowledge.
              North Pacific argues that the hearing officer “properly found that [North
Pacific] was entitled to an equitable adjustment to its contract price” because “the State
knew of, but did not disclose, concealed dimpling of the pan deck that substantially

       21	
              Id. at 998.
       22	
              Id. (citing Leigh v. Seekins Ford, 136 P.3d 214, 216 (Alaska 2006)).
       23
               Nash v. Matanuska-Susitna Borough, 239 P.3d 692, 698 (Alaska 2010)
(citing City of Nome v. Catholic Bishop of N. Alaska, 707 P.2d 870, 875 (Alaska 1985)).
       24	
              Id. (citations omitted).
       25
               See Schultz v. Wells Fargo Bank, N.A., 301 P.3d 1237, 1241 (Alaska 2013)
(reiterating this court’s longstanding position holding trial courts to have broad discretion
in fashioning attorney’s fee awards under Rule 82).
       26
            State v. Jacob, 214 P.3d 353, 358 (Alaska 2009) (alteration in original)
(quoting DeNardo v. Cutler, 167 P.3d 674, 677 (Alaska 2007)).

                                            -19-	                                      6818

increased the costs of [North Pacific’s] work.” The Department contends that “had
North Pacific or its subcontractor conducted a reasonable investigation — or simply
asked any of the subcontractors who worked on the five prior asbestos-abatement jobs
at the State Office Building — it would have learned of the patterned pan deck.”
              Although the hearing officer concluded that the Department was obligated
to disclose the condition and failed to do so, the deputy commissioner determined that
the Department did not have a duty to disclose the site condition, reasoning that it was
possible for North Pacific to have obtained the information through site visits or an
independent investigation. According to the deputy commissioner, “recognition of a
superior knowledge claim would effectively reverse the allocation of contractual
responsibilities.”
              In Morrison-Knudsen Co. v. State, we explained our test for imposing on
the State a duty to disclose information in its possession:
              [D]id the state occupy so uniquely-favored a position with
              regard to the information at issue that no ordinary bidder in
              the plaintiff’s position could reasonably acquire that
              information without resort to the State? Where resort to the
              state is the only reasonable avenue for acquiring the
              information, the state must disclose it, and may not claim as
              a defense either the contractor’s failure to make an
              independent request or exculpatory language in the contract
              documents.[27]

       27
               519 P.2d 834, 841 (Alaska 1974); see also Conner Bros. Constr. Co. v.
United States, 65 Fed. Cl. 657, 688 (Fed. Cl. 2005) (“There are four requirements for
establishing when the government has failed in its duty to disclose superior knowledge.
First, the contractor undertakes to perform without vital knowledge of a fact that affects
performance costs or direction. Second, the government was aware that the contractor
had no knowledge of and had no reason to obtain such information. Third, the contract
specification supplied either misled the contractor, or did not put it on notice to inquire.
                                                                             (continued...)

                                           -20-                                       6818

In Morrison-Knudsen, the contractor claimed that the State should have disclosed
information it had received from two other bidders regarding the feasibility of hydraulic
dredging at a construction site.28 The contract bid documents contained a drawing
showing that some underwater areas were “Areas Proven Suitable For Dredging.”29 But
dredging those areas was in fact not feasible, and as a result, the contractor had to
transport the fill material by barge to the construction site.30 Because the contractor
“could easily have conducted equally extensive research on its own” and because the
other contractors had obtained the information without special technical assistance from
the State, we concluded that the State had no duty to disclose information it had received
from another contractor on the feasibility of hydraulic dredging at the site.31
             We arrived at a similar conclusion in B-E-C-K Constructors v. State,
Department of Highways.32 In B-E-C-K Constructors, the contractor asserted that the
State had a duty to disclose earthquake damage reports concerning a bridge.33 But we
again concluded that the State had no duty to disclose because the reports “were all based

      27
         (...continued)
Fourth, the government failed to provide the relevant information.”); 2 P HILIP L. BRUNER
& PATRICK J. O’CONNOR , JR ., BRUNER & O’CONNOR ON CONSTRUCTION LAW § 5:108,
at 176 (2002).
      28
             Morrison-Knudsen Co., 519 P.2d at 838-39.
      29
             Id. at 836.
      30
             Id. at 836-38.
      31
             Id. at 842.
      32
             604 P.2d 578, 585 (Alaska 1979).
      33
             Id.

