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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Rhodes v. Erion (08/01/2008) sp-6293
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
| EVIE RHODES, | ) |
| ) Supreme Court No. S- 12402 | |
| Appellant, | ) |
| ) Superior Court No. 3AN-03-09126 CI | |
| v. | ) |
| ) O P I N I O N | |
| BECKY ERION, | ) |
| ) No. 6293 August 1, 2008 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Mark Rindner, Judge.
Appearances: Jeffrey J. Barber, Law Offices
of Steve Sims, Anchorage, for Appellant.
Gregory R. Henrikson, Walker & Eakes,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Carpeneti, and Winfree, Justices.
FABE, Chief Justice.
I. INTRODUCTION
Evie Rhodes was involved in a car accident with Becky
Erion, and Rhodes sued Erion. Erion made three offers of
judgment to Rhodes under Alaska Civil Rule 68, but Rhodes failed
to accept these offers. The case proceeded to trial, and the
jury awarded Rhodes $18,281.85 in damages. This verdict was at
least five percent less favorable to Rhodes than an offer made by
Erion, and Rhodes was therefore liable for fifty percent of
Erions reasonable actual attorneys fees under Rule 68. The trial
court awarded fees of $42,263.50, which offset the damages
awarded to Rhodes and left Rhodes with a balance of $17,411.45
payable to Erion. Rhodes asked the trial court to reconsider its
award of attorneys fees, requesting that it apply the Alaska
Civil Rule 82(b)(3) factors to reduce the award. The trial court
declined to do so.
Rhodes appeals the award of attorneys fees, contending
that the trial courts refusal to reduce the award was an abuse of
discretion and that Rule 68 violates the due process and equal
protection clauses of the Alaska Constitution. Because we
conclude that the trial court did not abuse its discretion in
declining to reduce Erions award of attorneys fees, and because
Rhodes waived her constitutional arguments, we affirm.
II. FACTS AND PROCEEDINGS
On February 15, 2003, a car driven by Becky Erion
collided with a car in which Evie Rhodes was a passenger at the
intersection of A Street and 38th Avenue in Anchorage. Rhodess
car was stopped when Erions car hit it and Rhodes sustained
injuries. Rhodes sued Erion in superior court in June 2003.
Between 2004 and 2005, Erion made three Rule 68 offers
of judgment to Rhodes, ranging from $20,000 to $30,000, two of
which were inclusive of interest, Rule 82 attorneys fees, and
allowable costs. These offers were not accepted.1 In October
2004, and again in October 2005, Rhodes requested and was granted
continuances. The case proceeded to a jury trial in June 2006.
The trial lasted eight days, and the trial court
characterized Rhodess prosecution of the case as vigorous.
Rhodes called eleven witnesses; Erion called two. Although
Rhodes sought a million dollar plus verdict, the jury ultimately
awarded Rhodes $18,281.85 in past damages and nothing for future
losses. With prejudgment interest, Rule 82 attorneys fees, and
Alaska Civil Rule 79 costs, Rhodess verdict totaled $27,016.12.
Erion calculated this amount to be at least five percent less
favorable to Rhodes than Erions June 2004 offer of $30,000, and
moved for attorneys fees under Rule 68.2 Rhodes requested
enhanced attorneys fees under Rule 82, pointing to the complexity
and length of the trial, the reasonableness of the claims and
defenses presented by each side, and other equitable factors.
Rhodes argued that Erions June 2004 offer of judgment
was invalid, that Rhodess judgment actually exceeded Erions
offers, and that Rule 82(b)(3)(I), (J), or (K) required the trial
court to deny Erion attorneys fees. The trial court was
unconvinced by Rhodess arguments and granted Erion fifty percent
of her attorneys fees under Rule 68, an award totaling
$42,263.50. This award completely offset Rhodess judgment, which
with prejudgment interest totaled $24,852.05, and left her with a
balance of $17,411.45 payable to Erion.
