TAYLOR CONSTRUCTION SERVICES, INC., and Ritchie Transportation Company, Inc., a joint venture, and Fidelity and Deposit Company of Maryland, Appellants, v. URS COMPANY, Appellee.
No. S-2014.
Supreme Court of Alaska.
July 22, 1988.
As for why such causes of action could not be assigned, some courts have “felt that unscrupulous people would purchase causes of action and thereby traffic in law suits for pain and suffering.”2 Harleysville Mut. Ins. Co. v. Lea, 2 Ariz.App. 538, 410 P.2d 495, 498 (App.1966) (citing Rice v. Stone, 83 Mass. 566 (1861)). While this reason may be sensible in other situations, it has little force in the specific context of an insurer reassigning a right of action back to the estate of a deceased employee. In this limited context, the purchase and sale of a cause of action for pain and suffering would be between the employer (or insurer) and the estate of the deceased employee. This type of transaction is considerably less offensive to us than when an unrelated third party purchases the rights to such a cause of action.
The Fourth Circuit, when confronted with a similar question, stated:
Neither do we find any merit in the defendant‘s reliance upon the general rule of the non-assignability of personal injury claims. In the first place, the reassignment in question (like the initial statutory assignment) affects only the right to bring and control action on the claim; it does not affect the beneficial interests in that claim.... All that is involved is a recasting of real party in interest status for the purpose of prosecuting a claim in which there remain joint beneficial interests. More importantly, the main purposes of the general rule of non-assignability of claims for personal injury are not offended by this type reassignment. Those purposes, to prevent unscrupulous strangers to an occurrence from preying on the deprived circumstances of an injured person, and to prohibit champerty, simply have no applicability where the assignment is to the injured person himself.
Caldwell v. Ogden Sea Trans., 618 F.2d 1037, 1048 (4th Cir.1980) (footnote omitted). We agree. In the absence of any public policy against such reassignments, we see no reason to prevent them. We hold that the superior court erred in determining that the reassignment of the cause of action against Crowley from INA to Croxton was invalid.
REVERSED and REMANDED for proceedings consistent with this opinion.
David D. Clark, Cummings, Clark & Tugman, Anchorage, and Wayne C. Booth and Donald P. Lehne, Beresford, Booth, Baronsky & Trompeter, Seattle, Wash., for appellee.
Before RABINOWITZ, C.J., and MATTHEWS, COMPTON and MOORE, JJ.
ORDER
IT IS HEREBY ORDERED:
The judgment of the superior court is AFFIRMED by an evenly divided court.
RABINOWITZ, Chief Justice, joined by MATTHEWS, Justice, would affirm the superior court for the following reasons.
This appeal arises from a contract dispute among Taylor Construction Services,
Wrangell counterclaimed for defects in construction resulting in damages of approximately $600,000.00. URS did not file a counterclaim.
Prior to trial Wrangell and URS made a joint offer to settle all claims against them, as well as Wrangell‘s counterclaim against Taylor-Ritchie, by payment of $70,000.00, unapportioned between the offerors.1 Taylor-Ritchie did not accept the offer within 10 days.
After a five week bench trial, the superior court found all parties were negligent to some degree and that (1) Wrangell and URS were jointly and severally liable to Taylor-Ritchie on its claim in the approximate sum of $162,000.00, and (2) Taylor-Ritchie was liable to Wrangell on its counterclaim in the approximate sum of $223,700.00. The superior court deducted the former from the latter and gave judgment to Wrangell for $61,700.00. No attorney‘s fees were awarded to any party because all parties were found to be at fault.
The superior court was subsequently informed of the offer of judgment. It recomputed its calculation of damages and raised Wrangell‘s award from $61,700.00 to $86,900.00. In accord with Civil Rule 68, the court then awarded Wrangell after-offer attorney‘s fees of $45,000.00 and costs of $11,959.80, with interest. It also awarded URS attorney‘s fees of $35,000.00 and costs of $18,659.41, with interest.
Taylor-Ritchie appeals only from the award of attorney‘s fees and costs to URS. Taylor-Ritchie argues first that the joint offer of judgment was ineffective to invoke Rule 68‘s penal cost sanctions. Second, it argues that its recovery was more favorable than the joint settlement offer, and that cost sanctions under Rule 68 are therefore impermissible. Finally, Taylor-Ritchie argues that the superior court abused its discretion by reversing its initial decision that each party should bear its own costs and attorney‘s fees, and by imposing fees substantially higher than those allowed by
We are not persuaded by these arguments and accordingly would affirm the superior court‘s award pursuant to Civil Rule 68 of post-offer attorney‘s fees and costs.
