You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Mackie v. Chizmar (10/2/98), 965 P 2d 1202
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, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
SCOTT P. MACKIE, M.D., )
) Supreme Court Nos. S-7782/7802
Appellant and )
Cross-Appellee, ) Superior Court No.
) 3AN-89-7746 CI
v. )
) O P I N I O N
SAVITRI CHIZMAR, )
) [No. 5035 - October 2, 1998]
Appellee and )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Karl S. Johnstone, Judge.
Appearances: Donna M. Meyers and Howard A.
Lazar, Delaney, Wiles, Hayes, Gerety & Ellis, Inc., Anchorage, for
Appellant/Cross-Appellee. C. R. Kennelly, Stepovich, Kennelly &
Stepovich, P.C., Anchorage, for Appellee/Cross-Appellant.
Before: Matthews, Chief Justice, Compton, and
Fabe, Justices. [Eastaugh and Bryner, Justices, not
participating.]
FABE, Justice.
MATTHEWS, Chief Justice, dissenting in part.
I. INTRODUCTION
This appeal stems from Savitri Chizmar's suit against Dr.
Scott Mackie based on his misdiagnosis of her as HIV positive. Dr.
Mackie argues that the trial court erred in ruling that the initial
appeal and remand of this case invalidated his offer of judgment,
made pursuant to Alaska Civil Rule 68. Chizmar argues that the
trial court awarded her inadequate damages. Based on a review of
the language and purpose of Rule 68, we conclude that offers of
judgment generally remain valid despite appeal and remand. The
rule's penalties do not apply to Chizmar's recovery in this case,
however, because that recovery was obtained through an alternative
dispute resolution procedure agreed upon by the parties. We remand
the damages award because a lack of findings leaves us unable to
review its adequacy.
II. FACTS AND PROCEEDINGS
We detailed the facts of Chizmar's suit against Dr.
Mackie in Chizmar v. Mackie, 896 P.2d 196 (Alaska 1995) (Chizmar
I). Therefore, we now recite only those additional facts
necessary to understand the current dispute between the parties.
Before trial began in the original litigation, Dr. Mackie
offered, pursuant to Civil Rule 68 and AS 09.30.065, to settle
Chizmar's claims for $25,000, plus attorney's fees, costs, and
prejudgment interest. Chizmar rejected his offer. Following a
jury trial, the trial court directed a verdict against Chizmar on
all of her claims. She appealed to this court, and we affirmed in
part and reversed in part. Ruling that Chizmar did not need to
show physical injury to recover on her claim of negligent
infliction of emotional distress (NIED), we reversed the trial
court's holding on this claim and remanded for further proceedings.
See Chizmar I, 896 P.2d at 214.
On remand, the parties signed an alternative dispute
resolution (ADR) stipulation that authorized the trial court to
decide the NIED claim based on a review of the record, supplemented
only by additional deposition testimony and the parties' oral
argument. The ADR stipulation expressly provided that Chizmar and
Dr. Mackie preserved all appellate rights.
Following the ADR procedure, Superior Court Judge Karl S.
Johnstone found that Dr. Mackie was negligent and that his
negligence proximately caused Chizmar's emotional distress. He
then awarded Chizmar $15,000 in compensatory damages. Chizmar
moved for attorney's fees and costs, but Dr. Mackie opposed her
motion, arguing that because his Rule 68 offer was more favorable
than the trial court's award, he was entitled to attorney's fees
and costs. Dr. Mackie also moved for entry of judgment against
Chizmar.
While these motions were pending, the superior court sua
sponte raised the issue of whether the Rule 68 offer remained valid
after the remand in Chizmar I. The parties submitted supplemental
briefing, and the court held a hearing on this issue. The superior
court ruled that the offer of judgment had expired because
the entry of the final judgment [the directed
verdict against Chizmar at the end of the first litigation]
terminated the validity of [the] offer: . . . the reinstatement of
the case by the Supreme Court for a new trial on more limited
issues changed the case, and for policy reasons, the court has
concluded the offer of judgment should no longer be valid.
The court denied Dr. Mackie's motions and entered final judgment
for Chizmar.
Dr. Mackie appeals the denial of Rule 68 attorney's fees
and costs and the entry of judgment for Chizmar. Chizmar cross-
appeals the amount of the damages award.
III. DISCUSSION
A. Standard of Review
The interpretation of Rule 68 is a question of law that
we review de novo, adopting the rule of law that is "most
persuasive in light of precedent, policy and reason." Jaso v.
