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Navistar Int'l Trans. Corp. v. F. Pleasant (12/30/94), 887 P 2d 951
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Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501.
THE SUPREME COURT OF THE STATE OF ALASKA
NAVISTAR INTERNATIONAL )
TRANSPORTATION CORPORATION, ) Supreme Court Nos. S-5579/5619
)
Appellant and )
Cross-Appellee, ) Superior Court No.
v. ) 4BE-88-007 CI
)
FERDINAND PLEASANT, ) O P I N I O N
)
Appellee and ) [No. 4159 - December 30, 1994]
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, Fourth Judicial District,
Bethel,
James A. Hanson,
Judge.
Appearances: Matthew K. Peterson,
Kenneth M. Gutsch, Hughes, Thorsness, Gantz,
Powell & Brundin, Anchorage, Barry Levenstam,
Jenner & Block, Chicago, for Appellant and
Cross-Appellee. John S. Hedland, Christopher
R. Cooke, Hedland, Fleischer, Friedman,
Brennan & Cooke, Anchorage, for Appellee and
Cross-Appellant.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton, Justices, and
Bryner, Justice, pro tem.*
MATTHEWS, Justice.
I. INTRODUCTION
Ferdinand Pleasant was in the process of taking apart a
dump truck brake when it violently came apart. A heavy metal
plate struck Pleasant in the face, knocking him unconscious and
causing him permanent injuries. He sued the manufacturer of the
truck, Navistar International Transportation Corporation; the
seller of the truck, Alaska Truck Center; and the manufacturer of
the brake, Indian Head Industries, Inc. Pleasant settled his
claim against Indian Head. Subsequently, a jury awarded him in
excess of $3 million. After the verdict, Pleasant settled his
claim against Alaska Truck Center. The remaining defendant,
Navistar, has appealed, raising a number of claims of error
relating to the conduct of the trial and disposition of certain
post-trial motions. Pleasant has cross-appealed from the court's
failure to award him prejudgment interest on future damages. We
hold that the court erred in calculating the judgment and that
the post-trial settlement with Alaska Truck Center satisfied the
judgment.
II. FACTS
In 1985, the city of Quinhagak purchased a dump truck
manufactured by Navistar from the Alaska Truck Center. The truck
arrived in Quinhagak in July of 1986. Pleasant was employed by
the city as an equipment operator. About three weeks after the
truck was delivered to the city the truck was driven into a soft
area and the brakes were covered and filled with mud. Dirt and
gravel entered the brake through a hole which should have been
covered by an access plug but was not. Pleasant and his
supervisor, Dave Gilbert, decided that the brake needed to be
taken apart and cleaned. Neither Gilbert nor Pleasant knew that
the brake contained a powerful spring having 2,500 pounds of
force. As Pleasant began to disassemble the brake by removing a
clamp ring, the spring released, forcing the metal brake cover to
fly into Pleasant's face, and causing unconsciousness, facial
fractures, and permanent double vision.
Each brake on the truck consisted of two mechanisms:
an air brake and a spring brake. If the air brake failed the
spring brake was designed to automatically engage and stop the
truck. If this occurred, the driver would have to recompress the
spring, that is "cage"the brake in order to move the truck. The
operator's manual contained directions for caging the brake in
emergency situations.
The brake system has access holes in the brake cover.
These holes make it possible for the operator to cage the brake.
The access holes are normally covered by access plugs. During
shipping, however, Navistar removed the plugs and stored them in
the cabin of the truck for safekeeping. Navistar instructed the
shipper to reinstall the access plugs when the truck was
delivered and instructed Alaska Truck Center to inspect the truck
on its arrival to ensure that the access plugs had been
reinstalled. These instructions were not followed and the truck
arrived in Quinhagak with the access plugs still in the cab of
the truck and with no instructions to the city that the access
plugs would need to be reinstalled.
The operator's manual for the truck does not contain a
warning concerning the possibility of a spring brake explosion.