Discussion
At the time the superior court entered its judgment, Civil Rule 68 provided in pertinent part, “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.”2
I. JOINT OFFER
This court has not previously addressed the factual circumstances of an offer of settlement made by multiple defendants where one defendant has a counterclaim against the plaintiff. We have previously held that joint offers of settlement by one defendant to several plaintiffs are ineffective under certain circumstances to invoke the penal cost sanctions of Rule 68.
In Brinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 943 (Alaska 1983), we held that defendant‘s failure to apportion the offer among plaintiffs deprived each plaintiff of the opportunity to accept or
Taylor-Ritchie‘s argument by analogy that these cases render the offer in this case ineffective to bring into play Rule 68‘s sanctions is not persuasive. The settlement offer clearly indicated all claims between the parties would be resolved if the offer were accepted. In the words of the superior court, “the offer was inclusive of all of the relationships among the parties and their conflicting claims.” We further agree with the superior court‘s observation that “[n]o apportionment difficulty existed, and plaintiff, in failing to accept the offer, assumed the risk of the penalty.” We would hold that the settlement offer was sufficient to trigger the penal cost sanctions provided for in Rule 68.
II. THE JUDGMENT OBTAINED
Taylor-Ritchie argues that the $162,000.00 judgment it obtained against Wrangell and URS jointly and severally was more favorable than the joint and several settlement offer of $70,000.00, and hence an award of Rule 68 penal cost sanctions to URS was improper. It is important to note, however, that in addition to a $70,000.00 payment, Wrangell and URS‘s settlement offer included dismissal of Wrangell‘s counterclaim against Taylor-Ritchie. While the superior court awarded Taylor-Ritchie $162,000.00 in damages, the court also awarded Wrangell $223,700.00 in damages for Wrangell‘s counterclaim (later recomputed to equal $248,900.00). The court then offset the two recoveries to achieve a “[n]et award” to Wrangell of $61,700.00 (later $86,900.00).3 A judgment requiring Taylor-Ritchie to pay $61,700.00 is clearly less favorable to Taylor-Ritchie than an offer from Wrangell and URS to pay Taylor-Ritchie $70,000.00, and to drop Wrangell‘s counterclaim. Therefore, the language of Rule 68 at the time of the judgment controls: “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.”
III. ATTORNEY‘S FEES IMPOSED
Taylor-Ritchie argues that the superior court abused its discretion in awarding URS attorney‘s fees in a greater amount than would have been allowed by the schedule set forth in Civil Rule 82(a). Rule 82 clearly gives the trial court discretion to award fees in an amount different from that prescribed by the schedule. Rule 82(a)(1) provides:
Unless the court, in its discretion, otherwise directs, the following schedule of attorney‘s fees will be adhered to in fixing such fees for the party recovering any money judgment therein:
[table set forth]
Should no recovery be had, attorney‘s fees may be fixed by the court in its discretion in a reasonable amount.
(Emphasis added.) Civil Rule 82(a)(2) further authorizes the court to exercise its discretion in certain cases:
In actions where the money judgment is not an accurate criteria [sic] for determining the fee to be allowed to the prevailing side, the court shall award a fee commensurate with the amount and value of legal services rendered.
We have repeatedly recognized the trial court‘s broad discretion in awarding attorney‘s fees. Tolstrup v. Miller, 726 P.2d 1304, 1307 (Alaska 1986); Palfy v. Rice, 473 P.2d 606, 613 (Alaska 1970); Dale v. Greater Anchorage Area Borough, 439 P.2d 790, 793 (Alaska 1968). We have required only that the trial court specify its reasons in the record when it departs from the fee schedule of Rule 82(a). Hayes, 718 P.2d at 938-39; Patrick v. Sedwick, 413 P.2d 169, 179 (Alaska 1966). This the superior court did:
Applying the formula of
Rule 82(c)(1) [sic] to the net award of $86,900 would result in a fee award of $11,190. This sum does not provide an accurate criterion for the fee to be allowed, being insufficient to be commensurate with the amount and value of the legal services rendered. The trial lasted approximately five weeks (in excess of 24 trial days) and involved a very substantial number of witnesses, including experts on all sides. There was a large mass of exhibits, many of which were lengthy and detailed construction records. Attorney fees should accordingly be set under Rule 82(a)(2) rather than by the schedule in sub-paragraph (1) of the Rule.4
BURKE, J., not participating.
COMPTON, Justice, joined by MOORE, Justice, would reverse the decision of the superior court. For the following reason, they decline to express the basis of their disagreement with that decision:
In the past, when this court has affirmed a lower court‘s decision by an evenly divided vote, our practice was to issue an order stating only that the decision was affirmed. There was neither publication nor statement of an expression of the reasons for affirmance or reversal of the lower court‘s decision. We believe this practice to be based upon sound, reasonable and necessary policy considerations involving litigants, the bar, the bench and the public.
Since this order is not precedent, reasons for affirmance or reversal of the superior court decision are immaterial. Accordingly, we adhere to our prior practice and decline to express reasons for reversal.