                                          -21-                                      6818

on information obtained by simple visual inspection of the bridge” and the contractor
could have independently performed a visual inspection of the bridge.34
             In short, a successful superior knowledge claim by a contractor requires the
government to have unique control over information.35 For instance, in Morrison-
Knudsen, we noted several federal decisions involving successful superior knowledge
claims:
             [I]n Helene Curtis Industries, the government “knew much
             more about the product than the bidders did or could” by
             virtue of having sponsored all the research that had been done
             on chlormelamine; in Aerodex, the government “was in a far
             better position than . . . any . . . bidder to tell whether the
             [thermal] resistor would be available from W[estern]
             E[lectric]” by virtue of its intimate involvement with Western
             Electric’s work on the resistor; and in Hardeman-Monier-
             Hutcherson, the government possessed “vital information
             concerning the weather and sea conditions at the site” by
             virtue of having commissioned the . . . reports, which were
             not generally available. Liability was imposed in all three
             cases, even though the contractor specifically requested the
             government’s information only in Hardeman, and even
             though the contracts in all of the cases contained exculpatory
             clauses.[36]
             Applying this standard, we conclude that the Department did not occupy
such “uniquely-favored a position with regard to the information at issue that no ordinary

      34
             Id.
      35
             See id; Morrison-Knudsen Co., 519 P.2d at 839-41.
      36
              Morrison-Knudsen Co., 519 P.2d at 841-42 (first alteration added; other
alterations in original) (citations omitted) (quoting Hardeman-Monier-Hutcherson v.
United States, 458 F.2d 1364, 1371-72 (Ct. Cl. 1972); Aerodex, Inc. v. United States, 417
F.2d 1361, 1366 (Ct. Cl. 1969); Helene Curtis Indus., Inc. v. United States, 312 F.2d
774, 778 (Ct. Cl. 1963)).

                                          -22-                                      6818

bidder in the plaintiff’s position could reasonably acquire that information without resort
to the State.”37 In this case, the State owns the buildings and a mere visual inspection of
the building site would not have revealed the surface of the pan deck. Although the
Department had more control over the information here than in Morrison-Knudsen and
B-E-C-K Constructors, the Department did not have absolute control over the relevant
information. Rather, North Pacific could have reasonably acquired the information
without resort to the Department. North Pacific could have requested photos or an
inspection of an exposed pan deck, spoken to other contracting companies that had
previously performed asbestos abatement for the Department in Juneau, or researched
conditions of similar buildings in the area. Indeed, one of the other bidders for this
abatement subcontract had worked in the same building and was aware of the dimpled
condition of the pan deck. We conclude that North Pacific could have conducted
research on its own and was not dependent on the Department as the only reasonable
avenue for acquiring information on the surface of the pan deck. Accordingly, we hold
that the State had no duty to disclose information regarding the pan deck surface.
       B.	    North Pacific’s Failure To Comply With The Contractual Records
              Requirement And The Damages Provision Bars Recovery For The
              Differing Site Condition Claim.
              Under the differing site conditions provision, the contract expressly
required a contractor “to keep an accurate and detailed record which will indicate the
actual ‘cost of the work’ done under the alleged differing site condition” and further
provided that “[f]ailure to keep such a record shall be a bar to any recovery by reason
of such alleged differing site conditions.” The contract also mandated that for additional
compensation claims, the contractor “must immediately begin keeping complete,
accurate, and specific daily records concerning every detail of the potential claim

