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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Sidney v. Allstate Insurance Company (01/11/2008) sp-6220
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| JOANNE SIDNEY, | ) |
| ) Supreme Court No. S- 12083/S-12084 | |
| Appellant/ | ) |
| Cross-Appellee, | ) |
| ) Superior Court No. | |
| v. | ) 3AN-04-11180 CI |
| ) | |
| ALLSTATE INSURANCE | ) |
| COMPANY, | ) O P I N I O N |
| ) | |
| Appellee/ | ) |
| Cross-Appellant. | ) No. 6220 - January 11, 2008 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sharon Gleason, Judge.
Appearances: Leonard T. Kelley, Kelley &
Canterbury, LLC, Anchorage, for
Appellant/Cross-Appellee. Barry J. Kell,
Call, Hanson & Kell, P.C., Anchorage, for
Appellee/Cross-Appellant.
Before: Fabe, Chief Justice, Eastaugh, and
Carpeneti, Justices. [Matthews and Bryner,
Justices, not participating.]
CARPENETI, Justice.
I. INTRODUCTION
A passenger was injured in an automobile accident and
entered into settlement with the drivers insurance carrier for a
$50,000 Coughlin policy limits settlement the face limits of the
drivers policy, but without additional add-ons of attorneys fees
or prejudgment interest. The passenger then pursued coverage
with her own underinsured motorist (UIM) insurer. Her insurer
disputed the amount of damages and the parties proceeded to
arbitration. Following entry of an arbitration award in the
passengers favor, her carrier paid the amount of the award less
the $50,000 settlement. The passenger requested that the
superior court confirm the full amount of the arbitration award,
arguing that her carrier had failed to raise the issue of the
$50,000 settlement at arbitration and claiming that the carrier
was therefore not entitled to an offset. The superior court
ultimately allowed the carrier to reduce its UIM payment by the
amount of the settlement, but ordered it to pay prejudgment
interest and attorneys fees on the $50,000. The passenger
appeals the reduction of the arbitration award, the courts
calculations of prejudgment interest and fees, and the courts
refusal to award her enhanced fees. Her insurer cross-appeals
and claims the court erred in requiring it to pay add-ons on the
settlement, finding the passenger to be the prevailing party, and
awarding her attorneys fees.
Because UIM coverage does not apply until underlying
liability coverage is exhausted, we conclude that the superior
court correctly reduced the arbitration award by $50,000. But
because we also conclude that the passenger elected to forgo add-
ons on the settlement from the liability insurer, we reverse the
courts order finding her insurer liable for those sums in all but
one respect: The passenger is entitled to a pro rata award of
attorneys fees because her litigation efforts associated with the
settlement procured a benefit for her insurer. We affirm the
order of the superior court in all other respects.
II. FACTS AND PROCEEDINGS
A. Facts
Joanne Sidney was riding as a passenger in a car driven
by William Sidney on January 13, 2000. The Sidneys vehicle
became disabled, and William Sidney got out of the vehicle in an
attempt to divert traffic. A car driven by Musa Kanteh struck
the Sidneys vehicle, injuring Joanne Sidney.
Joanne Sidney was covered under an Allstate automobile
liability policy that provided $50,000 in liability coverage,
$25,000 in medical payments coverage, and underinsured motorist
protection of $50,000 per person/$100,000 per accident. Sidney
also maintained a personal umbrella policy with Allstate that
provided motor vehicle liability coverage and statutory UIM
coverage. That policy provided a $1,000,000 liability limit.
Following the accident, Allstate paid Sidney $25,000 under the
medical payments coverage of her automobile liability policy,
exhausting her medical payments coverage and resulting in a
subrogation claim by Allstate against the driver of the other
vehicle, Musa Kanteh.
Kanteh maintained a liability policy with Safeco
Insurance Company that provided $50,000 in coverage. In May 2003
Sidney settled her claims against Kanteh by entering into a
settlement with Safeco, whereby Safeco paid Sidney $25,000 and
assumed responsibility for satisfying the $25,000 medical
payments lien asserted by Allstate (the $50,000 settlement).
Sidney tendered the settlement offer to Allstate, stating she
intended to accept the offer thereby triggering UIM coverage with
Allstate.
Following the liability settlement with Safeco, Sidney
pursued UIM benefits from Allstate. Sidney and Allstate failed
to reach agreement and they proceeded to arbitration. A one-day
arbitration hearing was held on August 15, 2004. The arbitration
panel ultimately entered an award of $118, 432.1
B. Proceedings
On September 21, 2004, Sidney filed a complaint seeking
to confirm the full arbitration award. She contended that
Allstate had not pled or tried any offset to the arbitration
panel and had not yet paid her the full amount due under the
award. She requested confirmation of the full award plus costs,
attorneys fees, and prejudgment interest as well as payment of
arbitrators fees, post-award fees, costs, and interest.
On October 26, 2004, Allstate forwarded a $95,727.82
payment to Sidney. That amount consisted of $68,432 (the amount
of the original arbitration award less the $50,000 settlement)
plus interest and attorneys fees.2
Allstate then answered Sidneys complaint. It alleged
that Sidney was entitled only to the amount of the arbitration
award over and above the $50,000 settlement and that Sidney was
not entitled to additional payments (or add-ons) of prejudgment
interest, attorneys fees, or costs on the settlement. Shortly
thereafter, Allstate filed an application to vacate, modify, or
remand the arbitration award for clarification. Sidney filed a
limited opposition, noting that Allstate had not made a timely
request to the arbitration panel to offset the $50,000 award.
