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Andrus v. Lena (3/26/99), 975 P 2d 54
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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, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
AMY ANDRUS, )
) Supreme Court No. S-8060
Appellant, )
) Superior Court No.
v. ) 3AN-96-161 CI
)
PERPARIM LENA, ) O P I N I O N
)
Appellee. ) [No. 5098 - March 26, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Brian C. Shortell, Judge.
Appearances: Paul W. Waggoner, Anchorage, for
Appellant. George M. Kapolchok, Law Offices of George M.
Kapolchok, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
MATTHEWS, Chief Justice.
I. INTRODUCTION
Perparim Lena received a $39,000 jury verdict against Amy
Andrus for a personal injury claim arising from an automobile
collision. The superior court, finding Lena's offer of judgment
more favorable to Andrus than the final judgment, awarded Lena an
additional five percent interest pursuant to Alaska Civil Rule 68.
The court also held that Lena was the prevailing party, awarding
him $10,000 in attorney's fees pursuant to Alaska Civil Rule
82(b)(3) and an additional $3,162 in actual paralegal fees.
Because the trial court erred in several respects, we vacate these
awards and affirm only the ruling that Lena is the prevailing
party.
II. FACTS AND PROCEEDINGS
On January 8, 1996, Lena filed a personal injury lawsuit
against Andrus. On November 15 Lena served Andrus with an offer of
judgment under Civil Rule 68. In it, he offered to settle the case
for $38,000 plus costs pursuant to Civil Rule 79, with 10.5%
interest from the date of the accident, and attorney's fees
calculated pursuant to Civil Rule 82. Andrus rejected the offer.
Prior to trial, Andrus conceded her negligence, leaving
only the issues of causation, injury, comparative negligence, and
damages for the jury. The jury found that Andrus's negligence was
a legal cause of Lena's injuries. It also found that Lena was
negligent, but found that his negligence did not cause his
injuries. It awarded Lena $39,000 in damages, which included
$16,397 in past damages and $22,603 in future damages.
The superior court then entered final judgment against
Andrus. It held that Lena's offer of judgment was more favorable
to Andrus than the judgment, and applied the penalty provision of
Rule 68 by setting both the prejudgment and post-judgment interest
on the damage award at 15.5%. It also found that Lena was the
prevailing party and awarded him attorney's fees under Rule
82(b)(1); $3,162 for actual paralegal fees; and an enhanced
attorney's fee award of $10,000 under Rule 82(b)(3)(F), (G), (J),
and (K), emphasizing that Andrus had initially refused to concede
liability and had rejected Lena's more favorable offer of judgment.
Andrus appeals the award of Rule 68 interest, attorney's
fees, and paralegal fees.
III. DISCUSSION
A. It was Error to Hold that Lena's Rule 68 Offer of
Judgment Was More Favorable to Andrus than the Judgment. [Fn. 1]
Andrus argues that the superior court erred in applying
the Rule 68 interest penalty against her. She claims that, with
prejudgment interest properly calculated on the full amount of the
offer but only on the past damage portion of the judgment, the
offer of judgment was not more favorable to her than the final
judgment. We agree.
Where the party defending against a claim rejects an
offer of judgment more favorable to the offeree than the final
judgment, the superior court must increase the prejudgment interest
award by five percent. Alaska R. Civ. P. 68(b)(2); AS 09.30.065.
[Fn. 2] To determine whether an offer is more favorable than a
judgment, we must add "interest to the date [of] the offer"to the
jury award. Farnsworth v. Steiner, 601 P.2d 266, 269 n.4 (Alaska
1979). Since the offer in this case was for a set amount plus
prejudgment interest from the date of the accident, we must also
add prejudgment interest to the offer to compare the value of the
two amounts. [Fn. 3]
First, we calculate the amount of prejudgment interest on
the $39,000 jury award. Lena's argument assumes that we should
calculate prejudgment interest on the entire amount of the jury
award. We reject his argument because "prejudgment interest should
be awarded only as to the past damages." McConkey v. Hart, 930
P.2d 402, 406 (Alaska 1996). Therefore, we calculate prejudgment
interest only on the jury's award of $16,397 in past damages, which
makes the judgment's value approximately $44,165. [Fn. 4]
Next, we calculate the amount of the prejudgment interest
on the $38,000 offer of judgment. Lena argues that we should
calculate prejudgment interest only on the portion of the offer
that corresponds to the jury's award of past damages, instead of on
the entire amount. He argues that Farnsworth allows the court to
view the offer through a "retrospectoscope,"and calculate
prejudgment interest using "the real numbers as decided by the jury
rather than applying prejudgment interest to everything." Using
his theory, we would calculate prejudgment interest on the offer
based on the percentage of past damages the jury actually awarded.