It does, however, show operators how to cage the brake when the
brake is activated by a loss of air pressure. A warning embossed
on the metal cover of the brake itself states: "Caution, spring
loaded. To cage power spring, remove cover, engage release bolt
in through top of head and tighten up." Because it was caked
with mud, Pleasant was not aware of this warning. A warning
label placed by Pleasant inside the cab of the truck read:
"Warning, do not operate or service this machine until you have
read and understand the operation and maintenance manuals
supplied with this equipment." The maintenance manual, however,
was not included with the truck. A few days before the accident,
Pleasant requested a manual from Navistar but it had not yet been
received.
Following the accident, Pleasant required surgery to
repair his facial fractures and subsequent surgery in an effort
to cure or reduce his double vision. The latter was unsuccessful
and the double vision persists. As a consequence, Pleasant lacks
binocular vision and depth perception. He wears thick, heavy
glasses in an effort to mitigate his double vision, and suffers
periodic facial pain for which he takes no medication.
Despite his injuries, Pleasant leads a productive life.
He continues to work for the city of Quinhagak as a truck driver,
equipment operator and foreman. He also engages in commercial
fishing, and is a subsistence hunter and fisherman.
III. PROCEDURAL HISTORY
Pleasant filed this action against Navistar, Alaska
Truck Center, Indian Head Industries, and certain individuals
employed by Alaska Truck Center. Pleasant settled with Indian
Head for $200,000. As part of the settlement, Pleasant released
Navistar, among others, from liability arising from negligence or
fault on the part of Indian Head including "allegations . . .
that the warnings embossed on the brake . . . were inadequate."
Pleasant, however, specifically reserved claims against the other
parties except for claims arising through any negligence or
wrongdoing on the part of Indian Head. The case was tried to a
jury in Bethel. A special verdict was returned, finding as
follows:
(1) the truck was defective when it left the
possession of Navistar and that this defect was a legal
cause of harm to Pleasant;
(2) Navistar was negligent and this negligence was
a legal cause of injury to Pleasant;
(3) Alaska Truck Center was negligent and its
negligence was a legal cause of harm to Pleasant;
(4) Pleasant was negligent in a manner that was a
legal cause of his harm;
(5) the parking brake manufactured by Indian Head
was defective and this defect was a legal cause of harm
to Pleasant;
(6) Indian Head was negligent and this negligence
was a legal cause of harm to Pleasant;
(7) the combined responsibility of all parties was
as follows:
Navistar - 15%
Alaska Truck Center - 30%
Pleasant - 10%
Indian Head - 45%
(8) Pleasant suffered damages as a consequence of
the accident as follows:
(a) Past economic loss (earnings,
medical expenses, reduction of subsistence
harvest): $92,000
(b) Past non-economic loss (pain and
suffering, physical impairment, disfigurement,
inconvenience): $500,000
(c) Future economic loss (earnings,
medical expenses, reduction of subsistence
harvest): $512,500
(d) Future non-economic loss (pain and
suffering, physical impairment, disfigurement,
inconvenience): $1,900,000
Total: $3,004,500
In addition, the jury awarded punitive damages of $500,000
assessed solely against Alaska Truck Center. After the verdict
was announced but before judgment was entered, Alaska Truck
Center settled with Pleasant for $2.1 million, $577,724 of which
Alaska Truck Center and Pleasant allocated as payment in full of
the punitive damage award, including attorney's fees and costs
thereon. Navistar filed post-trial motions for a new trial,
judgment notwithstanding the verdict and remittitur. These
motions were denied. The trial court entered judgment against
Navistar in the sum of $1,027,530.31 plus attorney's fees of
$105,253.03. From this judgment Navistar appeals. Navistar's
arguments on appeal are as follows:
1. Judgment notwithstanding the verdict
should have been granted because no reasonable
jury could have found that Navistar proximately
caused Pleasant's injury.
2. Navistar's motion for a new trial should
have been granted because evidence of Navistar's
liability was completely lacking and the verdict
resulted from appeals to prejudice.