In March 2005 Allstate moved for summary judgment,
arguing that (1) Alaskas UIM statutory scheme required that
Sidneys $50,000 settlement be deducted from the full arbitration
award before determining the principal amount due under her UIM
coverage; (2) Sidney was not entitled to prejudgment interest or
attorneys fees on the settlement; and (3) Sidney was not entitled
to costs incurred in the arbitration proceeding.
In April 2005 Sidney moved to reduce the full
arbitration award to judgment. She asserted that (1) she was
entitled to add-ons on the full amount of the arbitration award
prior to any claimed offset; (2) Allstate waived any claim for
reduction or offset by failing to raise the issue at arbitration;
and (3) alternatively, Allstate was only entitled to offset the
$25,000 liability payment portion of the settlement from the
award. She also requested costs and fees for both the
arbitration and the confirmation proceedings.
On May 23, 2005, following oral argument, Superior
Court Judge Sharon Gleason issued an order deducting the $50,000
settlement from Sidneys gross arbitration award. But Judge
Gleason also concluded that Sidney was first entitled to
prejudgment interest, costs, and attorneys fees calculated on the
full amount of the award. The court declined to award Sidney the
costs she incurred during the arbitration proceedings.
Allstate then moved for partial reconsideration on the
issue of add-ons on the $50,000 settlement. Judge Gleason denied
the motion, citing our analysis in Coughlin v. Government
Employees Insurance Co. (GEICO)3 and Ruggles ex rel. Estate of
Mayer v. Grow4 but also readily acknowledge[d] that reasonable
minds could differ on this issue.
Sidney requested entry of final judgment, determination
of prevailing party status, and an award of attorneys fees and
costs. Allstate cross-moved for a determination of prevailing
party status. The superior court entered judgment for Sidney in
the amount of $15,440 plus post-judgment interest. Sidney
objected to the courts calculations and moved to amend the
judgment. Allstate filed a partial opposition, but agreed that
the court had erred in its calculations and submitted its own
proposed calculations.
The parties then entered into a stipulation that the
judgment and calculations as set forth in Allstates partial
opposition reflect[] the correct calculation of the final
judgment in view of the courts rulings on the merits. Pursuant
to the parties stipulation, the court issued an amended final
judgment on August 31, 2005, generally adopting Allstates
calculations and entering judgment for Sidney in the amount of
$16,569.17.
Both parties now appeal the amended final judgment and
the superior courts order on summary judgment. Sidney contends
that the trial court erred in (1) reducing her arbitration award
by $50,000; (2) offsetting the $25,000 medical payments claim;
(3) calculating fees and interest on the $50,000 settlement
rather than on the full arbitration award; (4) calculating
interest on past damages; (5) refusing to award Sidney attorneys
fees based on the total arbitration award plus interest; (6)
refusing to award her the costs of the arbitration and the
confirmation proceedings; and (7) refusing to award Sidney
enhanced or full attorneys fees.
Allstate cross-appeals, contending the court erred in
(1) ordering Allstate to pay prejudgment interest and attorneys
fees on the $50,000 settlement; (2) awarding interest on the
$25,000 in medical payments; and (3) finding Sidney to be the
prevailing party.
III. STANDARD OF REVIEW
We review the superior courts grant of summary judgment
de novo,5 and will affirm if there are no genuine issues of
material fact and the winning party was entitled to judgment as a
matter of law.6
Judicial review of arbitration awards is closely
circumscribed.7 The superior court has limited authority to
correct and review arbitration awards and may only vacate,
modify, or correct an arbitration award pursuant to narrow
statutory parameters.8 We review a superior courts review of an
arbitration decision de novo when it deals with questions of law
and contract interpretation.9
Whether a dispute is arbitrable10 and whether a superior
courts decision to affirm an arbitration award is correct11 are
both questions of law that we also review de novo.
In the absence of evidentiary dispute, the existence of
an offset presents a question of law.12 We apply our independent
determination to questions of statutory and contract
interpretation,13 and adopt the rule of law most persuasive in
light of precedent, reason, and policy.14
The determination of whether a prevailing party is
entitled to prejudgment interest is a question of law to which we
apply our independent judgment, keeping in mind that such awards
should be denied only to avoid an injustice.15
We review the superior courts determination of
prevailing party status, as well as its awards of costs and fees,
for abuse of discretion.16 We will find an abuse of discretion
only where the courts determination is manifestly unreasonable17
or when our review of the entire record leaves us with a definite
and firm conviction the trial court erred.18
IV. DISCUSSION
In 1990 Alaska adopted an excess coverage approach to
underinsured motorist insurance.19 The excess approach seeks to
maximize the potential for full compensation by allowing the
purchaser of UIM insurance to supplement available liability
payments with UIM payments to the extent necessary to cover all
actual damages.20 Alaska Statute 28.20.445 provides that UIM
coverage cannot be drawn upon until the limits of liability of
all bodily injury and property damage liability bonds and
policies that apply have been used up by payments, judgments or
settlements.21 Thus, an insured must use up, or exhaust,
available underlying liability policy limits before she can
pursue UIM benefits.22 In this case, neither party disputes that
Sidneys settlement with Safeco exhausted the Safeco policy limits
and triggered Sidneys right to pursue UIM benefits.
A. The Superior Court Correctly Reduced the Arbitration
Award by the $50,000 Liability Settlement.
