Safeco Ins. Co. of America v. Honeywell, Inc., s. 5112

Decision Date12 December 1981
Docket NumberNos. 5112,5127,s. 5112
Citation639 P.2d 996
PartiesSAFECO INSURANCE COMPANY OF AMERICA and Interstate Company, Inc., Appellants/Cross-Appellees, v. HONEYWELL, INC., Appellee/Cross-Appellant.
CourtAlaska Supreme Court

Nissel A. Rose, Anchorage, for appellants/cross-appellees.

Robert J. Dickson, Atkinson, Conway, Bell & Gagnon, Inc., Anchorage, for appellee/cross-appellant.

Before RABINOWITZ, C. J., CONNOR, BURKE, and MATTHEWS, JJ., and THOMAS SCHULZ, Superior Court Judge. *

OPINION

CONNOR, Justice.

This is an action by a subcontractor against a surety's payment bond. Interstate Company, Inc. (Interstate) was the prime contractor for the construction of the Mulcahy Park Sports Arena under Contract No. C-7425, awarded by the predecessor of the Municipality of Anchorage on July 11, 1974. Safeco Insurance Company of America (Safeco) executed a payment bond under AS 36.25.010(a)(2) with Interstate as principal. Interstate awarded the mechanical subcontract to General Mechanical of Alaska (GMA). Interstate required GMA to post a performance and payment bond; GMA's bond was provided by Summit Insurance Company of New York. GMA awarded two subcontracts to Honeywell, Inc. Later, on December 12, 1975, Honeywell served notice of a claim on Interstate for $24,011 for services rendered. Honeywell served another claim for $5,569 on Interstate on February 4, 1976. Honeywell then sued Safeco, as the bonding company, and Interstate for $30,204 on March 18, 1977.

Honeywell moved for summary judgment on May 29, 1979. The superior court considered part of Honeywell's motion and granted it as to the timeliness of the suit. The issue of proper notice to Interstate on all claims was left for trial.

Before the trial, the parties, without their attorneys, agreed to settle the case on August 31, 1979, as to the $5,569 claim. When Interstate presented the settlement check to Honeywell's attorney, the attorney denied that Honeywell's Anchorage representative had the authority to settle.

On September 12, 1979, there was a trial on the remaining issues. Judgment was entered on September 20th in favor of Honeywell. Following a hearing on November 1, the judgment was revised, in response to a motion under Alaska Rule of Civil Procedure 60(b), to reflect the parties' signed settlement of September 28th, which was negotiated on August 31st. The judgment was again revised on December 5, 1979, on the superior court's own motion, to modify the findings of fact and conclusions of law. Interstate and Safeco appeal from the judgment in favor of Honeywell; Honeywell cross-appeals from the same judgment.

I

Honeywell claims that the appeal should not be considered because it is untimely. Former Appellate Rule 7(a)(1) 1 required that the appellant file a notice of appeal within 30 days from the entry of judgment. In this case, there are three dates of entry on the judgment from which the appeal and cross-appeal are taken. The first judgment was entered on September 20, 1979. The second judgment, based on the November 1st hearing, was entered on November 16th and reduced Honeywell's recovery. The third judgment was entered on December 5th and reflected modified findings of fact and conclusions of law to establish consistency between the court's reasoning and the damage award.

If Interstate had appealed from the September 20th judgment, both the judgment amount and the findings of fact and conclusions of law would have been inaccurate. An appeal from the November 16th judgment would have contained the proper award, but inconsistent reasoning. The superior court, aware of the confusion in the case, modified its reasoning and reaffirmed the award in the December 5th judgment.

Former Appellate Rule 46 provides that the requirements of the appellate rules may be relaxed where a strict adherence to them will work injustice. See McCarrey v. Commissioner of Natural Resources, 526 P.2d 1353, 1355 (Alaska 1974). This case is an appropriate one in which to relax the provisions of former Appellate Rule 7(a)(1). We note that had the parties appealed from either the September or November judgments, the resolution of the appeal would have been more difficult than necessary. Further, we do not wish to discourage trial courts from revising their judgments and clarifying the record. As a practical consideration, the judgment, on its face, has three dates of entry. That in itself is highly confusing and suggests that it is appropriate to relax the rules. Thus, we find that the appeal is timely.

II

On December 19, 1979, the superior court ordered Interstate to post a $40,000 bond to stay judgment. Interstate filed a motion to invest the cash deposit in a money market fund with the income to be paid to Interstate. Honeywell agreed with the investment, provided that it would receive one-half of the income in addition to the judgment award if Honeywell prevailed in the appeal. The trial court permitted the investment and granted Honeywell's condition.

The decision of whether to impose the condition requested by Honeywell is within the trial court's discretion. We will interfere with a discretionary determination of the trial court only if it is arbitrary, capricious or manifestly unreasonable. See Tobeluk v. Lind, 589 P.2d 873, 878 (Alaska 1979).

Interstate submitted the prospectus for the money market fund in which it planned to invest the $40,000. The prospectus reflects a net asset gain for the years ending August 31, 1978, and August 31, 1979. Honeywell argued that there was a risk of loss of the $40,000 if the amount were placed in the money market fund and thus Honeywell should receive one-half of the income as compensation for the risk. The risk alleged by Honeywell is not supported by the record. There are no accompanying documents with Honeywell's motion supporting its concern that the investment may decrease in value. It was arbitrary and capricious for the trial court to agree to Honeywell's condition, which in effect increased Honeywell's award, based on a claimed risk that has no support in the record. The order granting one-half of the income to Honeywell is reversed.