3. The trial court erred in allowing
Pleasant's expert, Daniel Solomonson, to testify
with regard to Navistar's warnings.
4. The jury's award for economic loss was
grossly inflated.
5. The jury's non-economic award was
grossly inflated.
6. The court erred in its calculation of
damages attributable to Navistar (a) by failing to
reduce the verdict by Indian Head's 45% share of
fault, (b) by failing to reduce the judgment by
the entire $2.1 million given as consideration for
Alaska Truck Center's release, and (c) by awarding
enhanced prejudgment interest at the rate of
15.5%.
Pleasant has taken a cross-appeal, contending that the court
erred in failing to allow prejudgment interest on damages for
future economic and non-economic losses.
We hold that Navistar is correct in its contentions
6(a) and (b) concerning necessary reductions in the judgment.
Because these reductions reduce the judgment to a negative number
we need not discuss Navistar's other points on appeal. Even in
light of the reductions an award of enhanced prejudgment interest
on items of future damages would result in a positive award to
Pleasant. We therefore rule on the cross-appeal, holding that it
lacks merit.
IV. DISCUSSION
A. The court erred in its calculation of damages
attributable to Navistar.
The argument under this heading has three parts.
Navistar claims that the court erred by (a) failing to reduce the
verdict by Indian Head's 45% share of fault, (b) by failing to
reduce the verdict by the entire $2.1 million given as
consideration in the Alaska Truck Center settlement, and (c) by
awarding prejudgment interest at the enhanced rate of 15.5%. We
agree with the first two points and, since they are dispositive,
need not discuss the third.
The law applicable to the post-verdict calculations
made by the court is reflected in AS 09.17.080 as it existed in
1986,1 AS 09.17.090, which has now been repealed,2 the offer of
judgment rule, Alaska Civil Rule 68,3 and AS 09.30.065.4
The court's post-verdict calculations were as follows:
total compensatory damages were $3,004,500. The court calculated
prejudgment interest on this sum at the enhanced rate of 15.5%5
from December 5, 1987,6 until the effective date of the judgment,
July 31, 1992. This amounted to $426,959.61. The verdict, plus
prejudgment interest, was therefore $3,431,459.61. The court
further adjusted the verdict by deducting enhanced prejudgment
interest on the $200,000 received from Indian Head and on the
$1,525,046 allocated to compensatory damages received from Alaska
Truck Center. The adjusted verdict was thus reduced to
$3,425,101.04. The court then applied the cap formula of former
AS 09.17.080(d) by doubling the percentage of fault allocated to
Navistar (.15 x 2 = .30) and multiplying the result by the
adjusted verdict, resulting in an award against Navistar of
$1,027,530.31.
The court then tested this sum against the sum that
would be awarded against Navistar assuming joint and several
liability with no cap formula. This sum would have been
$3,425,101.04, less $200,000 to account for the Indian Head
settlement, less $1,525,046 to account for the Alaska Truck
Center's settlement allocated to compensatory damages, and less
$342,510.10 for Pleasant's 10% comparative negligence, resulting
in a total of $1,357,544.94. As this amount was greater than the
capped amount, the capped amount controlled.
1. The court erred in failing to reduce the
verdict by Indian Head's 45% of the share of
fault.
Navistar's first point concerning these calculations is
that the court should have reduced the adjusted verdict by the
45% of fault attributable to Indian Head. Navistar makes two
independent arguments in support of this point, both of which are
based on the terms of the "settlement and hold harmless
agreement, and release of all claims"(the release) entered into
between Pleasant and Indian Head. The release provided in part:
Pleasant . . . releases . . . and
forever discharges Navistar . . . of and from
all claims . . . for any and all injury,
damage or loss . . . sustained by Pleasant,
arising from . . . negligence or other fault
. . . by Indian Head, including, without
limiting the foregoing, allegations that the
Indian Head brake which allegedly injured
Pleasant was a defective product in its
design or manufacture or that the warnings
embossed on the brake or affixed to the brake
were inadequate or nonexistent . . . .[7]
One of Navistar's arguments relates the language of the
release to AS 09.17.090(1).8 Specifically, Navistar argues that
the statutory language mandating reduction of a settled "claim
against the others to the extent of any amount stipulated by the
release . . . , or in the amount of the consideration paid for
it, whichever is the greater"requires a reduction of .45 times
the adjusted verdict as the "amount stipulated by the release."