We first turn to the question of whether the superior
court correctly deducted the $50,000 liability settlement from
Sidneys arbitration award in determining the amount of UIM
benefits Allstate was required to pay. Sidney contends that
because Allstate failed to present evidence of this offset or
raise the issue of the $50,000 settlement at arbitration,
Allstate is required to pay the full arbitration award. Allstate
counters that the arbitration panel was asked to determine the
amount of total damages Sidney incurred as a result of her
accident, rather than what portion of her damages were payable
under her UIM coverage, and thus the court properly reduced the
full arbitration award by the amount of the settlement. Allstate
further argues that the panel lacked the authority to determine
the effect of the liability settlement or to consider offset
claims, and that the reduction is required under statutory
limits regarding UIM recovery. We need not address the precise
question of whether the arbitration panel had the authority to
consider the effect of the $50,000 settlement because we conclude
that the arbitration panel determined a single issue the amount
of Sidneys total damages that did not require nor implicate the
panels consideration of any offsets or reductions.
Arbitrators are afforded broad discretion to fashion
remedies,23 and we recognize that courts considering the
arbitrability of offsets and reductions have routinely upheld
arbitrators authority to determine these issues in similar
contexts.24 In Wing v. GEICO Insurance Co.25 we held that where an
insurance policy granted the arbitration panel the authority to
determine the amount payable under the policy, the panel properly
adjusted the preliminary award downward by providing for offsets
of the insurers previously awarded damages. But we have also
expressed deference to arbitrators determinations of the issue(s)
before them and held that an arbitrators interpretation of the
question presented . . . should not be subjected to plenary
review.26 We therefore accord arbitrators interpretations of the
issues significant weight.27
Generally, the terms of the endorsement are controlling
in the determination of what matters or issues are to be
submitted to arbitration between the insured claimant and the
insurance carrier, except as mandated by statute or by
regulation.28 The UIM insurance provision of the Allstate policy
provides: [T]he right to benefits and the amount payable will be
decided by agreement between the insured person and Allstate. If
an agreement cant be reached, the decision will be made by
arbitration. The policy later provides that [i]f the insured
person or we dont agree on that persons right to receive any
damages or the amount . . . the disagreement will be settled by
arbitration. (Emphasis added.) The language of the Allstate
policy grants the arbitration panel authority to determine two
different and distinct concepts: (1) the total amount of damages
to which an insured is entitled (from the tortfeasor) and (2)
amounts payable under the insurance policy (by the UIM insurer).
While these policy terms are related, they are not mutually
exclusive.29
In her appeal, Sidney conceded (as she did in her
arguments before the arbitration panel) that [t]he only issue to
be determined at arbitration was Sidneys damages resulting from
the January 13, 2000 car wreck. In her arbitration brief, Sidney
asserted that the sole issue for the panel to determine is that
of damages. How much. Neither party contends that the panel
considered or was asked to consider the amount of benefits
payable (or amounts payable) under the Allstate policy.
Moreover, the panels award plainly stated that Joanne Sidney has
been damaged and is entitled to an award of damages . . .
[totaling] $118,432.
The scope of the panels award was confined to a
determination of damages that did not require consideration of
any alleged offsets.30 And unlike in Wing v. GEICO Insurance Co.,31
where we held an arbitration panel had acted within its authority
in reducing a partys award following receipt of briefing on
costs, fees, and offsets, here it appears the panel neither
invited briefing on nor was asked to consider any such issue.
While the panel may very well have had the authority to
consider the effect of the $50,000 settlement on Sidneys damages
awards, it did not do so in this case. As a result, we conclude
that Allstate did not waive its right to assert this issue.32
Moreover, the trial courts reduction was plainly proper
in light of the UIM statutory framework, the purpose underlying
UIM coverage, and the plain terms of the Allstate policy. Alaska
Statute 28.20.445(e)(1) provides that underinsured coverage may
not apply . . . until the limits of liability of all bodily
injury and property damage liability bonds and policies that
apply have been used up by payments, judgments or settlements . .
. . And AS 28.20.445(a)(1) provides that the maximum liability
of a UIM carrier is the lesser of (1) the difference between the
amount of the covered persons damages . . . and the amount paid
to the covered person by or for a person who is or may be held
legally liable for the damages; and (2) the applicable limit of
liability of the uninsured and underinsured motorist coverage.
Allstates policy mirrors this same language:
[Allstates] limit of liability will be the
lesser of:
1. The difference between the
amount of an insured persons
damages . . . and the amount paid
to that insured person for such
damages, by or for a person who is
or may be held legally liable for
damages . . . and
2. The applicable limit of
liability for this coverage.
The Allstate policy further notes that amounts payable under the
policy apply over and above any amounts available to the insured
person . . . [b]y or for a person who is or may be held legally
liable for damages. This language makes clear that Allstates
maximum liability in this case is the difference between Sidneys
total damages $118,432 and the amount previously satisfied by
the Safeco settlement $50,000.
It would be unreasonable to conclude that Sidney
incurred damages of $118,432, but that upon exhausting $50,000
policy limits she was entitled to a UIM award that failed to
reflect her receipt of the underlying benefits. It would also run
counter to Alaskas excess approach to UIM coverage.33 We
therefore affirm the superior courts decision to reduce Allstates
payment by the amount of the liability settlement.
B. Allstate Is Not Estopped from Reducing Its UIM Payment
by the $25,000 Medical Payments Coverage.
Sidney alternatively contends that even if the court
could have reduced her award, Allstate is estopped from receiving
an offset of the $25,000 in medical payments coverage it provided
because it never conceded those funds were an undisputed aspect
of Sidneys damages at arbitration. Allstate responds that
because Sidney is required to exhaust liability policy limits
before pursuing UIM benefits, and because the $25,000 in medical
payments is part of the underlying $50,000 settlement, the
medical payments are a necessary component of Sidneys UIM claim.
We conclude that Sidneys argument fails.
