George Gary FARNSWORTH and Sandra Kay Farnsworth, Appellants, v. H. J. STEINER, Personal Representative of the Estate of Michael R. Steiner, Deceased, Appellee.
No. 5345.
Supreme Court of Alaska.
Dec. 24, 1981.
In making the award of attorney‘s fees the court is limited to making an award to enable the other spouse to prosecute or defend “the action.” See
AFFIRMED in part, REVERSED in part, and REMANDED.
BURKE and COMPTON, JJ., not participating.
55.205. It is possible that Barbara can be a fit parent yet that a child‘s best interests compel that custody be placed in Christopher. Even if the interrelation between the issues was complete, the award of costs and fees must still rest upon some statute, court rule, or recognized rule of equity, not on inferences from language in an unrelated decision from another jurisdiction.
Before RABINOWITZ, C. J., CONNOR, BURKE and MATTHEWS, JJ., and ROWLAND, Superior Court Judge.*
OPINION
BURKE, Justice.
This case is here for a second time. The sole issue now is the superior court‘s award of interest upon remand from this court.
George Farnsworth won a jury verdict against Michael Steiner in a personal injury suit. Before trial, Steiner had made an offer of judgment pursuant to
On remand, in conformity with our mandate, the trial judge (1) adjusted each party‘s attorney‘s fees award; (2) denied Farnsworth prejudgment interest from the date of the offer through the date of verdict; and (3) granted Farnsworth postjudgment interest from the date of the verdict through the date of Farnsworth‘s initial notice of appeal, as well as postjudgment interest beginning from the date of the trial court‘s entry of its amended judgment upon remand and continuing until paid. Farnsworth then brought this appeal, Farnsworth II, objecting to the trial court‘s denial of postjudgment interest during the pendency of his initial appeal, Farnsworth I.2
Principles for Awarding Interest on Money Judgments
The consideration of this issue requires reference to the principles of Alaska law on awarding interest to judgment creditors. When a cause of action arises, the injured party becomes immediately entitled to be made whole, and the amount later adjudicated as damages becomes due. State v. Phillips, 470 P.2d 266, 274 (Alaska 1970). Therefore, “[a]ll damages . . . should carry interest from the time the
The allowance of prejudgment interest in Phillips could have been read narrowly so as to apply only when the state is the defendant.4 However, it later became clear that the principle that judgment creditors are entitled to the time value of the compensation for their injuries would be recognized by this court in all civil cases. Beech Aircraft Corp. v. Harvey, 558 P.2d 879, 888 n.30 (Alaska 1976); Nordin Constr. Co. v. City of Nome, 489 P.22 455, 474 (Alaska 1971); Fairbanks Builders, Inc. v. Morton DeLima, Inc., 483 P.2d 194, 195 (Alaska 1971).
In Phillips we acknowledged the argument that since the “plaintiff actually suffers the loss of use of money rightfully his between accrual of his claim and judgment,” the deprivation of interest is a consequential injury. 470 P.2d at 273 n.27. This thought was explicitly recognized in Davis v. Chism, 513 P.2d 475, 480-81 (Alaska 1973), where we held that prejudgment interest is compensation and not a cost of litigation.
Prejudgment Interest
With these principles in mind, we first turn to our decision in Farnsworth I, 601 P.2d 266. We now see that our inclusion of prejudgment interest as Rule 68 “costs” to be denied the plaintiff-offeree, id. at 272, was incorrect. The essential purpose of interest is compensation for the time that the judgment creditor has been “less than whole.” Davis, 513 P.2d at 481. Since interest is not “costs,” a successful Rule 68 offer of judgment does not terminate the running of interest.5
It is only when such an award would do an injustice that it should be denied. Phillips, 470 P.2d at 274. We have observed that such an injustice would occur “in only the most unusual case,” Davis, 513 P.2d at 481, and that even a lengthy delay attributable to the plaintiff is not an occasion for such denial. Beech, 558 P.2d at 887-88. Since an award of interest is not a penalty but compensation, fault for the delay between the injuring event and payment of consequential damages is irrelevant.6 The only ground for denial we have so far recognized has been double recovery. Haskins v. Shelden, 558 P.2d 487, 494-95 (Alaska 1976); Beech, 558 P.2d at 888 & n.31; Anchorage Asphalt Paving Co. v. Lewis, 629 P.2d 65, 70 (Alaska 1981).
The real question in awarding interest to a judgment creditor is whether the debtor has had use of money for a period of time when the creditor was actually entitled to it. Beech, 558 P.2d at 888. Since prejudgment interest is not “costs” and Farnsworth had no double recovery, no portion of his prejudgment interest should have been denied.