Navistar's other argument is that under the express terms of the
release, Pleasant released Navistar from injuries caused by the
fault of Indian Head. Navistar argues, in other words, that the
release imposed several liability under which Navistar vis-a-vis
Indian Head would be responsible for only its share of the total
fault.
In our view Navistar's second argument is a logical
one. It is difficult to conceive of any meaning which the
language discharging Navistar in the release could have other
than that Navistar was to be discharged from the amount of the
verdict multiplied by Indian Head's share of the fault -- that
is, to use the language of the release, from "the damage . . .
sustained by Pleasant arising from . . . fault . . . by Indian
Head."
Pleasant does not respond to this argument. Under the
terms of former AS 09.17.090 a release of one joint tortfeasor
does not discharge other tortfeasors from liability "unless its
terms so provide." Here, the terms of the settlement so provide.
The court should therefore have deducted 45% of the adjusted
verdict of $3,425,101.04, an amount equal to $1,541,295.40.
2. The court erred by failing to reduce the
verdict by the entire $2.1 million given as
consideration for the Alaska Truck Center release.
In addition to finding that Alaska Truck Center was 30%
at fault for Pleasant's injuries, the jury awarded punitive
damages against Alaska Truck Center in the amount of $500,000.
After the jury verdict, Alaska Truck Center settled with Pleasant
for $2.1 million, specifically allocating $574,954 of this total
to punitive damages and attorney's fees and costs attributable to
punitive damages. This left $1,525,046 of the total settlement
attributable to the compensatory damage claim against Alaska
Truck Center.
Navistar argues that the entire $2.1 million should
have been deducted from the adjusted verdict. It bases this
argument on the now repealed provisions of AS 09.17.090, which
requires reduction of a claim against other joint tortfeasors "to
the extent of any amount stipulated by the release or the
covenant, or in the amount of the consideration paid for it,
whichever is the greater." Navistar argues that the
consideration paid for the settlement with Alaska Truck Center is
$2.1 million.
Pleasant counters that Alaska Truck Center's and
Navistar's liability were not overlapping with respect to the
$574,954 for punitive damages, fees and costs. In no sense is
this a complete argument. Even though Navistar was not liable
for punitive damages and the jury found that Alaska Truck Center
was, the fact remains that AS 09.17.090(1) calls for a reduction
in the amount of the total consideration paid for the release,
not merely the consideration which can be allocated to common
liability. If the rule were otherwise, the plaintiff and the
settling tortfeasor could easily avoid the impact of AS
09.17.090, allocating some part of the consideration paid for a
release to punitive damages or to some other item of damage for
which other tortfeasors would not be liable.
In Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin,
828 P.2d 745, 758 (Alaska 1992), we held that the term "consider
ation paid,"as used in former AS 09.16.040(1),9 included amounts
paid in a loan receipt agreement which the plaintiff had an
obligation to repay: "[A]nything received by way of a covenant
not to sue operates as a payment pro tanto upon any judgment
obtained against the others." Id. (quoting Cullen v. Atchinson,
Topeka & Santa Fe Ry. Co., 507 P.2d 353, 362 (Kan. 1973))
(emphasis added). Amounts which a plaintiff must repay are, of
course, not overlapping damages, but they are "consideration
paid." Similarly, a payment allocated to punitive damages does
not overlap with a compensatory award, but it too falls readily
within the statutory term "consideration paid." Accordingly, we
conclude that the statutory term "amount of the consideration
paid for it"includes all consideration, including that allocated
to punitive damages.