We reject Lena's argument because it would make the offer
indefinite -- neither party would know how much the offer was
actually worth until the jury made an award. See Myers v. Snow
White Cleaners & Linen Supply, Inc., 770 P.2d 750, 752-53 (Alaska
1989) ("One of the protections afforded by the Civil Rule 68
procedure is that the offer of judgment must be definite. This
protection is designed to avoid post-trial litigation concerning
the meaning of the offer.") (citing Davis v. Chism, 513 P.2d 475,
481 (Alaska 1973) (internal citation omitted)). Furthermore,
Lena's theory is not a plausible reading of the offer, which we
interpret as a contract. See Jaso, 923 P.2d at 801. If Andrus had
accepted Lena's offer, the parties could only have calculated
prejudgment interest on the entire $38,000. Therefore, we will
calculate prejudgment interest on the entire amount of the offer,
which makes the offer's value approximately $49,970. [Fn. 5]
When prejudgment interest is properly applied to the
entire $38,000 of the offer but only to the past damages portion of
the jury award, the offer clearly was not more favorable to Andrus
than the jury award. [Fn. 6] We therefore hold that the court
erred in applying the Rule 68 interest penalty. [Fn. 7]
B. The Superior Court Did Not Abuse Its Discretion by
Finding that Lena Was the Prevailing Party. [Fn. 8]
Andrus argues that the superior court erred by finding
that Lena was the prevailing party. She argues that the court
should have declared that neither party prevailed in this case
because the jury rejected "much of plaintiff's damage claims."
"[T]he prevailing party is the one who prevailed on the
main issues." Blumenshine v. Baptiste, 869 P.2d 470, 474 (Alaska
1994). A plaintiff may still prevail even if he or she failed to
recover all of the relief sought. See id.; see also Alaska Placer
Co. v. Lee, 553 P.2d 54, 62-63 (Alaska 1976) (holding that
plaintiffs who sought $73,298, but were only awarded $34,026 after
offsets, were the prevailing parties). However, when each party
prevails on a main issue, the court retains the discretion to not
award any attorney's fees. See Shepherd v. State, Dep't of Fish &
Game, 897 P.2d 33, 44 (Alaska 1995) (citing Tobeluk v. Lind, 589
P.2d 873, 877 (Alaska 1979)).
We hold that the superior court did not abuse its
discretion by finding that Lena was the prevailing party. The
jury, on a special verdict form, found the following issues in
Lena's favor: 1) Andrus's negligence was a legal cause of Lena's
injuries; 2) Lena's own negligence was not a legal cause of his
injuries; and 3) Lena suffered a total of $39,000 in damages as a
result of Andrus's negligence. Thus the superior court did not
abuse its discretion by finding that Lena prevailed on the main
issues.
C. It Was an Abuse of Discretion to Enhance the Rule 82
Attorney's Fees by $10,000. [Fn. 9]
1. It was an abuse of discretion to consider the offer
of judgment in enhancing fees.
The superior court awarded Lena an enhanced attorney's
fee award based partially on its mistaken assumption that Andrus
had rejected an offer of judgment more favorable to her than the
judgment. Andrus argues that the superior court improperly
considered the offer of judgment in awarding enhanced attorney's
fees.
Since the 1993 amendments to Rule 82, trial courts can
consider whether to increase an offeror's attorney's fees award
when he or she has made an offer of judgment more favorable to the
offeree than the judgment. See Fairbanks North Star Borough v.
Lakeview Enterprises, Inc., 897 P.2d 47, 62 (Alaska 1995). Here,
however, the court relied on its erroneous assumption that Lena's
offer of judgment was more favorable to Andrus than the judgment.
Since the offer was not more favorable to Andrus than the judgment,
the superior court abused its discretion by increasing Lena's
attorney's fees on this basis. We thus remand the attorney's fee
award so the superior court can determine whether other factors
justify enhancing the award.
2. It was an abuse of discretion to enhance fees when
Lena's counsel failed to submit records which gave a brief
description of the services provided.
Andrus also argues that Lena did not submit proper
records to support his request for enhanced attorney's fees. Lena
argues, however, that this rule no longer applies after the 1993
amendments to Civil Rule 82(b)(3)(C), which allow the court to
consider the reasonableness of the hourly rates and the hours
expended. He argues that since he was not seeking actual fees, he
was only required to submit the total hours worked and the hourly
rate.
"[W]hen counsel requests attorney's fees, other than
based on the schedule in Rule 82(a)(1), accurate records of the
hours expended and a brief description of the services reflected by
those hours should be submitted." Hayes v. Xerox Corp., 718 P.2d
929, 939 (Alaska 1986) (remanding for superior court to order
counsel to "itemize the hours and nature of the work spent on this
case"). We have not limited this rule to situations where the
party seeks actual fees. Furthermore, a brief description of the
work performed is also necessary to allow the superior court to
determine the reasonableness of the hours expended when it awards
enhanced fees.