The elements of equitable estoppel are the assertion of
a position by conduct or word, reasonable reliance thereon by
another party, and resulting prejudice.34 We have also adopted
the doctrine of quasi-estoppel, which applies where the existence
of facts and circumstances makes the assertion of an inconsistent
position unconscionable.35 Sidney contends that allowing Allstate
to offset the $25,000 in medical payments results in a windfall
to Allstate because there is no evidence that the past medical
expenses awarded by the arbitration panel are for the same
medical expenses Allstate originally paid.
As discussed above, Sidney is precluded from pursuing
UIM coverage unless and until she exhausts underlying liability
policy limits. If Sidney had received $25,000 directly from
Safeco and nothing more, she would have failed to exhaust the
policy limits and would be precluded from pursuing UIM coverage
altogether. But Safeco assumed responsibility for satisfying
Allstates subrogated claim, and in so doing the $25,000 in
medical payments became a requisite element of Sidneys UIM
coverage claim. We therefore reject Sidneys argument that
Allstate is not entitled to offset the $25,000 it paid for her
medical expenses.36
C. Sidney Is Not Entitled to Prejudgment Interest and
Attorneys Fees on the $50,000 Settlement, with One
Exception.
1. Sidney was not underinsured as to add-ons to the
Safeco policy.
Allstates cross-appeal contends that the superior court
erred in ordering it to pay Sidney prejudgment interest and
attorneys fees on the underlying $50,000 liability settlement.
Allstate makes a number of arguments in support of its claim,
including that (1) the add-ons are amounts payable under the
Safeco liability policy and are therefore excluded from UIM
recovery under Alaskas UIM statutory scheme; (2) allowing Sidney
to recover these sums undermines the purpose of UIM coverage; and
(3) allowing claimants to recover add-ons under these
circumstances will ultimately increase the cost of UIM insurance.
Sidney responds that under Coughlin v. Government Employees
Insurance Co. (GEICO)37 and the UIM statutory framework, she is
entitled to recover add-ons on the settlement from Allstate. For
the reasons set forth below, we reject her argument and reverse
the award of add-ons in all but one respect.
In Coughlin we concluded that costs, interest, and
attorneys fees are not to be included in determining whether
policy limits have been exhausted for the purpose of drawing upon
underinsured motorist coverage in deciding that a party had
exhausted a $50,000 liability policy where the party settled with
the liability insurer for $40,000 plus the insurers assumption of
a $10,000 medical lien.38 We noted that while add-ons were
incorporated into overall policy limits to the extent that
insurers were legally obligated to pay [them], they did not bear
on the question of whether the limits of liability . . . have
been used up for the purposes of triggering the exhaustion
statute.39 That statute, AS 28.20.445(e)(1), provides that UIM
coverage may not apply until the limits of liability of all
bodily injury and property damage liability bonds and policies
that apply have been used up by payments, judgments or
settlements. We looked to the purposes of the statute to ensure
that UIM coverage is secondary rather than primary coverage while
at the same time making the benefit of UIM coverage broadly
available in deciding that limits of liability meant facial
coverage and not add-ons.40 Thus, policy limits were exhausted
for the purposes of pursuing UIM coverage when the face value of
the policy was satisfied, independent of any additional attorneys
fees or prejudgment interest.41
The question in Coughlin concerned what threshold
triggered a UIM providers obligation to provide benefits, not
what amounts are payable once UIM coverage is triggered.
Contrary to Sidneys contention, Coughlin is not dispositive of
the question presented here: whether an insured who exhausts the
facial limits of the underlying policy is entitled to UIM
benefits for amounts that were otherwise recoverable under the
liability policy in the first instance. This issue is governed
by AS 28.20.445(b), which provides:
An amount payable under the uninsured and
underinsured motorist coverage shall be
excess to an amount payable under automobile
bodily injury, death, or medical payments
coverage . . . and may not duplicate amounts
paid or payable under valid and collectible
automobile bodily injury [coverage] . . . .
(Emphasis added.)
Unlike subsection .445(e)(1), subsection .445(b) speaks
of amounts payable rather than limits of liability, a difference
that may be readily understood when considered in light of the
purpose of UIM insurance. Alaskas UIM coverage is premised on the
notion that an injured party may be entitled to UIM coverage to
the extent that the tortfeasors liability insurance coverage is
insufficient to compensate the injured person fully for [their]
loss . . . .42 As aptly noted by one commentator, the
[f]undamental characteristic of the undeirnsured motorist
insurance is that it is only relevant when the tortfeasors
insurance is not adequate to provide indemnification.43 Thus,
where a liability policy provides coverage for add-ons, the
amounts payable may be greater than the policys limits of
liability (as defined in Coughlin to equal facial limits).44
Allstate notes that the use of the term amounts payable
in subsection .445(b) indicates that coverage provided by a UIM
insurer will be over and above any amounts available under an
underlying liability policy, and that here, because attorneys
fees and interest were available to Sidney under the Safeco
policy, Allstate is not liable for those sums. The Allstate
policy includes language similar to that provided in subsection
.445(b): Any amounts otherwise payable for damages under this
coverage shall apply over and above any amounts available to the
insured person because of the bodily injury . . . [b]y or for a
person who is or may be held legally liable for damages.45 Both
the Allstate policy and the statutory language in subsection
.445(b) contemplate that amounts available to Sidney under the
Safeco liability policy may be broader than the policys limits of
liability as interpreted in Coughlin. That we interpreted limits
of liability to exclude add-ons in determining when a liability
policy is exhausted does not lead to the conclusion that the same
definition applies in the context of determining what amounts are
recoverable.46
It is important to note that the Safeco liability
policy is absent from the record. In its cross-appeal, Allstate
notes that Sidney admits prejudgment interest and attorneys fees
were available to her under the Safeco policy. Sidney does not
dispute Allstates allegation on this point but responds that
[Allstate] offered no evidence that the tortfeasor policy
includes interest as part of the facial value of the policy. We
conclude that Sidneys failure to directly dispute that
prejudgment interest and attorneys fees were available to her
under the Safeco policy,47 her election to forgo those amounts
when she settled, and the plain language of the Allstate UIM
policy support the conclusion that Sidney is not entitled to
recover add-ons on her liability settlement from Allstate.