       37
              Id. at 841.

                                           -23-	                                     6818
including actual costs incurred” and “[i]n computing damages, or costs claimed for a
change order, or for any other claim against the Department for additional time,
compensation or both, the contractor must prove actual damages based on internal costs
for equipment, labor or efficiencies.” Under the contract, “[t]otal cost, modified total
cost or jury verdict forms of presentation of damage claims are not permissible to show
damages.” Finally, “[l]abor inefficiencies must be shown to actually have occurred and
can be proven solely based on job records.” Thus, the parties contracted to require
detailed records for differing site condition claims and to establish the actual cost method
as the only permissible method to calculate damages.
              We conclude that North Pacific’s failure to comply with these provisions
in the contract bars recovery for the differing site condition claim. A fundamental rule
in contract interpretation is that “[u]nless a different intention is manifested, where
language has a generally prevailing meaning, it is interpreted in accordance with that
meaning.”38 And “[p]arties are free to enter into contracts that contain provisions that
apportion damages in the event of a default, and may agree to a particular measure of
damages in the event of a breach or a default.”39 The contract at issue here expressly
provided for the actual cost method to calculate damages and prohibited the total cost,
modified cost, and jury verdict methods.
              Not only did the contract call for actual cost data, under Alaska law, “[t]he
preferred method is the actual cost method, ‘in which each element of extra expense

       38
              RESTATEMENT (SECOND ) OF CONTRACTS § 202(3)(a) (1981).
       39
           24 RICHARD A. LORD , W ILLISTON ON CONTRACTS § 64:17, at 152 (4th ed.
2002) (emphasis added) (footnotes omitted).

                                           -24-                                       6818
incurred because of the [alleged breach] is added up for a total claimed amount.’ ”40
Similarly, other jurisdictions “have shown a strong preference for the actual damage
method of calculation.”41 Courts prefer the actual cost method because it provides the
court with a record of discrete additional costs, guaranteeing that the final amount of the
adjustment will be equitable and reliable.42
              Here the hearing officer found that the subcontractor wrote only one daily
report discussing problems encountered at the outset with the embossed pan deck and
that the subcontractor “did not segregate its labor costs.” We note that the single daily
report concerning problems cleaning the pan deck surface is worded in broad, general
terms and does not contain any estimate of additional costs or work hours. And instead
of relying on the contractually mandated method to calculate damages, North Pacific’s
expert relied on the modified total cost method, and the hearing officer relied on the jury
verdict method to calculate damages. We have occasionally approved of the jury verdict
method to calculate damages when the contractor has put forth some actual cost data, in
addition to other evidence, and when specific contractual record-keeping requirements

       40
             Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20, 41 (Alaska
1998) (quoting Municipality of Anchorage v. Frank Coluccio Constr. Co., 826 P.2d 316,
324-27 (Alaska 1992)); see also ROBERT F. CUSHMAN ET AL ., PROVING AND PRICING
CONSTRUCTION CLAIMS § 4.07[B][3], at 132 (3d ed. 2001).
       41
          W ILLIAM SCHWARTZKOPF & JOHN J. M C N AMARA , CALCULATING
CONSTRUCTION D AMAGES § 1.03[A] (2d ed. Supp. 2012).
       42
             See id.; CUSHMAN ET AL., supra note 40, § 4.07[B][3], at 132; see also
Frank Coluccio Constr. Co., 826 P.2d at 325 (stating that the actual cost method of
damages calculations involves the addition of each element of extra costs incurred
because of the differing site condition).

                                           -25-                                      6818

were not at issue.43 The jury verdict method permits the contractor to “present evidence
of the cost of additional work to the finder of fact[,] including any actual cost data,
accounting records, estimates by law and expert witnesses, and calculations from similar
projects.”44 But the jury verdict method is only appropriate once the contractor has
shown that “ ‘there was no more reliable method for computing damages.’ ”45 Although
our decisions indicate that the jury verdict method, in conjunction with some actual cost
data, may be appropriate when there is no more reliable method to calculate damages,
North Pacific is bound by the express provisions of the contract.
              Our conclusion is supported by federal decisions in this area.46 The United
States Court of Claims stated in Joseph Pickard’s Sons Co. v. United States that, to rely
on the jury verdict method, a contractor must show “a justifiable inability to substantiate