We thus hold that Lena was required to submit records
with a brief description of the services provided, the hours
worked, and the hourly rate to support his motion for enhanced
attorney's fees. Since Lena submitted only total hours and rates,
but no breakdown of the services provided, we also remand on this
issue so the court can request these records when it reconsiders
its enhanced award.
D. It Was Error to Enter Final Judgment Without Calculating
Lena's Rule 82 Attorney's Fees. [Fn. 10]
The final judgment in this case provided that the
"plaintiff is awarded attorney fees pursuant to Rule 82 and in
addition is awarded the sum of $10,000." Andrus argues that the
superior court abused its discretion by failing to specify the
amount of the Rule 82 attorney's fees in the final judgment. We
agree.
Rule 82(d) provides that
Attorney's fees upon entry of judgment by
default may be determined by the clerk. In all other matters the
court shall determine attorney's fees.
(Emphasis added.) The rule, therefore, clearly provides that the
court must calculate the fees. See id. On remand, the court
should calculate the amount of attorney's fees. [Fn. 11]
E. It Was Error to Award Actual Paralegal Fees to Lena. [Fn.
12]
In the final judgment, the superior court stated that
"plaintiff is awarded paralegal fees in the amount of $3,162,"the
actual amount of costs Lena requested. Andrus argues that the
superior court erred in awarding actual paralegal fees. We agree.
Prior to the 1995 amendments to Rule 79 and Rule 82,
actual paralegal expenses which were necessarily incurred were
recoverable as costs under Rule 79(b). See, e.g., Rule 79 (1994);
Yurioff v. American Honda Motor Co., 803 P.2d 386, 390-91 (Alaska
1990).
However, Rules 79 and 82 were amended, effective July 15,
1995. See Alaska Supreme Court Order No. 1200 (May 4, 1995). Rule
79(b) then specifically stated that "[f]ees for investigators,
paralegals or law clerks shall not be allowed as costs."[Fn. 13]
In addition, subsections (b)(2) and (b)(4) of Rule 82 were amended
to include these types of fees, but only in limited circumstances.
[Fn. 14] When the prevailing party does not recover a money
judgment, Rule 82(b)(2) allows him or her to recover either twenty
or thirty percent of the reasonable actual attorney's fees which
were necessarily incurred, including paralegal fees for "legal work
customarily performed by an attorney." Similarly, Rule 82(b)(4),
which allows partial recovery of fees when default judgment is
entered, was also amended so that actual fees include legal work
performed by a paralegal.
Lena argues, however, that these amendments did not
overrule the line of cases which provided that actual paralegal
fees could be recovered as costs "necessarily incurred"under Rule
79(b). He emphasizes that the Alaska Rules of Civil Procedure do
not currently provide for a separate recovery of paralegal fees
under Rule 82(b)(1) when a party recovers a money judgment. He
argues that allowing full recovery of paralegal fees which were
"necessarily incurred"would fill this void, asserting that it
would be "senseless"to suggest that paralegal fees are only
recoverable when a prevailing party recovers no monetary award or
when there is a default judgment.
We reject this argument. The amendments were intended to
remove paralegal fees from Rule 79, where the fees had been fully
compensated, and provide for only partial compensation under Rule
82. Rule 82, as amended, leaves no void. Instead, under subsec-
tion (b)(1), attorney's fees are only recovered at a certain
percentage rate of the monetary recovery. The schedule in
subsection (b)(1) is intended to partially compensate for
attorney's fees -- whether actually performed by the attorney or
delegated to a paralegal, law clerk, or investigator. The other
sections provide for partial awards of attorney's fees, including
paralegal fees, when this schedule does not apply. We thus hold
that the superior court erred in awarding actual paralegal fees in
addition to the attorney's fees calculated under Rule 82(b)(1).
[Fn. 15]
IV. CONCLUSION
We VACATE the award of Civil Rule 68 interest, the
attorney's fee award, and the award of actual paralegal fees, and
REMAND to the superior court for proceedings consistent with this
opinion. We AFFIRM the superior court's finding that Lena was the
prevailing party.
FOOTNOTES
Footnote 1:
The question of whether an offer of judgment is more favorable
to the offeree than the judgment is a question of law which we
review de novo. See Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska
1996); Farnsworth v. Steiner, 601 P.2d 266, 269-70 & n.4 (Alaska
1979).
Footnote 2:
Rule 68 has been amended and the previous version (applying to
cases filed before August 7, 1997) is applicable to the present
case. The penalty provision of that previous version of Rule 68
provided:
(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:
. . .
(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.