Rhodes filed a motion for reconsideration, requesting
an itemization of Erions legal bills to assess the reasonableness
of the fees. She also argued that the trial court should have
reduced the award under Rule 82(b)(3)(I), (J), or (K). The trial
court directed Erion to respond to Rhodess request for itemized
bills but confirmed that Erion need not address Rhodess second
argument because the court found no basis to apply the Rule
82(b)(3) factors. Erion complied with the trial courts order and
submitted itemized bills to Rhodes and the trial court. Rhodes
then submitted supplemental briefing, contending that Erions fees
were unreasonable and that the trial court should reduce the
award under the Rule 82(b)(3) factors. On October 4, 2006, the
trial court denied Rhodess motion for reconsideration, finding
that its award was reasonable given the vigorous prosecution of
the case and the exposure to the [defendant].
The parties agree that Rhodess verdict is at least five
percent less favorable to her than Erions June 2004 offer of
$30,000 and that Rhodes is therefore liable to Erion for a
portion of Erions attorneys fees under Rule 68. Rhodes contends
that the trial court erred in its refusal to reduce the award
under the Rule 82(b)(3) factors and argues alternatively that
Rule 68 is unconstitutional.
III. STANDARD OF REVIEW
We review awards of attorneys fees for abuse of
discretion.3 Such abuse exists if the award is arbitrary,
capricious, manifestly unreasonable, or improperly motivated.4
We interpret our civil rules and address constitutionality de
novo, adopting the rule of law most persuasive in light of
precedent, policy, and reason.5
IV. DISCUSSION
A. The Trial Court Did Not Abuse Its Discretion by
Declining To Reduce Erions Rule 68 Award of Attorneys
Fees Under Rule 82(b)(3).
The heart of Rhodess argument on appeal is that Erion
spent more on her defense than the amount in controversy. Rhodes
contends that doing so made no economic sense and demonstrated
Erions intent to deter future claimants from suing insurers.
Consequently, Rhodes argues, the trial court should have reduced
the attorneys fees award assessed against her under Rule
82(b)(3)(I) or (J).6
We note at the outset that whether Erion spent more on
her defense than the amount in controversy is not dispositive.
In Magill v. Nelbro Packing Co., we initially expressed surprise
that an attorneys fees award of $172,970.50 to defend a $200,000
controversy could be reasonable.7 But we explained that [w]e
will not overturn an attorneys fees award solely because the
amount of actual fees upon which the award is based exceeds or is
close to the amount in controversy.8 We ultimately affirmed the
award in Magill, determining that the circumstances of the case
justified it and noting that some responsibility for the large
amount of fees lies with the plaintiffs, who vigorously pushed
the case.9
As in Magill, a number of factors support the trial
courts conclusion in this case that the award was appropriate.
The case took three years to get to trial and was continued
twice, both times at Rhodess request. Substantial motion
practice took place, including a Daubert10 hearing on the
admissibility of expert testimony. The trial lasted eight days
and featured the testimony of thirteen witnesses, eight of whom
were experts.
Rhodes contends that the most she could have recovered
from Erion was $112,500 $100,000 from the liability policy plus
$12,500 in Rule 82 attorneys fees. But as the trial court
recognized, Rhodes was seeking a million dollar plus verdict from
the jury, and that was the amount in controversy, not the policy
limit. Rhodes claims that she planned to seek any amount over
$112,500 from her own underinsured motorist coverage, thus
rendering Erions defense against any excess award unnecessary.
Yet Rhodes concedes that Erion could have been found liable for a
large verdict in excess of her policy limit, regardless of
Rhodess hypothetical collection strategy: In the event of a
$900,000 judgment, Mrs. Rhodes gets $100,000 under Ms. Erions
State Farm insurance policy, $12,500 in Rule 82 attorney fees,
prejudgment interest, and a piece of paper indicating that Ms.