McCarthy, 923 P.2d 795, 801 (Alaska 1996) (citations omitted). We
review a trial court's award of damages as a finding of fact and
will not disturb it on appeal unless clearly erroneous. See Otis
Elevator Co. v. Garber, 820 P.2d 1072, 1075 (Alaska 1991). Unless
we are left with a "definite and firm conviction on the entire
record"that the trial court committed a mistake, we will not
reverse a damages award. Id.
B. Did Dr. Mackie's Offer of Judgment, Made Pursuant to Rule
68, Apply to Judge Johnstone's Decision?
The parties agree that the only issue Dr. Mackie raises
on appeal is "whether [the offer] remained valid after judgment was
entered in favor of Mackie and after this court's remand." We
conclude that offers of judgment, in general, do remain effective
after appeal and remand. The parties' decision to resolve their
dispute through an alternative to trial, however, invalidated Dr.
Mackie's offer in this case.
1. An offer of judgment remains valid after appeal and
remand.
The first question posed by this dispute is how the
appeal and remand of a case affects the viability of a Rule 68
offer. In deciding this question, we consider the text of Rule 68,
the scope of its federal counterpart, and the policy concerns
raised by the parties' proposed interpretations. [Fn. 1]
Turning first to the language of Rule 68, we note that
nothing in its text limits an offer's validity after appeal and
remand. [Fn. 2] Instead, the rule provides that the offeree will
incur penalties if the judgment "finally"entered by the court is
less favorable to the offeree than the Rule 68 offer. Alaska R.
Civ. P. 68(b). A judgment finally entered by a court may well be
a judgment entered after appeal and remand. Indeed, the term
"finally"implicitly acknowledges the role of appeals and remands
in the litigation process because it recognizes that the judgment
finally entered may differ from the initial final judgment entered
by a trial court.
An interpretation of the rule that permits offers to
remain valid after appeal and remand is also consistent with
interpretation of Federal Rule of Civil Procedure 68, upon which
our rule is based. The commentary to the federal rule states:
It is implicit . . . that as long as the case
continues -- whether there be a first, second or third trial -- and
the defendant makes no further offer, his first and only offer will
operate to save him the costs from the time of that offer if the
plaintiff ultimately obtains a judgment less than the sum offered.
Fed. R. Civ. P. 68 Advisory Committee Notes on 1946 amendment
(emphasis added). The federal counterpart to Rule 68 therefore
assumes, as Dr. Mackie urges, that offers of judgment will remain
valid throughout the course of multiple appeals and remands.
Finally, Dr. Mackie's proposed interpretation of Rule 68
furthers its purpose of encouraging settlement and avoiding
prolonged litigation. See Pratt & Whitney Canada, Inc. v. Sheehan,
852 P.2d 1173, 1182 (Alaska 1993) (citation omitted); see also Fed.
R. Civ. P. 68 Advisory Committee Notes on 1946 amendment ("These
provisions should serve to encourage settlements and avoid
protracted litigation."). Offers of judgment force both the
offeror and the offeree to "evaluate the risks and costs of
litigation, and to balance them against the likelihood of success
upon trial on the merits." Marek v. Chesny, 473 U.S. 1, 5 (1985)
(referring to Fed. R. Civ. P. 68). The penalties of Rule 68 raise
the cost of litigation in the offeree's risk-benefit analysis, thus
making settlement more attractive. If the offeree knows that he or
she can escape these penalties by appealing the trial court's
decision and obtaining a remand on any issue, the risk of
litigation will decrease and, thereby, so will the motivation to
settle. Indeed, adopting Chizmar's position may encourage parties
to prolong litigation. Faced with an unfavorable trial court
ruling, an offeree will have the incentive to file an appeal if
only to hope for a remand that will nullify the Rule 68 offer. In
sum, allowing a litigant to escape the penalties of Rule 68 because
an appellate court remanded the case would create an exception
nearly large enough to swallow the rule.
Chizmar contends that any general rule that Rule 68
offers do remain valid after an appeal and remand should not apply
when an appellate court (i) vacates only part of a judgment or (ii)
remands a case after significantly changing the relevant law. We
disagree.
First, we note that the text of Rule 68 draws neither of
the distinctions suggested by Chizmar. Second, Chizmar offers no
compelling policy reason to justify these exceptions. Plaintiffs
regularly raise multiple causes of action in a lawsuit, and
appellate courts regularly remand on some issues while affirming on
others. Similarly, the governing law is often revised in the
course of a trial and appeal. We see no reason why these expected
events of the appellate process should excuse an offeree from
incurring the penalties of Rule 68. Given that the offer of
judgment is made prior to trial, both parties are equally unsure
about what may occur during an appeal and both parties are equally
capable of factoring partial remands and changes in the law into
their risk-benefit analysis. We therefore reject Chizmar's
proposed exceptions to the general rule that offers of judgment
remain valid after appeal and remand.