AS 09.30.065, in turn, provided that if the party
defending against the claim rejects a valid offer of judgment, and
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 of judgment will be increased by five percent. AS
09.30.065 was amended in 1997, but the amended statute does not
apply to cases arising before August 7, 1997. Ch. 26 sec. 55, SLA
1997. Because Lena's accident occurred in 1994, the present case
is therefore governed by AS 09.30.065 in its pre-amendment form.
Footnote 3:
The mathematical formula to compute the value of a judgment
under Rule 68 is:
J = (V + PI) + (AF + C),
for which
J = Judgment for computation under Rule 68 to determine
whether the Offer of Judgment had been exceeded;
V = Jury verdict;
PI = Prejudgment interest accrued prior to the Offer of
Judgment;
AF = Attorney's fees calculated under the "Contested
Without Trial"column of Rule 82(b)(1);
C = Costs allowable and incurred as of the Offer of
Judgment.
See Farnsworth, 601 P.2d at 269 n.4; Alaska R. Civ. P. 82(b)(1).
Lena's offer was for a base amount of $38,000 plus fees,
costs, and prejudgment interest, all calculated pursuant to the
Rules of Civil Procedure. It is not necessary to calculate the
amount of attorney's fees and costs incurred by the offeree prior
to the offer, because they would add proportional amounts to the
offer and the judgment.
Footnote 4:
Both parties agree that the prejudgment interest should be
calculated from January 22, 1994, the date of the accident, to
November 15, 1996, the date of the offer. For ease of comparison
we approximate both figures based on three years of interest.
Thus, PI = ($16,397 x 10.5% x 3 years) = $5,165, and J = ($39,000
+ $5,165) = $44,165.
Footnote 5:
PI = ($38,000 x 10.5% x 3 years) = $11,970, and the offer =
($38,000 + $11,970) = $49,970.
Footnote 6:
Andrus would have had to pay approximately $49,970 plus
attorney's fees and costs if he had accepted the offer of judgment,
but will only have to pay approximately $44,165 plus attorney's
fees and costs under the judgment.
Footnote 7:
We note that the superior court also erred by increasing the
post-judgment interest pursuant to the Rule 68 penalty provision.
Rule 68(b) clearly provides that "prejudgment interest accrued up
to the date judgment is entered shall be adjusted . . . ."
(emphasis added); see also, AS 09.30.065. There is no provision
for increasing post-judgment interest.
Footnote 8:
We review the superior court's determination as to which party
is the prevailing party for an abuse of discretion. See Barber v.
Barber, 915 P.2d 1204, 1209 n.10 (Alaska 1996) (citing Apex Control
Sys. v. Alaska Mechanical, Inc., 776 P.2d 310, 314 (Alaska 1989)).
Footnote 9:
We review an award of attorney's fees for abuse of discretion,
and will affirm the trial court's determination unless it is
arbitrary, capricious, manifestly unreasonable, or improperly
motivated. See Alaska Center for the Environment v. State, 940
P.2d 916, 921 n.4 (Alaska 1997).
Footnote 10:
We review issues of statutory interpretation de novo. SeeState, Dep't of Revenue, Child Support Enforcement Div., ex rel.
Valdez v. Valdez, 941 P.2d 144, 148 (Alaska 1997) (citing Hertz v.
Carothers, 784 P.2d 659, 660 (Alaska 1990)).
Footnote 11:
We note that in Lena's motion for attorney's fees, he included
$3,500 in costs when calculating the amount of Rule 82(b) fees.
Lena now concedes, however, that Rule 82 fees can only be
calculated on the total of the judgment plus prejudgment interest,
but not costs. See Rule 82(b)(1). On remand, the court should
exclude the amount of costs from the attorney's fees calculation.
Footnote 12:
See supra note 10.
Footnote 13:
Rule 79(b) was amended again by SCO 1306, effective January
15, 1998. The new version does not contain the quoted language.
Footnote 14:
Rule 82(b) now provides in relevant part:
(2) In cases in which the prevailing
party recovers no money judgment, the court shall award the
prevailing party in a case which goes to trial 30 percent of the
prevailing party's reasonable actual attorney's fees which were
necessarily incurred, and shall award the prevailing party in a
case resolved without trial 20 percent of its actual attorney's
fees which were necessarily incurred. The actual fees shall
include fees for legal work customarily performed by an attorney
but which was delegated to and performed by an investigator,
paralegal or law clerk.
. . . .
(4) Upon entry of judgment by default,
the plaintiff may recover an award calculated under subparagraph
(b)(1) or its reasonable actual fees which were necessarily
incurred, whichever is less. Actual fees include fees for legal
work performed by an investigator, paralegal, or law clerk, as
provided in subparagraph (b)(2).
(Emphasis added.)
Footnote 15:
We note that the amount of paralegal fees can be considered as
a factor under Rule 82(b)(3) to deviate from the (b)(1) schedule.
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