However, nothing in our conclusion alters Coughlins threshold
determination of when UIM coverage may be pursued.48
Because Sidney was entitled to pursue add-ons from
Safeco but elected not to do so, she is not underinsured as to
those amounts.49 To conclude otherwise would conflate the
purposes of primary liability and UIM insurance and award Sidney
sums she elected to forgo in her choice to settle for facial
policy limits. Allowing Sidney to recover all of the add-ons at
issue from Allstate would permit Sidney to render herself
artificially underinsured as to those amounts and force Allstate
to provide for overlapping coverage of select amounts where none
should exist.50 It also awards her prejudgment interest on sums
which she never lost the use of in the first instance.51 Because
Sidney was not underinsured with respect to the sums at issue, we
conclude that with the one exception discussed below, she is not
entitled to UIM recovery of those amounts.52
2. Sidney is entitled to a pro rata award of
attorneys fees and costs from Allstate.
While we conclude that Sidney is not entitled to
receive from her UIM carrier add-ons to the liability settlement,
we also recognize that in pursuing the liability settlement
Sidney procured a direct benefit for Allstate. Is she entitled
to a pro rata award of attorneys fees and cost for this work? We
conclude that she is.
In Cooper v. Argonaut Insurance Co.,53 we interpreted a
workers compensation statute as providing that, where an injured
employee is ordered to reimburse compensation as the result of a
third-party recovery against a tortfeasor, the amount reimbursed
must be reduced by a pro rata share of the attorneys fees
incurred by the injured employee in recovering against the
tortfeasor.54 In Cooper, appellants husband was killed while
working and appellant was paid workers compensation benefits
through her husbands employers insurer, Argonaut. After
appellant filed suit against a third-party tortfeasor and the
case settled, Argonaut sued Cooper to recover the amount of
benefits paid.55 On appeal, we required a deduction from the
amount Cooper had to reimburse Argonaut to reflect the litigation
expenses Cooper incurred that were attributable to Argonauts
share of the recovery. In so holding, we recognized that if the
employer (or the insurance carrier) were not required to pay its
pro rata share of litigation expenses, the entire burden of the
litigation would be borne by the employee and [t]he carrier would
take the benefit of the employers premium and the employees
litigation effort.56
We later discussed this reasoning in another case
affirming application of the common fund doctrine, which provides
that a litigant or lawyer who recovers a common fund for the
benefit of persons other than himself or his client is entitled
to a reasonable attorneys fee from the fund as a whole.57 We noted
that one rationale underlying the common fund doctrine was to
avoid unjust enrichment58 and stated that the doctrine was
implicated any time one litigants success releases well-defined
benefits for a limited and definable group of others.59
Our review of the record and our case law on this issue
convinces us that the rationale underlying these cases applies
equally to the facts presented here. While neither party
addressed this issue below, the parties disputed who was entitled
to add-ons on the $25,000 medical payments portion of the
liability settlement and the superior courts award invokes
analogous case law on this same subject. Judge Gleasons order
awarding Sidney add-ons noted that her decision was consistent
with the supreme courts analysis in this area as set forth in
both Coughlin v. Government Employees Insurance Co.60 and Ruggles
v. Grow.61
While Ruggles does not specifically address the common
fund doctrine, it does discuss an insureds right to recover fees
incurred in pursuing and recovering her insurers subrogated
claim:
When an insurer pays expenses on behalf of an
insured it is subrogated to the insureds
claim. The insurer effectively receives an
assignment of its expenditure by operation of
law and contract. If the insurer does not
object, the insured may include the
subrogated claim in its claim against a third-
party tortfeasor. Any proceeds recovered
must be paid to the insurer, less pro rata
costs and fees incurred by the insured in
prosecuting and collecting the claim.[62]
We therefore conclude that Sidney is entitled to recover from
Allstate a pro rata share of the expenses she incurred seeking
recovery from Safeco.
D. The Superior Court Correctly Refused To Award Sidney
the Costs of the Arbitration Proceeding.
Sidney next appeals the superior courts decision not to
award her the costs she incurred in arbitration. But Sidney did
not request an award of costs from the arbitration panel, and
instead asked for arbitration costs in her April 2005 motion for
summary judgment. The superior court rejected Sidneys request
because she failed to pursue costs before the arbitration panel.
Because Allstate informed Sidney that it would seek a
trial de novo as provided for under the terms of its contract,63
Sidney claims that (1) the arbitration panel may have lacked
jurisdiction to determine costs, (2) Allstates ultimate decision
not to proceed with a trial cannot be used to prejudice her
decision not to requests costs from the panel,64 and (3) the
superior court had the authority to enter an award for
arbitration costs. But there is nothing to support her
suggestion that Allstates actions somehow prevented Sidney from
seeking costs from the arbitration panel.