III

On March 18, 1977, Honeywell sued Safeco and Interstate for breach of contract. Interstate moved for summary judgment on the ground that Honeywell's complaint was untimely. The superior court denied Interstate's motion, but granted Honeywell's concurrent motion, and held that the complaint was timely. 2

The applicable statute of limitations is AS 36.25.020(c): "No suit may be started after the expiration of one year after the date of final settlement of the contract." The contract between the Municipality and Interstate did not define final settlement. As the contract was completed and payments were made, agents of the Municipality made no specific determination of the date of final settlement. The issue is: Under the circumstances surrounding this contract, when did final settlement occur?

The term "final settlement," in referring to government contracts, appeared in 1905 in the Heard Act (Ch. 778, 33 Stat. 811):

"Provided, That where suit is instituted by any of such creditors on the bond of the contractor it shall not be commenced until after the complete performance of said contract and final settlement thereof, and shall be commenced within one year after the performance and final settlement of said contract ...."

The Miller Act (Ch. 642, § 2, 49 Stat. 793) in 1935, amended the Heard Act but retained the provision requiring suits to be filed no more than "one year after the date of final settlement of such contract." The meaning of the term "final settlement" was litigated extensively and caused considerable uncertainty in the construction industry. In 1959, Congress abandoned the term in favor of "the day on which the last of the labor was performed or material supplied by him." Act of Aug. 4, 1959, Pub.L.No. 86-135, § 1, 73 Stat. 279 (codified at 40 U.S.C. § 270b). The legislature has not changed the Alaska statute; the term "final settlement" is still in use here.

When interpreting the Alaska statute, it is appropriate to look at federal case law interpreting the previously similar Miller Act. State v. Walsh & Co., 575 P.2d 1213, 1218 (Alaska 1978). Final settlement under federal law was defined in Illinois Surety Co. v. United States, 240 U.S. 214, 221, 36 S.Ct. 321, 324, 60 L.Ed.2d 609, 614 (1916) as:

"the time ... when, so far as the government was concerned, the amount which it was finally bound to pay or entitled to receive was fixed administratively by the proper authority."

Later, in Globe Indemnity Co. v. United States, 291 U.S. 476, 483, 54 S.Ct. 499, 501, 78 L.Ed. 924, 928 (1934), final settlement was defined as:

"A determination, made and recorded in accordance with established administrative practice by the administrative officer or department having the contract in charge, that the contract has been completed and that the final payment is due ...."

Relying on Illinois Surety, Interstate argues that final settlement occurred on January 5, 1976, when the Director of Public Works approved for payment Pay Estimate No. 16. That estimate lists as 100 percent complete all of the construction requirements of the contract. After No. 16, the contract price could not change, and thus the amount by which the Municipality was finally bound was fixed administratively. Honeywell relies on Globe Indemnity, and contends that May 13, 1976, is the date of final settlement. On that day, the Director of Public Works approved Pay Estimate No. 17 which authorized the two percent retainage to be paid. Honeywell maintains that the contract was not completed until some time in March, 1976, because construction continued past January 5, 1976, as indicated by the on-site inspection report, and Interstate did not file the certificate of compliance, as required by section 10.08 of the contract, until May 12, 1976. Thus, it argues, the authorization to release the...

To continue reading

Request your trial
7 cases
  • Metzger v. Kalke
    • United States
    • Wyoming Supreme Court
    • November 12, 1985
    ... ... Olson v. A.H. Robins Company, Inc., Wyo., 696 P.2d 1294 (1985); Duke v. Housen, ... Safeco Insurance Company of America v. Honeywell, Inc., ... ...
  • SIMPSON v. OFFICE OF HUMAN RIGHTS
    • United States
    • D.C. Court of Appeals
    • October 1, 1991
    ...are possible, the courts prefer the one which gives the longer period in which to prosecute the action. Safeco Inc. Co. of Am. v. Honeywell, 639 P.2d 996, 1001 (Alaska 1981). "If there is any reasonable doubt in a statute of limitations problem, the [c]ourt will resolve the question in favo......
  • Gustafson v. Bridger Coal Co.
    • United States
    • U.S. District Court — District of Wyoming
    • September 21, 1993
    ... ... BRIDGER COAL COMPANY and Pacific Minerals, Inc., Defendants ... No. 93-CV-0177-B ... United ... Allstate Ins. Co., 723 F.Supp. 624 (D.Wyo.1989) and Wagner v ... Kalke, 709 P.2d 414, 416-17 (Wyo.1985); Safeco Ins. Co. v. Honeywell, Inc., 639 P.2d 996 (Alaska ... ...
  • Lively v. Flexible Packaging Ass'n, 97-CV-128.
    • United States
    • D.C. Court of Appeals
    • August 21, 2003
    ...are possible, the courts prefer the one which gives the longer period in which to prosecute the action. Safeco Ins. Co. of Am. v. Honeywell, 639 P.2d 996, 1001 (Alaska 1981). "If there is any reasonable doubt in a statute of limitations problem, the [c]ourt will resolve the question in favo......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT