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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Boiko v. Kapolchok (8/24/2018) sp-7278
Notice: This opinion is subject to correction before publication in the P ACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
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corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
INNA V. BOIKO and )
LOUIS PICARELLA, ) Supreme Court Nos. S-16482/16512
)
Appellants and
) Superior Court No. 3AN-14-10765 CI
Cross-Appellees, )
) O
P I N I O N
v. )
) N
o. 7278 - August 24, 2018
GEORGE M. KAPOLCHOK and )
GEORGE KAPOLCHOK LAW )
OFFICES, INC., )
)
Appellees and )
Cross-Appellants. )
)
A
ppeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Pamela Scott Washington,
Judge pro tem.
Appearances: James Alan Wendt, Law Offices of James
Alan Wendt, Anchorage, for Appellants/Cross-Appellees.
George M. Kapolchok, George Kapolchok LawOffices, Inc.,
Anchorage, for Appellees/Cross-Appellants.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
and Carney, Justices.
WINFREE, Justice.
----------------------- Page 2-----------------------
I. INTRODUCTION
A self-represented couple sued their lawyer for legal malpractice. After
lengthy and contentious discovery disputes, at the end of which the couple was
sanctioned, the couple retained counsel to assist them in terminating the litigation. The
parties agreed to dismiss the suit with prejudice, leaving open the couple's former
lawyer's right to seek an award of attorney's fees. This appeal focuses on the superior
court's decisions regarding that lawyer's motion for attorney's fees.
Very early in the litigation the lawyer gave the couple a joint,
unapportioned Alaska Civil Rule 68 offer of judgment. The superior court ruled the
offer was invalid. Following our precedent that joint, unapportioned offers of judgment
generally are invalid, we affirm the superior court's ruling as a matter of law.
The superior court applied Alaska Civil Rule 82 for its award of partial
reasonable attorney's fees to the lawyer. But instead of employing Rule 82(b)(2)'s
standard 20% calculation for an award without a money judgment, the court applied
Rule 82(b)(3), which allows courts to vary from the standard award. The court made
findings and exercised its discretion to use 15% for calculating its fee award to the
lawyer, and it left the discovery sanction against the couple in place. We conclude that
the superior court's findings are not clearly erroneous and that the court did not abuse
its discretion or otherwise err when it applied Rule 82(b)(3); we also conclude that the
court did not abuse its discretion in levying and leaving in place the discovery sanction.
We therefore affirm the superior court's judgment.
II. FACTS AND PROCEEDINGS
Inna Boiko and Louis Picarella retained attorney George Kapolchok and
his law firm to represent them in dental malpractice and loss of consortium claims after
Boiko underwent procedures allegedly resulting in disfigurement and extreme pain. The
dentist moved for partial summary judgment, arguing that the statute of limitations
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period had expired before the initial complaint was filed. Boiko and Picarella opposed,
asserting that there were genuine issues of material fact regarding the date the statute of
limitations began to run.
While the summary judgment motion was pending, the parties engaged in
settlement negotiations. Months later, on December 13, 2012, the court denied the
motion, holding that - based on the continuing course of treatment doctrine - the
original complaint was timely filed. A certificate of distribution on the order indicates
it was mailed to the parties' attorneys the day it was issued. On December 17 Boiko and
Picarella signed a settlement agreement in Kapolchok's office. They stipulated to
dismissal of the case, with prejudice, in return for a settlement payment. The day after
the settlement agreement was signed, Kapolchok's paralegal emailed Picarella the
favorable summary judgment decision.
Boiko and Picarella, self-represented, subsequently filed a complaint
against Kapolchok and his law firm (collectively Kapolchok unless otherwise noted).
They contended that they had settled the dental malpractice lawsuit without knowledge
of the favorable summary judgment ruling and that Kapolchok deliberately had withheld
the decision to induce them to settle at that time. They alleged legal malpractice,
intentional and negligent misrepresentation, intentional and negligent infliction of
emotional distress, breach of fiduciary duties, breach of contract, and unfair business
practices.