Alaska Statute 09.43.100, which provides for fees and
expenses of arbitration, states that [u]nless otherwise provided
in the agreement to arbitrate, the arbitrators expenses and fees,
together with other expenses, not including counsel fees,
incurred in the conduct of the arbitration, shall be paid as
provided in the award. The Allstate policy states that [a]ll
expenses and fees, not including counsel fees or adjuster fees,
incurred because of arbitration, will be paid as determined by
the arbitrator. The panels award ordered Allstate to pay the
arbiters fees and stated that the parties can submit motions for
attorneys fees and costs, if necessary. Thus, regardless of
Allstates actions in deciding whether to pursue a trial de novo,
Sidney had the duty to seek the costs of the arbitration if she
wished to obtain them. But Sidney failed to submit a motion for
costs to the panel.
Moreover, the statutes that Sidney relies upon to
assert that the trial court could independently award the costs
of the arbitration are inapposite. Alaska Statute 09.43.170
grants the courts jurisdiction to enforce arbitration agreements
and to enter judgment on an award, but does not grant independent
jurisdiction to award costs where a party has failed to request
them from the arbitrator. Alaska Statute 21.89.020(f)(1) merely
provides that arbitration expenses incurred in insurance disputes
shall be paid as determined by the arbitrator. Neither statute
mandates the courts award of costs here. The trial court ruled
that where a party desires costs associated with the arbitration,
it is incumbent on the party to move for them. This Sidney
failed to do. We therefore affirm the superior courts refusal to
award Sidney her costs of arbitration.
E. Prevailing Party Status and the Courts Refusal To Award
Sidney Enhanced Attorneys Fees
1. Costs of the confirmation proceeding
Sidney next argues that the trial court erred in
failing to award her the costs of the confirmation action in its
August 10, 2005 final judgment. But the courts amended final
judgment, entered pursuant to the parties stipulation, did in
fact award Sidney the costs of the confirmation proceedings in
the amount of $503.38. However, because we vacate the courts
order finding Sidney to be the prevailing party in this case, we
vacate the courts award of the costs of the confirmation action
to Sidney and remand for a new determination of prevailing party
status as set forth below.
2. Prevailing party status
Allstate contends that even if the court correctly
decided summary judgment in Sidneys favor, and Sidney was held to
be entitled to add-ons on the full amount of the arbitration
award, the superior court erred in its determination of
prevailing party status. The superior court found Sidney to be
the prevailing party and awarded Sidney attorney fees in both its
original final judgment and in the subsequent amended final
judgment. Because we reverse the superior courts order awarding
Sidney all of her requested add-ons on the liability settlement,
we vacate the courts determination that Sidney was the prevailing
party and the award of attorneys fees in her favor.65 On remand
the superior court should determine who is the prevailing party
in this action and award attorneys fees accordingly.66
3. The superior court did not err in refusing to
award Sidney enhanced attorneys fees.
Sidneys final argument is that the court erred in
awarding her attorneys fees under the deficiency without trial
schedule of Civil Rule 82(b)(1) rather than awarding her actual
fees under Rule 82(b)(3). In her reply brief she alternatively
contends that the court should have followed Rule 82(b)(2) and
awarded her a certain percentage of her actual fees. She claims
that full fees were proper here because of the intricacy of the
legal issues, the length in time between the arbitration award
and final judgment, the amount of time invested in the case,
Allstates erroneous briefing, and the utility of our decision in
setting precedent for future calculation of UIM arbitration
awards.
But while Sidney requested full attorneys fees in her
motion to the superior court, she did so in a one sentence
statement: Plaintiff requests an award for her actual attorneys
fees and costs. She provided no justification for varying the
presumptive fee award, offered no authority in support of her
argument, and pointed to no authority in support of her request.
Not until filing her reply to Allstates opposition to her motion
for attorneys fees did she articulate a basis for departing from
Rule 82(b)(1) or raise any arguments in support of her original,
cursory statement on this issue. In light of her failure to
sufficiently raise this issue, we conclude her argument on this
point is waived.67
V. CONCLUSION
The arbitration panel determined the total amount of
damages Sidney incurred as a result of her accident, but was not
asked to consider or weigh the applicability of any offsets.
Under Alaskas statutory UIM scheme, Allstate as the provider of
underinsured motorist coverage is liable for only that portion of
damages in excess of available liability insurance. Because
Sidney had already received the benefit of the $50,000
settlement, we AFFIRM the superior courts decision to reduce
Allstates payment by $50,000. But because she elected to forgo
payment of additional prejudgment interest and attorneys fees on
that amount, we REVERSE in all but one respect the courts
decision requiring Allstate to pay add-ons. Because Sidney
procured a benefit for Allstate in entering into settlement with
Safeco, we hold that she is entitled to a pro rata share of
attorneys fees from Allstate. We REMAND this issue to the
superior court for a determination of the amount of this pro rata
share.
Because Sidney did not seek the costs of the
arbitration before the arbitration panel, we AFFIRM the trial
courts refusal to award Sidney the costs of the arbitration.
Finally, we VACATE the award of prevailing party
attorneys fees and REMAND the issue to the superior court for
determination of prevailing party in light of todays opinion.
_______________________________
1 The award included $33,432 for past economic loss;
$10,000 for future economic loss; $65,000 for past non-economic
loss; and $10,000 for future non-economic loss.
2 Allstate forwarded one check of $70,617.12 (equaling
the first $50,000 of its payment plus prejudgment interest and
attorneys fees) from Sidneys automobile policy and one check of
$25,110.70 (the remaining $18,432 of its $68,432 payment plus
prejudgment interest and fees) from her PUP policy.
3 69 P.3d 986, 991-92 (Alaska 2003).
4 984 P.2d 509, 512 (Alaska 1999).