2. The penalties of Rule 68 do not apply to Chizmar's
recovery through ADR.
Although Rule 68 offers generally remain valid after
appeal and remand, Chizmar obtained her recovery in this case
through ADR, rather than through trial. As a result, we must
consider if Rule 68's penalties apply to damages received in ADR
procedures. Again, we consult the rule's text and purpose in
deciding this issue.
The stipulation signed by the parties on remand expressly
stated that they were adopting the ADR procedure "in lieu of the
regular trial presently scheduled for November 13, 1995 . . . ."
The text of Rule 68, however, suggests that its penalties apply
only to those who pursue traditional trial litigation rather than
accept a reasonable settlement offer. See Alaska R. Civ. P. 68(a)
(stating that the offer of judgment may be made "[a]t any time more
than 10 days before the trial begins . . .") (emphasis added). As
a result, when Dr. Mackie and Chizmar chose to pursue ADR and
settle their dispute outside the traditional litigation process,
they chose a dispute resolution method that is not subject to Rule
68's penalties.
In fact, in agreeing to resolve their dispute through
ADR, Chizmar and Dr. Mackie acted in accordance with the goals of
Rule 68. Rule 68 is meant to discourage expensive and protracted
litigation. See Sheehan, 852 P.2d at 1182. The parties in this
case rejected a full-blown trial, restricting the way evidence was
to be presented and waiving their right to a jury in order to save
time and money. Ruling that Rule 68's penalties do not apply to
Chizmar's ADR recovery furthers the rule's purposes because it
encourages parties, at all stages of proceedings, to choose dispute
resolution methods that avoid unnecessary litigation.
Further, although we acknowledge that the parties'
agreement could be interpreted as providing for trial on an
augmented record, the agreement's title indicates that the parties
viewed the chosen procedure as an ADR. We see no reason to second-
guess their understanding of the agreement's substance as reflected
in its title because, unlike the dissent, we are not concerned by
the fact that the ADR procedure they chose resembles a trial in
some respects. Alternative dispute resolution may take many forms,
some of which, such as arbitration, mini-trials, summary jury
trials, and private judging, closely resemble traditional trials.
See Jay E. Grenig, Alternative Dispute Resolution sec. 2.6-2.72, at
20-37 (2d ed. 1997); see also Bette J. Roth et al., The Alternative
Dispute Resolution Practice Guide sec. 40:1-2, at 1-2 (1993).
Our holding in this case should not be construed to
suggest that parties cannot retain the penalties of Rule 68 as part
of an ADR procedure. We place no such artificial limits on what
parties may agree to in fashioning an ADR process that meets their
needs and concerns. See Donovan Leisure Newton & Irvine ADR
Practice Book 9 (John H. Wilkinson ed., 1990) (stating that in
designing an ADR process, such as arbitration, parties can agree
upon any format that they find acceptable). Instead, given that
Rule 68 applies only to the results of conventional litigation, we
hold simply that parties must explicitly reserve its applicability
when they decide to pursue ADR. The stipulation in this case did
not specifically provide that the offer of judgment would apply to
the results of the ADR process. [Fn. 3] Particularly as Dr. Mackie
drafted the stipulation, his failure to reserve the applicability
of Rule 68 prevents the offer of judgment from applying to the ADR
award recovered by Chizmar. [Fn. 4]
C. Did the Trial Court Err in Awarding $15,000 in Damages to
Chizmar?
Chizmar urges us to vacate the trial court's $15,000
damage award. She argues that the damage award is grossly
inadequate and will not compensate her for the emotional distress
and economic loss she has suffered due to Dr. Mackie's negligence
in misdiagnosing her as HIV positive.
In response, Dr. Mackie argues that Chizmar failed to
seek economic damages on remand and therefore cannot claim that the
damage award was inadequate in part because it fails to compensate
her for such damages. The trial transcripts considered by Judge
Johnstone on remand, however, included testimony introduced in part
to prove Chizmar's economic damages. Thus, contrary to Dr.
Mackie's assertion, the trial court may have incorporated economic
damages into its award to Chizmar; we are unable to determine if it
did so due to the lack of findings.
Additionally, we cannot agree with Dr. Mackie that
Chizmar waived her claim to economic damages by failing to request
them in the proposed findings she submitted to the trial court.
The proposed findings stated in part:
48. I find that an appropriate amount, under
all of the attendant circumstances, to compensate Savitri Chizmar
for the emotional and mental distress she has suffered and
continues to suffer is One Hundred Fifty Thousand and No/100
Dollars ($150,000.00).