Our conclusions result in the following calculation of
damages. From the total award of $3,425,101.04 the following
should be deducted: damages resulting from Indian Head's fault
from which Pleasant released Navistar, $1,541,295.40; the
release consideration paid by Alaska Truck Center, $2.1 million;
and the amount for Pleasant's comparative negligence,
$342,510.10. The final figure is a negative number.
B. Cross-Appeal - the court did not err in
failing to allow prejudgment interest on
damages for future economic and non-economic
losses.
After the trial, Pleasant filed a proposed judgment
against Navistar including prejudgment interest on past and
future damages. Navistar opposed the form of judgment, arguing
that any award of prejudgment interest on future damages would
amount to a double recovery for Pleasant. The trial court agreed
and entered judgment against Navistar for its share of fault and
prejudgment interest on Pleasant's past economic and non-economic
damages only. Pleasant moved for reconsideration, arguing that
Alaska law required the defendant to pay prejudgment interest on
the entire damage award. The trial court denied Pleasant's
motion and Pleasant appeals.10
Prior to passage of the 1986 Tort Reform Act, this
court held that prejudgment interest on future economic damage
awards was proper. See Hertz v. Berzanske, 704 P.2d 767, 773 n.9
(Alaska 1985) (relying on State v. Phillips, 470 P.2d 266 (Alaska
1970)). The Tort Reform Act does not specifically address
prejudgment interest on future damage awards, but requires their
reduction to present value.11 Prior to the act awards of future
damages were not reduced to present value. Beaulieu v. Elliott,
434 P.2d 665, 671 (Alaska 1967). Pleasant argues that since the
legislature could have but did not enact legislation precluding
prejudgment interest on future damage awards, it did not intend
to overrule this court's previous holdings on the subject.
The seminal case on prejudgment interest is State v.
Phillips, 470 P.2d 266 (Alaska 1970). In Phillips, this court
held that prejudgment interest would be awarded on "[a]ll damages
. . . , whether liquidated or unliquidated, pecuniary or
nonpecuniary . . . from the time the cause of action accrues,
unless for some reason peculiar to an individual case such an
award of interest would do an injustice." Id. at 274. Despite
the breadth of this language, it was argued in Hertz v.
Berzanske, 704 P.2d 767 (Alaska 1985), that prejudgment interest
should not accrue on lost future earning capacity. We rejected
this argument based on Phillips. 704 P.2d at 773 n.9.
The rationale underlying awards of prejudgment interest
is that money is due in a tort case when the plaintiff is injured
through the tortious act of the defendant. In an ideal system a
trial could be conducted immediately following the injury at
which time all of the plaintiff's claims could be valued and a
judgment entered. The judgment, of course, would bear interest
until it was paid. Since the ideal of instant adjudication
cannot be met, and money is worth less the later it is received,
it is ordinarily unjust not to award prejudgment interest between
the time of the accident and the adjudication. Phillips, 470
P.2d at 273, 274.
In Phillips we gave the following hypothetical:
Suppose A inflicts precisely the same
amount of damage of any type on B and C at
the same moment, evaluated by juries as
$1,000 each. If C wins his judgment a year
later than B and does not get prejudgment
interest for the year, C recovers less than B
for the same injury; C has been deprived of
the use value of $1,000 for one year while B
has enjoyed the use value. Interest is the
market, or in the case of the legal rate the
legislative, evaluation of the use value of
money. B obviously has not gotten too much
for he had a right to be made whole
immediately upon being injured, and B and C
should get the same amount for the same
injury, so C must have gotten too little.
Only by awarding prejudgment interest from
the time the cause of action accrues, when a
plaintiff is entitled to be made whole, can
the sort of injustice which happened to C in
the hypothetical case be avoided.
Id. at 274 (emphasis added). This hypothetical applies, as it
states, to "damage of any type"including future damage. Indeed,
as a plaintiff has "a right to be made whole immediately upon
being injured," nearly all damages at that point are future
damages.