Erion . . . owes her the balance. Rhodess assumption that any
amount over $112,500 would have been uncollectible from Erion is
flawed because nothing in the record suggests that Erion had
insufficient assets to satisfy a verdict in excess of her policy
limit. And Erions insurer had a duty to defend her against the
million dollar plus verdict sought by Rhodes.11
Rhodes also contends that Erions award should be
reduced under Rule 82(b)(3)(K). Rule 82(b)(3)(K) is a catch-all
clause that permits courts to vary fees considering other
equitable factors deemed relevant. Rhodes argues that this
factor favors reduction because Erions award was simply unfair,
because the amount Erion spent on her defense was shameful, and
because the trial courts decision not to apply Rule 82(b)(3)(K)
was manifestly unjust. These contentions fail because, as we
concluded above, the award was not unjustified. The trial court
explicitly rejected reducing the award on the basis of Rule
82(b)(3)(K), and that rejection was not unreasonable.
But this conclusion does not end our inquiry. Rule
82(b)(3)(I) and (J) call upon the court to examine more than just
whether the award was reasonable under the circumstances; they
invite the court to consider what effect this award may have on
future litigants. Is the Rule 68 award assessed against Rhodes
so onerous that it will deter similarly situated litigants from
the voluntary use of the courts? Will it mean, as Rhodes argues,
that future personal injury claimants are no longer able to
retain lawyers on contingency fee bases?
The result in this case was less than ideal from
Rhodess perspective. A jury found that Rhodes was injured and
awarded her over $18,000 in damages, but her judgment was not
only offset by the fee award, she was also left with a $17,411
bill. We have expressed concern in the past about financially
ruinous fee awards12 and their impact on access to the courts.13
Indeed, we considered a case not unlike the one at bar in
Bozarth.14 Bozarth, a dismissed employee, brought an action
against his former employer claiming that his dismissal was
improper retaliation for whistleblowing.15 He lost and was
charged $76,000 in Rule 82 attorneys fees, an award we affirmed.16
In his dissent, Justice Matthews cautioned that [i]f the superior
court is to serve its constitutional purpose as a forum available
to all the people, superior court judges must consider whether an
award of attorneys fees will impair the constitutional right of
access to the courts. In the present case it is evident that no
such consideration was given.17 This concern about access to the
courts played a role in the addition of Rule 82(b)(3)(I) in 1993.18
But unlike the lower court in Bozarth, the trial court
in this case did consider whether the award was so onerous as to
impair access to the courts. It explicitly ruled on the issue on
two separate occasions in its order directing Erion to file a
response to Rhodess motion to reconsider attorneys fees,19 and
again in its order denying Rhodess motion to reconsider attorneys
fees.20 On both occasions the trial court concluded that the
circumstances of the case justified the award. Application of
Rule 82(b)(3) factors is discretionary, not mandatory.21 The
trial court received substantial briefing on this issue and twice
concluded that Rule 82(b)(3) factors did not apply. The trial
courts decision declining to reduce the Rule 68 award under the
Rule 82(b)(3) factors was not an abuse of discretion.
B. Rhodes Waived Her Constitutional Arguments.
Rhodes argues that the due process guarantee of access
to the courts required the trial court to reduce Erions Rule 68
award under the Rule 82(b)(3) factors and that [t]he disparate
treatment for plaintiffs and defendants under Rule 68 violates
equal protection and due process. Although she failed to brief
these constitutional arguments before the trial court, Rhodes
contends that her Rule 82(b)(3)(I) arguments in the trial court
were sufficient to preserve the constitutional issues for appeal.
Alternatively, she argues that the trial court committed plain
error by declining to reduce the award under Rule 82(b)(3) on
constitutional grounds.
But an argument that the Rule 82(b)(3) factors should
be applied to reduce an award is not enough to preserve an
appellate claim that Rule 68 is unconstitutional.22 Rhodes did
not raise a constitutional argument at the trial court level, and
she failed to include any constitutional arguments in her amended
points on appeal. Rhodes thus waived her constitutional
arguments.23 And Rhodess plain error argument is unavailing given
that in deciding a facial challenge to the statutory provision
governing offers of judgment, we decline[d] to expand the right
of access to prohibit an offer of judgment scheme.24
V. CONCLUSION
Because the trial court did not abuse its discretion in
declining to reduce Erions award of attorneys fees under Rule
82(b)(3), and because Rhodes waived her constitutional arguments
regarding the award, we AFFIRM the decision of the trial court in
all respects.
_______________________________
1 Rhodes also made two offers of judgment to Erion one
for $100,000, exclusive of interest, Rule 82 attorneys fees, and
allowable costs, and another for $100,000, inclusive of these
costs. Erion did not accept these offers.
2 Rule 68(b) provides, in relevant part, that
[i]f the judgment finally rendered by
the court is at least 5 percent less
favorable to the offeree than the offer
[of judgment], . . . the offeree . . .
shall pay all costs as allowed under the
Civil Rules and shall pay reasonable
actual attorneys fees incurred by the
offeror from the date the offer was made
as follows: . . . (2) if the offer was
served more than 60 days after the date
established in the pretrial order for
initial disclosures . . . but more than
90 days before the trial began, the
offeree shall pay 50 percent of the
offerors reasonable actual attorneys
fees.
3 Kellis v. Crites, 20 P.3d 1112, 1113 (Alaska 2001).
4 Id.
5 Id. at 1113-14; Sands ex rel. Sands v. Green, 156 P.3d
1130, 1132 (Alaska 2007).
6 Rule 82(b)(3)(I) permits courts to vary an award of
attorneys fees considering the extent to which [the award] may be
so onerous to the non-prevailing party that it would deter
similarly situated litigants from the voluntary use of the
courts. Rule 82(b)(3)(J) allows courts to vary an award
considering the extent to which the fees incurred by the
prevailing party suggest that they had been influenced by
considerations apart from the case at bar, such as a desire to
discourage claims by others against the prevailing party or its
insurer.
7 43 P.3d 140, 144 (Alaska 2001).
8 Id.
9 Id. at 145.
10 Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579
(1993); State v. Coon, 974 P.2d 386 (Alaska 1999) (adopting the
federal Daubert standard for evaluating the admissibility of
scientific evidence and expert testimony).
11 See, e.g., Tush v. Pharr, 68 P.3d 1239, 1249 (Alaska
2003) (The duty to defend is broader than the duty to provide
coverage.).
12 Reid v. Williams, 964 P.2d 453, 462 (Alaska 1998)
(internal quotations omitted).
13 See, e.g., id.; State v. Native Vill. of Nunapitchuk,
156 P.3d 389, 405-06 (Alaska 2007); Bozarth v. Atl. Richfield Oil
Co., 833 P.2d 2, 4 n.3 (Alaska 1992); Malvo v. J.C. Penney Co.,
512 P.2d 575, 587-88 (Alaska 1973).
14 833 P.2d 2.
15 Id. at 2-3.
16 Id. at 3-5.
17 Id. at 6-7 (Matthews, J., dissenting).
18 Susanne DiPietro & Teresa W. Carns, Alaskas English
Rule: Attorneys Fee Shifting in Civil Cases, 13 Alaska L. Rev.
33, 45 (1996).
19 The trial court stated that it found no basis to apply
the factors set forth in Civil Rule 82(b)(3)(I)[,] (J) or (K).
20 In that order, the trial court noted again that there
was no basis to apply the factors set forth in Civil Rule
82(b)(3)(I)[,] (J) or (K).
21 Rule 82(b)(3) (The court may vary an attorneys fee
award . . . if, upon consideration of the factors listed below,
the court determines a variation is warranted.).
22 See, e.g., Kellis v. Crites, 20 P.3d at 1114-15.
23 Fernandes v. Portwine, 56 P.3d 1, 9 n.27 (Alaska 2002);
Wells v. State, 46 P.3d 967, 970 n.7 (Alaska 2002).
24 Evans ex rel. Kutch v. State, 56 P.3d 1046, 1064
(Alaska 2002).
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