Dr. Mackie argues that the phrase "emotional and mental distress"
proves that Chizmar was seeking only non-economic damages.
However, given that Chizmar sought compensation for mental health
care expenses, such as therapy, we conclude that the proposed
finding is broad enough to encompass a request for economic
damages.
Turning to Chizmar's argument that the damage award is
inadequate, we find that we are unable to review its adequacy
because the trial court did not provide any findings of fact. In
its decision, the court failed to explain the theory by which it
reached the $15,000 award. Instead, it merely stated: "The court
concludes that the sum of $15,000 shall be awarded to Savitri
Chizmar for compensatory damages . . . ." A "stark pronouncement"
that a plaintiff deserves a particular amount of damages, with no
rationale to support the amount chosen, frustrates our ability to
conduct appropriate appellate review. Fairbanks Builders, Inc. v.
Morton DeLima, Inc., 483 P.2d 194, 197 (Alaska 1971). Inadequate
findings are particularly problematic in this case, as the court
chose an award different from the awards suggested by the parties.
See Otis Elevator Co. v. Garber, 820 P.2d 1072, 1076 (Alaska 1991).
Chizmar requested $150,000 in damages whereas Dr. Mackie suggested
an award of less than $4,000.
In the absence of factual findings, we cannot conduct
meaningful appellate review. Searching the briefs and the record
to justify a damage award would require us to weigh the evidence
and thus improperly assume the role of the trial court. See
Merrill v. Merrill, 368 P.2d 546, 548 (Alaska 1962). We therefore
remand to the trial court to enter appropriate findings of fact and
conclusions of law in accordance with Alaska Civil Rule 52(a).
Further, we note that if the trial court's award represents damages
for both economic and non-economic loss, the award should be
itemized as required by AS 09.17.040. [Fn. 5]
IV. CONCLUSION
We AFFIRM the trial court's decision that Dr. Mackie's
Rule 68 offer did not apply to the damages recovered by Chizmar
through the ADR procedure. We REMAND the damage award to the trial
court for sufficiently detailed findings that will enable this
court to conduct meaningful appellate review of the award's
adequacy.
MATTHEWS, Chief Justice, dissenting in part.
I agree with the majority opinion, except its holding
that Civil Rule 68 does not apply because the parties used the term
"alternative dispute resolution"in the title of their stipulation.
The term is a broad one which, taken alone, is devoid of specific
content. The best way to determine what the parties to this case
meant in their "Stipulation For Alternative Dispute Resolution"is
to refer to the text of the stipulation. It is set out in the
margin. [Fn. 1]
The stipulation calls for a bench trial rather than a
jury trial and specifies that the evidence will consist of the
evidence presented at the first trial, deposition testimony of
three named witnesses, and deposition testimony presented to rebut
the testimony of the three witnesses. Final argument is limited to
one hour per side.
The civil rules contemplate the waiver of jury trials,
Civil Rule 38(d), and provide for the limitation of final
arguments, Civil Rule 46(h). The only features of the stipulation
that deviate from the norm for judge-tried cases are evidentiary.
The stipulation limits the evidence that can be presented. It
waives objections to the use of depositions (such as the one-
hundred-mile rule of Civil Rule 32(a)(3)(B)) and to the use of
testimony presented at the first trial (such as the unavailability
requirement of Evidence Rule 804 (b)).
What the stipulation thus calls for is a bench trial on
limited evidence with certain objections waived. [Fn. 2] The
stipulated proceedings are therefore alternative to a jury trial
and alternative to a judge-tried case in which evidence is not
limited and objections are not waived. In my view, those are the
only senses in which the dispute resolution process stipulated to
was "alternative."
There is no settled meaning of the term "alternative
dispute resolution"which would require that provisions of the
rules not waived under the terms of the stipulation nonetheless be
considered waived. It would be difficult to argue that the parties
agreed to dispense with rules such as those pertaining to service,
filing, signing, continuances, or sanctions. (See Civil Rules 5,
5.1, 11, 40(e), and 95). And the majority has implicitly
acknowledged that the dispute resolution method agreed to was not
so alternative that the findings requirement of Civil Rule 52(a)
was waived. In my view, it follows that the offer of judgment
rule, Civil Rule 68, was not waived.
In addition, the concept of waiver implies "an inten-
tional relinquishment of a known right." Alaska Foods, Inc. v.
American Mfrs. Mut. Ins. Co., 482 P.2d 842, 852 (Alaska 1971)
(quoting Hammonds v. State, 442 P.2d 39, 42 (Alaska 1968)).