5 Grace v. Ins. Co. of N. Am., 944 P.2d 460, 464 (Alaska
1997).
6 Id.
7 2 Alan I. Widiss & Jeffrey E. Thomas, Uninsured and
Underinsured Motorist Insurance 26.2 at 457 (3d ed. 2005) (The
grounds for a modification or correction by a court are
relatively narrow and are specifically limited so as not to
impinge on matters which go to the merits of an award.).
8 AS 09.43.120 provides a limited set of circumstances
under which the court shall vacate an award, including where the
award was procured by fraud. AS 09.43.130 provides that upon
application within ninety days of delivery of the award, the
court shall modify or correct the award if there was an evident
miscalculation or evident mistake in the subject of the award,
the arbitrators exceeded their authority and awarded upon a
matter not submitted to them, or the award is imperfect in a
matter of form.
9 Univ. of Alaska v. Alaska Cmty. Colleges Fedn of
Teachers, Local 2404, 64 P.3d 823, 825 (Alaska 2003).
10 State Farm Mut. Auto. Ins. Co. v. Dowdy, 111 P.3d 337,
340 (Alaska 2005).
11 Kinn v. Alaska Sales & Serv., Inc., 144 P.3d 474, 482
(Alaska 2006).
12 Falconer v. Adams, 974 P.2d 406, 410 n.2 (Alaska 1999).
13 Holderness v. State Farm Fire & Cas. Co., 24 P.3d 1235,
1237-38 (Alaska 2001).
14 Progressive Ins. Co. v. Simmons, 953 P.2d 510, 512
(Alaska 1998) (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6
(Alaska 1979)).
15 Cole v. Bartels, 4 P.3d 956, 958 (Alaska 2000).
16 Alaska Constr. & Engg, Inc. v. Balzer Pacific Equip.
Co., 130 P.3d 932, 935 (Alaska 2006).
17 Bromley v. Mitchell, 902 P.2d 797, 804 (Alaska 1995).
18 Alderman v. Iditarod Props., 104 P.3d 136, 140 (Alaska
2004).
19 Simmons, 953 P.2d at 514.
20 Id. at 517.
21 AS 28.20.445(e)(1).
22 Coughlin v. Govt Employees Ins. Co. (GEICO), 69 P.3d
986, 988-89 (Alaska 2003).
23 Alaska Pub. Emloyees Assn. v. State Dept of Envtl.
Conservation, 929 P.2d 662, 666 (Alaska 1996).
24 See Klimek v. Horace Mann Ins. Co., 14 F.3d 185, 189
(2d Cir. 1994) (under broad arbitration clause insurers offset
claims should be decided by arbitrators along with other defenses
of insurer to its duty to provide coverage); Zimmerman v.
Illinois Farmers Ins. Co., 739 N.E.2d 990, 996 (Ill. App. 2000)
(where parties agreed to submit amount of payment which may be
owing under this coverage to arbitration, insurer required to
submit setoff and other issues); Cole v. Inland Natl Ins. Co.,
273 N.E.2d 65, 68 (Ill. App. 1971) (insurer required to raise
setoff argument during arbitration to avoid waiver); In re
Liberty Mut. Ins. Co. v. Tetteh, 277 A.D.2d 239, 240 (N.Y. App.
Div. 2000) (extent of insurers liability and availability of
offsets in UIM arbitration matter determined by arbitrator). But
see Assicurazioni Generali, S.P.A. v. Clover, 195 F.3d 161, 165
(3d Cir. 1999) (issue of UIM coverage and setoff not subject to
arbitration under clause permitting arbitration of damages
disputes).
25 17 P.3d 783, 786-87 (Alaska 2001).
26 Dept of Pub. Safety v. Pub. Safety Employees Assn., 732
P.2d 1090, 1096 (Alaska 1987); see also id. at 1096 n.8 ([I]f the
arbitrator had adhered to a strict interpretation of the
submitted issue and limited its interpretation [to a solitary
issue] we would likewise defer to this construction of the issue
for arbitration.); Sea Star Stevedore Co. v. Intl Union of
Operating Engrs, Local 302, 769 P.2d 429, 431 (Alaska 1989)
(noting arbitrator does not have authority to reach merits of
grievance not submitted).
27 Sea Star Stevedore Co., 769 P.2d at 431 n.7 (quoting
Pub. Safety Employees, 732 P.2d at 1097).
28 8 Patrick D. Kelly, Blashfield Automobile Law and
Practice 332.6 at 381 (3d ed. 1987).
29 See Zimmerman v. Illinois Farmers Ins. Co., 739 N.E.2d
990, 995 (Ill. App. 2000) (discussing distinction between damages
and payment and noting insured entitled to damages from
tortfeasor, but payment from UIM insurer).
30 While the arbitration demand charging the panel with
the issue(s) to be addressed at the hearing is absent from the
record, our review of the record as a whole readily supports this
conclusion.
31 17 P.3d 783, 786-87 (Alaska 2001).
32 We recognize that other courts have held where an
arbitrator had broad authority under the contract, the parties
were obligated to raise any offset claims. See Zimmerman, 739
N.E.2d at 992 ([P]arties may not subvert the arbitration process
by failing to raise a matter which falls within the ambit of the
issues submitted, then later asking the court to determine the
matter in a subsequent proceeding.) (quotations omitted).
33 Excess coverage . . . strives to provide additional
coverage, as needed to fully compensate injured motorists after
available liability coverage has been completely exhausted.
Curran v. Progressive Nw. Ins. Co., 29 P.3d 829, 832 (Alaska
2001).