Kapolchok retained a second attorney to represent his corporate law firm
and assist him in defending the legal malpractice claim. One month after service of the
complaint, Kapolchok made the couple a $1,500 joint, unapportioned Rule 68 offer of
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1
judgment. The offer was not accepted. Following a lengthy and contentious discovery
process, including Kapolchok filing several motions to compel, the superior court levied
$2,000 in sanctions against Boiko and Picarella: $1,000 to be paid to the court, and
$1,000 to be paid to Kapolchok.
At this point Boiko and Picarella hired an attorney, who filed a motion for
complete dismissal of their claims with prejudice, conditioned on their ability to contest
any attorney's fees motion by Kapolchok. The superior court dismissed the case with
prejudice and gave Kapolchok a deadline to file a motion for attorney's fees.
Boiko and Picarella preemptively moved for the superior court to hold the
2 and to
Rule 68 offer of judgment invalid because it was an unapportioned, joint offer
instead calculate any attorney's fees award under Rule 82.3 Kapolchok opposed, arguing
that no apportionment problems existed because they were husband and wife and
Picarella's loss of consortiumclaimwas purely derivative ofBoiko's claims. Kapolchok
noted they had accepted a joint check for the dental malpractice settlement, undermining
their purported need for apportioned offers in thelegal malpracticecase. Kapolchok then
sought attorney's fees under Rule 68. He contended that after a year's defense work he
had incurred $85,296 in fees and was entitled to an award of 75% of that amount.
Boiko and Picarella opposed; they asserted that instead of Rule 82's usual
20% award, the court should decline to award any attorney's fees at all. They
1 See Alaska R. Civ. P. 68 (providing rules for offer of judgment and that
offeree shall pay offeror's allowable costs and reasonable attorney's fees incurred after
offer date if final judgment is a given percentage "not more favorable" than offer).
2 See John's Heating Serv. v. Lamb, 46 P.3d 1024, 1041-42 (Alaska 2002)
(discussing difficulties of unapportioned joint offers in Rule 68 context).
3 See Alaska R. Civ. P. 82 (providing standard schedule and enumerating
grounds for varying attorney's fee awards).
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----------------------- Page 5-----------------------
enumerated several grounds for a variance under section (b)(3) of the rule, including
reasonableness of their legal malpractice claims, Kapolchok's vexatious and bad faith
conduct in boththedental and legal malpractice cases, and their status as self-represented
4
plaintiffs.
Before Kapolchok replied, the superior court ruled without elaboration that
the Rule 68 offer of judgment was invalid. Kapolchok then recomputed his prospective
fee award under Rule 82, submitting billings dating back to the first day of litigation
instead of the offer of judgment, totaling $123,099.50. Kapolchok also requested an
enhancement from 20% to 50% under section (b)(3) of the rule, based on the
unreasonableness of Boiko's and Picarella's claims and their vexatious and bad faith
conduct throughout the litigation.5
Thesuperiorcourt awarded Kapolchok Rule82 attorney'sfees,but reduced
the calculation from 20% to 15% under section (b)(3) of the rule. The final judgment
included the discovery sanction levied against Boiko and Picarella, for a total judgment
of $18,902.33.
Boiko and Picarella filed a motion to reconsider, arguing that the court
should have considered Kapolchok's vexatious conduct in the underlying dental
malpractice case and that the court overlooked Kapolchok's use of privileged
information to harass the couple in the present litigation. The court denied the motion,
stating that "[i]t is not appropriate for this court to consider [Boiko's and Picarella's]
claims about [Kapolchok's] bad faith or vexatious conduct in the underlying action that
4 See Alaska R. Civ. P. 82(b)(3)(F) (reasonableness of claims and defenses),
(G) (vexatious or bad faith conduct), and (K) (other equitable factors).