The prejudgment interest statute no longer provides for
interest after it is "due." Instead, prejudgment interest is to
run "from the day process is served on the defendant or the day
the defendant received written notification that an injury has
occurred and that a claim may be brought against the defendant
for that injury, whichever is earlier." AS 09.30.070(b).
Although this modification changes the date from which
prejudgment interest begins to run, it does not change the
elements of damage on which prejudgment interest does run.
However, the assumption in the Phillips hypothetical
does not take into account cases in which a future stream of
income is discounted not to the time of injury (or the time of
accrual of prejudgment interest) but to the time of trial. If
future damages were discounted back to the time of injury, it
would be appropriate to allow prejudgment interest on future
damages so discounted.12 It is, however, a double recovery to
permit prejudgment interest on future sums which are discounted
only to the time of trial, for such sums are greater than they
would be if they were discounted to the time of injury -- a
difference attributable to the interaction of the discount rate
and the intervening period. For example, in Sebring v. Colver,
649 P.2d 932, 936 (Alaska 1982), we disallowed an award of
prejudgment interest on the cost of future repairs, as estimated
at the time of trial: "Since the financial impact of the passage
of time was thus incorporated into the jury's damage award, any
award of prejudgment interest on this amount would therefore
constitute a double recovery." Id. at 936; see also City of
Whittier v. Whittier Fuel & Marine Corp., 577 P.2d 216, 226
(Alaska 1978) (prejudgment interest disallowed on future lost
profits which must be discounted to present value as of the date
of judgment). Under the court's instructions, the jury was
directed to reduce the elements of future damage to present value
as of the time of trial rather than the time of injury. Given
this fact, the trial court did not err in refusing to award
prejudgment interest on these elements.
V. CONCLUSION
The trial court's calculations of the award against
Navistar erroneously failed to take into account the amount by
which Pleasant discharged Navistar in accordance with the release
between Pleasant and Indian Head and the total consideration
given by Alaska Truck Center for its release. When these amounts
are properly considered, the judgment against Navistar is
satisfied. The court did not err in refusing to add prejudgment
interest to future damages awarded by the jury because they were
reduced to present value to the time of trial rather than to the
time of injury. This case is REMANDED to the superior court with
instructions to enter a satisfaction of judgment in favor of
Navistar.
_______________________________
* Sitting by assignment made pursuant to article IV,
section 16 of the Alaska Constitution.
1 In 1986, AS 09.17.080 provided:
Apportionment of damages. (a) In all
actions involving fault of more than one
party to the action, including third-party
defendants and persons who have been released
under AS 09.17.090, the court, unless
otherwise agreed by all parties, shall
instruct the jury to answer special
interrogatories or, if there is no jury,
shall make findings, indicating
(1) the amount of damages each
claimant would be entitled to recover if
contributory fault is disregarded; and
(2) the percentage of the total
fault of all of the parties to each claim
that is allocated to each claimant,
defendant, third-party defendant, and person
who has been released from liability under AS
09.17.090.
(b) In determining the percentages
of fault, the trier of fact shall consider
both the nature of the conduct of each party
at fault, and the extent of the causal
relation between the conduct and the damages
claimed. The trier of fact may determine
that two or more persons are to be treated as
a single party if their conduct was a cause
of the damages claimed and the separate act
or omission of each person cannot be distin
guished.
(c) The court shall determine the
award of damages to each claimant in
accordance with the findings, subject to a
reduction under AS 09.17.090, and enter
judgment against each party liable. The
court also shall determine and state in the
judgment each party's equitable share of the
obligation to each claimant in accordance
with the respective percentages of fault.
(d) The court shall enter judgment
against each party liable on the basis of
joint and several liability, except that a
party who is allocated less than 50 percent
of the total fault allocated to all the
parties may not be jointly liable for more
than twice the percentage of fault allocated
to that party.