34 Maynard v. State Farm Mut. Auto. Ins. Co., 902 P.2d
1328, 1330 (Alaska 1995) (quoting Jamison v. Consol. Utils.,
Inc., 576 P.2d 97, 102 (Alaska 1978)).
35 Jamison, 576 P.2d at 102.
36 In addition, Sidney has not provided sufficient
evidence to support her estoppel claim. She provides no evidence
that she relied on Allstates position or that she did so to her
detriment, and offers no support for her argument that an insurer
must concede medical payments are an undisputed aspect of a
partys damages in order to later receive a credit or offset for
an initial payment of benefits. Cf. Jamison, 576 P.2d at 102-03
(discussing relevant criteria for quasi-estoppel claim, including
whether party asserting inconsistent position gained advantage
through first position, magnitude of inconsistency, changed
circumstances, whether inconsistency was relied on by party to
his detriment, and whether first assertion made with full
knowledge of facts).
37 69 P.3d 986 (Alaska 2003).
38 Id. at 989.
39 Id. at 991.
40 Id.
41 Id. at 992.
42 Progressive Ins. v. Simmons, 953 P.2d 510, 517 n.6
(Alaska 1998) (emphasis added) (quoting State Auto. Mut. Ins. Co.
v. Youler, 369 S.E.2d 737, 748 (W. Va. 1990)).
43 2 Alan I. Widiss & Jeffry E. Thomas, Uninsured and
Underinsured Motorist Insurance 26.2 at 457 (3d ed. 2005).
44 See Coughlin, 69 P.3d at 991-92.
45 Allstate notes that Sidneys personal umbrella policy
does not contain UIM coverage but concedes that under our case
law, the terms of coverage are provided by statute. See
Holderness v. State Farm Fire & Cas. Co., 24 P.3d 1235, 1241
(Alaska 2001).
46 See Coughlin, 69 P.3d at 992.
47 There is no indication that Sidney, as the injured
party who settled with Safeco, did not have access to the
complete terms of the Safeco policy. But she has wholly failed
to dispute Allstates allegation or directly claim that the add-
ons were unavailable to her under the Safeco policy. See State
v. ONeill Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980)
(Failure to argue a point constitutes abandonment of it.).
48 Under our holding today, a party pursuing UIM coverage
is required to do nothing more or less than what is required
under Coughlin: exhaust facial policy limits. Whether she (1)
exhausts the underlying policy via settlement for facial limits;
(2) exhausts the underlying policy via settlement for facial
limits and add-ons; or (3) proceeds to trial, receives a
favorable verdict, and recovers full policy limits plus add-ons,
she is in the same position to the extent that in each situation
she is then eligible to pursue UIM recovery. The difference is
that in the first scenario, the insured forfeited recovery of add-
ons. But in all cases, the UIM coverage is triggered the moment
facial limits are exhausted.
49 See State Farm Mut. Auto. Ins. Co. v. Lestenkof, 144
P.3d 504, 509 (Alaska 2006) (holding that UIM provider not liable
for fees where party not underinsured as to those amounts).
50 A party cannot create an underinsured situation upon
accepting a less than liability limits settlement in an amount
under the victims own policy coverage. 8 Patrick D. Kelly,
Blashfield Automobile Law & Practice 315.4 at 550 (3d ed. 1987).
51 Prejudgment interest is awarded to compensate a party
for the loss of use of money. Liimatta v. Vest, 45 P.3d 310,
321(Alaska 2002). Nowhere does Sidney assert that she was
deprived of the use of the $25,000 in medical payments such that
an award of prejudgment interest on this amount is proper.
52 Sidney contends that the court applied an incorrect
prejudgment interest rate when calculating the amount of add-ons
due on the liability settlement. Because we decide that Sidney
is not entitled to recovery of prejudgment interest in the first
instance, we do not address this argument.
53 556 P.2d 525 (Alaska 1976).
54 Id. at 525-26.
55 Id. at 526.
56 Id. at 527.
57 Edwards v. Alaska Pulp Corp., 920 P.2d 751, 754 (Alaska
1996) (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478
(1980)).
58 Id. at 754.
59 Id. at 755.
60 69 P.3d 986, 991-92 (Alaska 2003).
61 984 P.2d 509, 512 (Alaska 1999).
62 Id. at 512 (emphasis added and citations omitted).
63 The trial de novo clause in the Allstate contract
provides that when any arbitration award exceeds the Financial
Responsibility limits in the State of Alaska, either party has a
right to trial on all issues in a court of competent
jurisdiction.
64 We decline Sidneys two-sentence invitation, contained
in a footnote, to rule the trial de novo clause unenforceable as
a matter of law. She did not raise this argument to the superior
court and has further failed to give the issue sufficient
attention to merit our appellate review. See Adamson v. Univ. of
Alaska, 819 P.2d 886, 889 n.3 (Alaska 1991) ([W]here a point is
given only a cursory statement in the argument portion of a
brief, the point will not be considered on appeal.).
65 See Romulus v. Anchorage Sch. Dist., 910 P.2d 610, 619
(Alaska 1996) (vacating attorneys fee award and remanding for new
determination of prevailing party status in light of decision to
reverse superior court on issue of partys unpaid suspension).
66 See Day v. Moore, 771 P.2d 436, 437 (Alaska 1989)
(granting superior court broad discretion in determining
prevailing party).
67 See State Farm Auto. Ins. Co. v. Lawrence, 26 P.3d
1074, 1076 (Alaska 2001) (holding that party waived argument by
failing to adequately address issue below); Adamson, 819 P.2d at
889 n.3 (holding that where point given only cursory treatment in
argument portion of brief, waiver not correctable by arguing
issue in reply brief).
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