       43
             See, e.g., Power Constructors, Inc., 960 P.2d at 41-45; Frank Coluccio
Constr. Co., 826 P.2d at 326.
       44
             Power Constructors, Inc., 960 P.2d at 41 (quoting Frank Coluccio Constr.
Co., 826 P.2d at 325) (internal quotation marks omitted).
       45
              Frank Coluccio Constr. Co., 826 P.2d at 327 (quoting Fattore Co. v. Metro.
Sewerage Comm’n of Milwaukee Cnty., 505 F.2d 1, 5 (7th Cir. 1974)); see also Corban
Indus., Inc. v. United States, 24 Cl. Ct. 284, 287 (Cl. Ct. 1991); Power Constructors,
Inc., 960 P.2d at 41; Allen L. Overcash & Jack W. Harris, Measuring the Contractor’s
Damages by “Actual Costs” – Can It Be Done?, 25 C ONSTRUCTION LAW 31, 31-32
(Winter 2005).
       46
                See Joseph Pickard’s Sons Co. v. United States, 532 F.2d 739, 742-44 (Ct.
Cl. 1976) (denying claim based on contractor’s failure to provide direct proof of
additional costs); see also Corban Indus., 24 Cl. Ct. at 287-88 (deciding that contractor
forfeited its claim to recover costs by failing to produce reliable evidence of actual costs);
Assurance Co. v. United States, 813 F.2d 1202, 1204-06 (Fed. Cir. 1987) (holding that
contractor was not entitled to use the jury verdict method to calculate damages because
contractor had failed to submit cost documentation or explain the absence of records).

                                            -26-                                        6818

the amount of his resultant injury by direct and specific proof.”47 Because the contractor
in that case had not shown that it “was prevented from specifically proving its damages”
by a reason beyond its control, the Court of Claims upheld the Armed Services Board of
Contract Appeals’ finding that the failure to produce records of actual costs was
inexcusable and fatally defective.48
              Despite the express contract provisions requiring detailed records and use
of the actual cost method to calculate damages, North Pacific argues that it is entitled to
additional compensation because (1) it maintained cost records and (2) the contractual
remedy “failed of its essential purpose.” Citing the contract’s requirement for “complete,
accurate, and specific daily records concerning every detail of the potential claim
including actual costs incurred,” the Department responds that “[t]he undisputed
evidence established that neither North Pacific nor its subcontractor maintained the
detailed cost records that the contract required.”
              First, North Pacific claims that the contract “just requires keeping actual
records of the costs, which the hearing officer found was done.” But the hearing officer
did not find that North Pacific had complied with the contractual records requirement.
Rather, the hearing officer pointed out that the subcontractor had made only one daily
report on the alleged differing site condition and did not separate or track additional
costs. The hearing officer further acknowledged that the subcontractor’s expert used “a
method of requesting damages which is prohibited by the contract.” Nonetheless, the
hearing officer “decline[d] to enforce strictly the construction contract limitations in
Section 15.1.4,” reasoning that the “limitation in this contract for damages should not be

       47
              532 F.2d at 742.
       48
              Id. at 744.

                                           -27-                                      6818
enforced as an equitable matter because [the Department] failed to disclose the embossed
pan deck prior to bid.”49
             Second, North Pacific argues that “[a]s applied to [North Pacific]’s differing
site condition claim, the State’s clause would deny any remedy at all because [North
Pacific]’s added costs are not distinguishable from its as-planned costs without using one
of the prohibited quantification formulas” and the remedy thus “failed of its essential
purpose.” But North Pacific does not offer any explanation why it was unable to provide
a contemporaneous record of the actual additional costs incurred and how the agreed-
upon contractual method of calculating damages would deny any remedy. North Pacific
relies on Pierce v. Catalina Yachts, Inc.50 to argue that the records requirement “failed
of its essential purpose and is unenforceable,” but our reasoning in Pierce does not apply
to this case. In Pierce, a Uniform Commercial Code 51 case, we held that when a limited
warranty fails due to a seller’s breach, a separate provision of the warranty barring
consequential damages will survive as long as the bar is not unconscionable.52 In that
case, we further held that the bar to consequential damages was unconscionable because
the seller acted in bad faith.53 In construing the Uniform Commercial Code, we
considered the policy behind the failure-of-the-essential-purpose rule, which is to