5 See Alaska R. Civ. P. 82(b)(3)(F) (reasonableness of claims and defenses)
and (G) (vexatious or bad faith conduct).
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forms the basis of this malpractice case when deciding whether to enhance or reduce
attorney fees in this case."
Boikoand Picarellaappeal thecourt's decision to awardattorney's fees and
to maintain the discovery sanction. Kapolchok cross-appeals, challenging both the
court's decision invalidating the Rule 68 offer and its decision to reduce rather than
enhance attorney's fees under Rule 82(b)(3).
III. STANDARD OF REVIEW
The validity of a Rule 68 offer of judgment presents a question of law that
6
we review de novo.
We review an award of attorney's fees under Rule 82 for abuse of
discretion and will not disturb the award on appeal unless it is "arbitrary, capricious,
7
manifestly unreasonable, or improperly motivated." When an award or enhancement
"calls into question [a party's] litigation conduct and the potential merits of [the party's]
underlying . . . motions, we assess de novo the legal and factual viability of [the] motions
8 We review imposition of discovery
and review relevant findings of fact for clear error."
sanctions for abuse of discretion.9
6 Marshall v. Peter , 377 P.3d 952, 956 (Alaska 2016); Progressive Corp. v.
Peter ex rel. Peter, 195 P.3d 1083, 1089 (Alaska 2008); Pagenkopf v. Chatham Elec.,
Inc., 165 P.3d 634, 638 (Alaska 2007) (treating Rule 68 offer and acceptance as contract
and therefore applying de novo review).
7 Kollander v. Kollander, 400 P.3d 91, 95 (Alaska 2017) (quoting Roderer
v. Dash, 233 P.3d 1101, 1106 (Alaska 2010)).
8 Herring v. Herring, 373 P.3d 521, 528 (Alaska 2016) (first threealterations
in original) (quoting Johnson v. Johnson, 239 P.3d 393, 399 (Alaska 2010)); Cizek v.
Concerned Citizens of Eagle River Valley, Inc., 71 P.3d 845, 848-49 (Alaska 2003).
9 Roderer, 233 P.3d at 1106.
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IV. DISCUSSION
A. The Rule 68 Offer Was Invalid.
Kapolchok made a $1,500 joint offer of judgment to Boiko and Picarella
"in complete satisfaction of all [their] claims." Kapolchok argues that the couple's
rejection of this offer compelled the superior court to employ Rule 68's more generous
formula for calculating attorney's fees. We conclude otherwise.
Rule 68's goal is to "encourage settlement and avoid protracted
10
litigation." It allows a party before trial to make an offer of judgment "in complete
11
satisfaction of the claim . . . with costs then accrued." If the offer is served less than 60
days after the date set for initial disclosures, the offeree does not accept within 10 days,
and the ultimate judgment is "at least [5%] less favorable to the offeree than the offer,"
12
then the offeree must pay 75% of the offeror's reasonable and actual attorney's fees.
The rule "creates a financial incentive for settlement by 'encourag[ing] parties to assess
their litigation risks carefully and penaliz[ing] an offeree's rejection of a reasonable
settlement offer.' "13
10 Beal v. McGuire, 216 P.3d 1154, 1178 (Alaska 2009); see Progressive
Corp., 195 P.3d at 1088.
11 Alaska R. Civ. P. 68(a).
12 Alaska R. Civ. P. 68(a), (b)(1).
13 Marshall v. Peter, 377 P.3d 952, 957 (Alaska 2016) (alterations in original)
(quoting Windel v. Mat-Su Title Ins. Agency, Inc., 305 P.3d 264, 279 (Alaska 2013)).
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----------------------- Page 8-----------------------
14
But "[n]ot all settlement offers trigger Rule 68." An invalid offer "may
15
notbeconsidered in determining costs andattorney's fees."