Without an indication that the parties intended to waive their
respective rights under Civil Rule 68, this principle requires the
conclusion that such rights were not waived.
Finally, Civil Rule 68 is determinative of the amount of
attorney's fees and costs under the civil rules where the eventual
judgment is lower than the offer of judgment. Here the stipulation
expressly provided that fees and costs would be determined "based
upon the guidelines set forth in the Civil Rules." Thus even if
excluding civil rules except those called for by the subject matter
of the stipulation were appropriate, Civil Rule 68 would still have
to be applied for it supplies critical guidelines for the
determination of costs and fees.
For these reasons I would remand this case for the
additional purpose of the application of Civil Rule 68 with respect
to the determination of court-awarded costs and attorney's fees.
FOOTNOTES
Footnote 1:
Although Dr. Mackie made his offer of judgment pursuant to
both Rule 68 and AS 09.30.065, we have previously held that our
construction of Rule 68 generally applies to the interpretation of
the statute. See LaPerriere v. Shrum, 721 P.2d 630, 633 (Alaska
1986).
Footnote 2:
Rule 68 provides in relevant part:
(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 follows:
(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.
Footnote 3:
The stipulation instructing Judge Johnstone to "determine
costs and attorney's fees based upon the guidelines set forth in
the Civil Rules"is insufficient to reserve the applicability of
Rule 68. Because the rule imposes sanctions on a party for
refusing to settle short of trial, an agreement that anticipates
such a settlement necessarily waives the rule's sanctions absent an
express indication to the contrary. We therefore conclude that
this stipulation invoked only the applicability of Civil Rules 79
and 82, the rules that generally govern the award of costs and
attorney's fees.
Footnote 4:
Although Chizmar did not raise this argument below, we
exercise our authority to affirm on any grounds supported by the
record. See Dixon v. Dixon, 747 P.2d 1169, 1175 n.5 (Alaska 1987).
Footnote 5:
Alaska Statute 09.17.040 provides in relevant part:
(a) in every case where damages for personal
injury are awarded by the court or jury, the verdict shall be
itemized between economic loss and noneconomic loss, if any, as
follows:
(1) past economic loss;
(2) past noneconomic loss;
(3) future economic loss;
(4) future noneconomic loss; and
(5) punitive damages.
FOOTNOTES (Dissent)
Footnote 1:
STIPULATION FOR ALTERNATIVE DISPUTE RESOLUTION
IT IS HEREBY stipulated and agreed by and between
counsel for Savitri Chizmar, individually, and for Savitri Chizmar as the natural parent of minor
Cynthia Marie Chizmar and Desiree Michelle Chizmar, and counsel for Scott P. Mackie, M.D.,
that in lieu of the regular trial presently scheduled for November 13, 1995, the following
procedure shall be employed:
1. A complete transcript of the proceedings from the
original trial will be submitted to Judge Johnstone for his review and to assist him in recalling
any testimony from that trial;
2. There will be no "live"testimony presented to
Judge Johnstone for his consideration;
3. The only additional evidence that will be provided
to Judge Johnstone will be in deposition form and shall be limited to the deposition testimony
of Cynthia Chizmar, Tina Lalonde, Psychiatrist Wilford A. Cassell, M.D., and any testimony
defendant wishes to provide to rebut evidence presented by the three witnesses noted above;
4. Each side will be given one hour to argue the case
to Judge Johnstone. That is, plaintiffs would have one hour in total and the defendant would
have one hour in total;
5. The argument before Judge Johnstone would be
held on November 20, 21, or 22, at Judge Johnstone's discretion;
6. Judge Johnstone would then make a determination
as to liability and damages, if necessary;
7. Judge Johnstone would then determine costs and
attorney's fees based upon the guidelines set forth in the Civil Rules;
8. All appellate rights will be preserved for all parties.
Footnote 2:
In Thomson v. Wheeler Construction Co., 385 P.2d 111 (Alaska 1963), we
disapproved of a stipulation deferring evidentiary objections until the end of trial:
Such a practice is totally incompatible with the orderly type of
trial contemplated by the rules of practice and procedure made and promulgated by this court.
These rules may not be stipulated away or nullified by any agreement between the parties to
litigation, even when such an agreement is acquiesced in by the trial judge.
Id. at 115 (emphasis added). The emphasized sentence may be too broad. Arguably
stipulations which do not interfere with the model of an "orderly"trial under the civil rules
should not be prohibited. If that is the test, the stipulation in this case would pass muster,
as would a stipulation waiving the provisions of Civil Rule 68.