      49
             The hearing officer also stated that the Department “did not make an
attempt to resolve the issue with [the subcontractor] during the performance of the
contract.”
      50
             2 P.3d 618 (Alaska 2000).
      51
             We note that the Uniform Commercial Code applies to “commercial
transactions” or transactions in goods but this case involves a contract for services.
U.C.C. § 1-102(2)(a) (2011); see AS 45.02.102.
      52
             Pierce, 2 P.3d at 622-23.
      53
             Id. at 623-24.

                                          -28-                                       6818

guarantee that a buyer has “at least minimum adequate remedies.”54 Although Pierce
requires minimum remedies when one party has acted in bad faith, North Pacific has not
shown that the Department acted in bad faith or breached the contract,55 and any
limitation on remedies is due to North Pacific’s own failure to maintain the requisite
records. Moreover, the hearing officer did not make any findings to indicate bad faith
actions or unconscionability.
             North Pacific also cites Illinois case law to support its argument that the
express contract provisions are inapplicable.56 In Razor v. Hyundai Motor America,
another Uniform Commercial Code case, the Illinois Supreme Court held that a
warranty’s consequential damages provision was enforceable unless it was
unconscionable, regardless of whether the warranty’s limited remedy failed its essential
purpose.57 Razor has limited applicability to the contract for services here. While Razor
involves the relationship between a consequential damages provision and a limited
remedy clause, this case involves an express record-keeping requirement, and there were
no allegations of unconscionability.58
             In sum, North Pacific is barred from recovery for any alleged differing site
condition because it did not substantially comply with the damages and records
provisions of the contract.

      54
             Id. at 621 (internal quotation marks omitted).

      55
             See discussion supra Part IV.A.

      56

              See, e.g., Razor v. Hyundai Motor Am., 854 N.E.2d 607 (Ill. 2006); Adams
v. J.I. Case Co., 261 N.E.2d 1 (Ill. App. 1970), abrogated by Razor, 854 N.E.2d 607.
      57
             854 N.E.2d at 622.
      58
             See id. at 620-21.

                                          -29-                                     6818

       C.     North Pacific’s Procedural Claims
              North Pacific challenges the superior court’s legal conclusions following
the court’s trial de novo on procedural issues. North Pacific raises several procedural
claims: (1) the deputy commissioner did not review directly the hearing officer’s
recommended decision or the hearing transcripts; (2) the deputy commissioner relied on
a false finding of fact that was not supported by evidence at the hearing; (3) any
procedural defects were not cured by a delegation of authority to staff; and (4) the
hearing officer’s recommended decision should be deemed final when a valid
commissioner’s decision was not “appropriate” or timely issued.59 The Department
responds that the deputy commissioner was not required to review the record, a
recording, or a transcript of the hearing and maintains that the deputy commissioner’s
decision was proper.60 While the deputy commissioner made a factual error, and the