Apportionment difficulties
16 We have held that
are one ground upon which a court may find an offer invalid.
difficulties are "intrinsic to cases involving unapportioned joint offers because the
offerees must agree . . . how proceeds are to be divided."17 "In determining whether a
joint offer may nonetheless be valid, we consider two factors: (1) whether '[t]he
settlement offer clearly indicated all claims between the parties would be resolved if the
offer were accepted'; and (2) whether apportionment difficulty actually exists."18
Apportionment difficulties exist "if [the offer] would leave unresolved serious disputes
that, absent settlement, would have to be resolved by a jury."19
The parties dispute only the second prong, whether "apportionment
20 Kapolchokasserts thejoint offer was appropriatebecause
difficultyactually exist[ed]."
Picarella's claims were purely derivative in both the dental and legal malpractice cases,
and no apportionment difficulties existed between the husband and wife, as they had
accepted a joint offer for the dental malpractice case. Kapolchok also contends that we
14 Id.
15 Alaska Fur Gallery, Inc. v. First Nat'l Bank Alaska , 345 P.3d 76, 98
(Alaska 2015) (quoting Grow v. Ruggles , 860 P.2d 1225, 1227 (Alaska 1993)).
16 See John's Heating Serv. v. Lamb, 46 P.3d 1024, 1042 (Alaska 2002).
17 Id. ; see also Alaska Fur Gallery, Inc., 345 P.3d at 99 ("[J]oint offers . . . are
usually invalid as Rule 68 offers of judgment due to apportionment difficulties.").
18 Alaska Fur Gallery, Inc. , 345 P.3d at 99 (alteration in original) (quoting
John's Heating Serv., 46 P.3d at 1042 & n.85).
19 Roderer v. Dash, 233 P.3d 1101, 1113 (Alaska 2010).
20 See Alaska Fur Gallery, Inc., 345 P.3d at 99.
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are obligated to remand because the court failed to specify any basis for holding the offer
invalid, hindering Kapolchok's ability to contest the ruling.
We disagree on both counts. Although the superior court's decision did not
explicitly state the basis upon which it found the Rule 68 offer invalid, it need not have
21 Apportionment was the sole basis upon which the parties litigated the offer's
done so.
validity. Contrary to Kapolchok's assertions, we see no reason to remand for
clarification.
We also agree with the superior court that the offer was invalid. The
$1,500 offer to Boiko and Picarella was a classic joint offer: an offer of a lump sum to
two offerees without reference to apportionment.22 Our past decisions recognize the
difficulties of apportioning offers and hold that such difficulties "warrant a general
exclusion of joint offers from the penal cost provisions of Rule 68."23
Picarella had a separate legal malpractice claim and was thus owed an
apportioned offer. It is irrelevant that Boiko and Picarella were joint payees for the
dental malpractice claim or treated as a single client by Kapolchok. Picarella's original
loss of consortium claim in the dental malpractice lawsuit being derivative does not bear
on whether he had an independent legal malpractice claim in this litigation. Kapolchok
formed a separate attorney-client relationship with Picarella by obtaining his signature
on the attorney-client fee agreement and adding his loss of consortiumclaimto the dental
21 See Parks v. Parks , 214 P.3d 295, 304 (Alaska 2009) ("Trial courts are not
required to state all findings in their written orders 'so long as the basis for their
decisions is clear from the record and thus susceptible to review.' " (quoting Duffus v.
Duffus, 932 P.2d 777, 779 (Alaska 1997))).
22 See, e.g., John's Heating Serv., 46 P.3d at 1042 (citing Brinkerhoff v.
Swearingen Aviation Corp., 663 P.2d 937, 943 (Alaska 1983)).
23 See Brinkerhoff, 663 P.2d at 943.
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malpractice lawsuit. Duties individually owed to Picarella flowed from the creation of
24
that attorney-client relationship in addition to thoseseparately owed to Boiko. Because
Picarella had aseparate legal relationship with and therefore aseparate malpractice claim
against Kapolchok, Picarella was owed an apportioned offer.