Postjudgment Interest
We turn now to the issue of postjudgment interest. Appellee Steiner argues that since appellant Farnsworth is responsible for the delay in payment by bringing an appeal later found to lack merit, the appellant should not receive interest for the period that payment was delayed on account of the appeal. 7 Many jurisdictions have adopted this view. Annot., 15 A.L.R.3d 411, 415 (1967).
We cannot agree with this position. Since, in Alaska, we view interest on damage awards to be a form of compensation for the period that the plaintiff remains “less than whole,” we do not consider responsibility for a delay of payment as a factor in making an interest award. We have explicitly made this point with regard to prejudgment interest, Beech, 558 P.2d at 888, and we see no reason to distinguish postjudgment interest on this issue.
Interest is not a penalty but simply a charge for the use of money. Since appellee had the use of money to which appellant was entitled during the pendency of the first appeal, he is charged interest for that use. This is hardly an injustice. Beech, 558 P.2d at 888; Haskins, 558 P.2d at 494-95. Farnsworth was not achieving a double recovery but merely exercising his statutory right of appeal.
We vacate the amended judgment insofar as it denies Farnsworth any part of his rightful prejudgment and post-judgment interest and remand for entry of a new judgment including full prejudgment and postjudgment interest. We also vacate and remand the attorney‘s fees award so that it can reflect the new judgment in the sense that a
REVERSED in part and REMANDED.
RABINOWITZ, Chief Justice, dissenting in part.
I disagree with the court‘s treatment of prejudgment interest. The issue of prejudgment interest was disposed of by this court in the initial appeal in this case. See Farnsworth v. Steiner, 601 P.2d 266, 272 (Alaska 1979).1 Subsequent to the issuance of our mandate in the first appeal the superior court modified its judgment as it pertained to prejudgment interest.
Normally, the “law of the case” doctrine would preclude this court from modifying its earlier holding as to prejudgment interest. As Professor Moore notes:
When . . . a federal court enunciates a rule of law to be applied in the case at bar it not only establishes a precedent for subsequent cases under the doctrine of stare decisis, but, as a general proposition, it establishes the law, which other courts owing obedience to it must, and which it itself will, normally apply to the
same issues in subsequent proceedings in that case.
1B J. Moore & T. Currier, Moore‘s Federal Practice ¶ 0.404[1], at 402-03 (1980) (footnotes omitted). The author goes on to observe that “when a federal appellate court has established a rule of law for the case at bar it will not, on a successive appeal, depart therefrom in deciding the same issues, except for cogent reasons.” 2 Id. ¶ 0.404[10], at 573. In my view the majority has not articulated “cogent reasons” for departing from its prior holding in this case. Therefore, I believe that the majority‘s holding in regard to prejudgment interest is improper in light of the law of the case doctrine.
Even if the majority‘s treatment of the prejudgment interest issue were compatible with the law of the case,
* Rowland, Superior Court Judge, sitting by assignment made pursuant to article IV, section 16 of the Constitution of Alaska.
Notes
There we held in part:At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against him for the money or property or to the effect specified in his offer, with costs then accrued. If within 10 days after the service of the offer the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon the clerk shall enter judgment. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs. If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer. The fact that an offer is made but not accepted does not preclude a subsequent offer. When the liability of one party to another has been determined by verdict or order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, the party adjudged liable may make an offer of judgment, which shall have the same effect as an offer made before trial if it is served within a reasonable time not less than 10 days prior to the commencement of hearings to determine the amount or extent of liability.
However, under Rule 68, a party who is successful at trial but who rejected an offer of judgment which exceeded his trial recovery, is permitted to recover expenses and fees—including prejudgment interest—only from the date that the cause of action accrues, to the date of the rejected offer of judgment. Farnsworth v. Steiner, 601 P.2d 266, 272 (Alaska 1979) (footnote omitted).
1B J. Moore & T. Currier, Moore‘s Federal Practice ¶ 0.404[1], at 401-02 (1980) (footnotes omitted).The general American doctrine is that a court is not inexorably bound by its own precedents, but in the interests of uniformity of treatment to litigants, and of stability and certainty in the law will follow the relevant rule of law which it has established in earlier cases, unless clearly convinced that the legal rule was originally erroneous or is no longer sound because of changed conditions and that more good than harm would come by departing from precedent. These same principles should, and in the main do, determine the doctrine of the law of the case for the federal courts. And they apply in probably most state courts, although some state courts apply the doctrine rigidly in a manner approximating res judicata.