       59
                See AS 36.30.675(a) (“The hearing officer shall recommend a decision to
the commissioner of administration or the commissioner of transportation and public
facilities, as appropriate, based on the evidence presented. The recommendation must
include findings of fact and conclusions of law.”); AS 36.30.680 (“[A] decision by the
commissioner of transportation and public facilities involving procurement of
construction shall be sent to all parties by personal service or certified mail within
45 days after receipt by the commissioner of transportation and public facilities of the
hearing officer’s decision.”).
       60
              See, e.g., In re Reinstatement of Wiederholt, 24 P.3d 1219, 1233 (Alaska
2001) (holding that Rule 29 time limits were merely directory rather than mandatory,
despite legislature’s use of “will,” because the legislative intent was to create guidelines
for orderly conduct of public business, and because “serious, practical consequences
would follow from a finding that it is mandatory” (citations omitted)); State, Dep’t of
Commerce & Econ. Dev., Div. of Ins. v. Schnell, 8 P.3d 351, 357 (Alaska 2000)
(concluding that “shall” language in statute governing insurance was directory because
the statute imposed no consequence for an untimely decision and there was no injury
from the delay); Oaksmith v. Brusich, 774 P.2d 191, 201-02 (Alaska 1989) (explaining
that other courts had concluded that time limits for trial courts’ issuance of decisions are
                                                                              (continued...)

                                           -30-                                       6818

“clarification” email between the hearing officer and the agency raises some concerns,
we do not need to reach the procedural issues because we reject North Pacific’s superior
knowledge argument as a matter of law and because North Pacific is barred from
recovery for its differing site condition claim. Thus, we conclude that the deputy
commissioner’s factual error was harmless and the ex parte exchange between O’Brien
and the hearing officer, while a questionable practice, did not affect North Pacific’s
substantial rights.
       D.     The Attorney’s Fees Award Was Not An Abuse Of Discretion.
              The Department of Transportation and Public Facilities awarded the
Department of Administration attorney’s fees and costs following the administrative
proceeding.61 Subsequently the superior court awarded attorney’s fees and costs to the
Department of Administration and the Department of Transportation and Public
Facilities.62 Arguing it should be the prevailing party on appeal, North Pacific challenges
the awards of attorney’s fees to the State under Rule 82 for the administrative appeal and
under AS 09.60.010 for its due process claims. The Department first responds that North
Pacific was not the prevailing party and that, even if North Pacific prevailed on appeal,
“it would not be entitled to an award of full reasonable attorney’s fees under
AS 09.60.010(c)(1).” The Department further relies on subsection (d)(2) of the statute.

       60
        (...continued)
directory and not mandatory).
       61
             The Department of Transportation and Public Facilities awarded
$12,899.19 to the Department of Administration for attorney’s fees and costs from the
administrative appeal.
       62
            The superior court awarded attorney’s fees of $35,537.40 to the Department
of Administration and $16,439.99 to the Department of Transportation and Public
Facilities.

                                           -31-                                      6818

Alaska Statute 09.60.010(d)(2) provides that “[i]n calculating an award of attorney fees
and costs under (c)(1) of this section, . . . the court shall make an award only if the
claimant did not have sufficient economic incentive to bring the suit, regardless of the
constitutional claims involved.” Based on this requirement, the Department maintains
that North Pacific is not entitled to attorney’s fees because North Pacific had sufficient
economic incentive to bring its claim for additional compensation.
              Alaska Statute 09.60.010(c)(2) prohibits a court from ordering a party to
pay the attorney’s fees of the opposing party where the claims concerned “constitutional
rights if the . . . plaintiff . . . did not prevail in asserting the right, the action or appeal
asserting the right was not frivolous, and the claimant did not have sufficient economic
incentive to bring the action or appeal regardless of the constitutional claims involved.”
Although North Pacific alleged due process violations, we conclude that North Pacific
had “sufficient economic incentive to bring the action or appeal regardless of the
constitutional claims involved.”63 North Pacific’s primary requested relief in superior
court was an order vacating the deputy commissioner’s decision and “judgment in favor
of North Pacific Erectors, Inc. in the amount of $163,173.42.” Because additional
compensation was the motivation throughout the litigation and because North Pacific
does not explain how it lacked sufficient economic motivation, AS 09.60.010 does not
apply. We therefore affirm the award of reasonable attorney’s fees to the State as the
prevailing party.
V.     CONCLUSION
              We AFFIRM the judgment of the superior court.

       63
              AS 09.60.010(c)(2).

                                             -32-                                         6818