2 AS 09.17.090, repealed by ch. 14 17, SLA 1987,
provided:
Effect of release. When a release or
covenant not to sue or not to enforce
judgment is given in good faith to one of two
or more persons liable in tort for the same
injury or the same wrongful death
(1) it does not discharge any of
the other tortfeasors from liability for the
injury or wrongful death unless its terms so
provide; but it reduces the claim against the
others to the extent of any amount stipulated
by the release or the covenant, or in the
amount of the consideration paid for it,
whichever is the greater; and
(2) it discharges the tortfeasors
to whom it is given from all liability for
contribution to any other tortfeasor.
3 Civil Rule 68 provides in relevant part:
Offer of Judgment. (a) At any time
more than 10 days before the trial begins,
either the party making a claim or the party
defending against a claim may serve upon the
adverse party an offer to allow judgment to
be entered in complete satisfaction of the
claim for the money or property or to the
effect specified in the offer, with costs
then accrued. The offer may not be revoked
in the 10 day period following service of the
offer. If within 10 days after 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,
and the clerk shall enter judgment. An offer
not accepted within 10 days is considered
withdrawn and evidence of the offer is not
admissible except in a proceeding to
determine costs. The fact that an offer is
made but not accepted does not preclude a
subsequent offer.
(b) If the judgment finally
rendered by the court is not more favorable
to the offeree than the offer, the
prejudgment interest accrued up to the date
judgment is entered shall be adjusted as fol
lows:
(1) if the offeree is the party
making the claim, the interest rate will be
reduced by the amount specified in AS
09.30.065 and the offeree must pay the costs
and attorney's fees incurred after the making
of the offer (as would be calculated under
Civil Rules 79 and 82 if the offeror were the
prevailing party). The offeree may not be
awarded costs or attorney's fees incurred
after the making of the offer.
(2) if the offeree is the party
defending against the claim, the interest
rate will be increased by the amount
specified in AS 09.30.065.
4 AS 09.30.065(2) provides for an increase of interest "by
five percent a year"where the defendant is the offeree who has
declined an offer more favorable to the defendant than the
judgment.
5 Pleasant had made an offer of judgment which was more
favorable to Navistar than the judgment; thus, the court applied
enhanced interest under Civil Rule 68(b)(2) and AS 09.30.065(2).
6 Prejudgment interest began to run on the date of written
notification that the injury occurred and a claim would be
brought. See AS 09.30.070(b).
7 The release also provided:
Pleasant excludes from this release, and
specifically reserves, all claims against any
party except Indian Head, including but not
limited to Navistar . . . based upon any act,
omission or circumstance giving rise to
liability other than negligence or other
fault or wrongdoing or act or omission by
Indian Head which would provide a basis for
imposition of any liability whatsoever upon
Indian Head.
8 See supra note 2.
9 Former AS 09.16.040(1) was identical to the controlling
statute in this case, former AS 09.17.090.
10 The determination of whether Pleasant is entitled to
prejudgment interest on the future damage award is a question of
law subject to this court's independent judgment. Tookalook
Sales & Service v. McGahan, 846 P.2d 127, 129 (Alaska 1993).
11 AS 09.17.040(b).
12 As the Supreme Court of the United States observed in
Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 538 n.22
(1983):
At one time it was thought appropriate
to distinguish between compensating a
plaintiff "for the loss of time from his work
which has actually occurred up to the time of
trial"and compensating him "for the time he
will lose in [the] future." C. McCormick,
Damages 86 (1935). This suggested that
estimated future earning capacity should be
discounted to the date of trial, and a
separate calculation should be performed for
the estimated loss of earnings between injury
and trial. Id., 86, 87. It is both
easier and more precise to discount the
entire lost stream of earnings back to the
date of injury -- the moment from which
earning capacity was impaired. The plaintiff
may then be awarded interest on that
discounted sum for the period between injury
and judgment, in order to ensure that the
award when invested will still be able to
replicate the lost stream.
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