We see no grounds for deviating from the general rule against joint offers
under the facts of this case. Because we agree that the Rule 68 offer was invalid, we
affirm the superior court's decision to calculate attorney's fees under Rule 82.
B. The Rule 82 Attorney's Fees Award Was Not An Abuse of Discretion.
Rule 82(b)(2) provides that when a prevailing party recovers no money
judgment and the case is resolved without trial, the court shall award the prevailing party
20% of its actual attorney's fees. But Rule 82(b)(3) allows the court to vary an
attorney's fees award upon consideration of certain enumerated factors as well as "other
25
equitable factors deemed relevant."
24 Alaska Rule of Professional Conduct 1.7 provides guidance concerning
representation of multiple clients and emphasizes that an attorney bears responsibilities
to each. The commentary to Rule 1.2, which details the principles governing the scope
of a lawyer's representation, states that although lawyers and clients have "substantial
latitude to limit the representation," such limitation "does not exempt a lawyer from the
duty to provide competent representation." Alaska R. Prof. Conduct 1.2 cmt. 7.
Kapolchok has not persuaded us that his representation of both Boiko and Picarella was
so limited or that he did not owe separate legal obligations to Picarella in the event a
conflict did arise.
25 Alaska R. Civ. P. 82(b)(3)(K).
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26
We review all Rule 82 attorney's fees awards for abuse of discretion, and
"[a]n award constitutes an abuse ofdiscretion only whenit is manifestly unreasonable." 27
In the event of a variance, "legal questions . . . are reviewed de novo, while exceptions
28 The court enjoys "broad
that rely on factual findings are reviewed for clear error."
discretion to award fees and to alter the amount it intends to award."29
1. Reduction of attorney's fees from 20% to 15%
In determining whether varying an award under Rule 82 is warranted, the
30
superior court may consider "the complexity of the litigation" and "the reasonableness
31
of the numbers of attorneys used." It may also consider "the extent to which a given
fee award may be so onerous to the non-prevailing party that it would deter similarly
32
as well as "other equitable
situated litigants from the voluntary use of the courts,"
33
factors deemed relevant."
26 Herring v. Herring , 373 P.3d 521, 528 (Alaska 2016) (citing Johnson v.
Johnson, 239 P.3d 393, 399 (Alaska 2010)); Cizek v. Concerned Citizens of Eagle River
Valley, Inc. , 71 P.3d 845, 850 (Alaska 2003) ("[T]he decision to award and to alter fees
under Rule 82 is committed to the discretion of the trial court and will only be reversed
if the court has abused its discretion.").
27 Cizek, 71 P.3d at 848 (quoting Thorstenson v. ARCO Alaska, Inc., 780 P.2d
371, 376 (Alaska 1989)).
28 Id . at 848-49.
29 Id. at 851.
30 Alaska R. Civ. P. 82(b)(3)(A).
31 Alaska R. Civ. P. 82(b)(3)(D).
32 Alaska R. Civ. P. 82(b)(3)(I).
33 Alaska R. Civ. P. 82(b)(3)(K).
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Here the court reduced the fee award from 20% to 15% "due to the
unreasonableness of paying two attorneys to defend what appears to be a rather
unremarkable attorney malpractice case" brought by self-represented plaintiffs. This
view was compounded by Kapolchok not documenting the full amount of fees sought,
prompting the court to rely on a lower estimate. The fee reduction was further motivated
by the court's policy concern that "a large fee award may deter similarly situated
plaintiffs from bringing similar cases." The court noted that "[i]mposition of a large fee
award when a defendant attorney ultimately prevails insidiously closes the doors of the
courthouse ever so slightly to plaintiffs who choose to represent themselves and assume
the formidable task of suing their former attorney."
Kapolchok advances three arguments supporting his position that the court
erred in its decision to reduce attorney's fees. First, Kapolchok argues that because he
was sued both in an individual capacity and as a corporation, a second attorney had to
be retained under the statute requiring that corporations appear by attorney. But
Kapolchok contorts the purpose of AS 22.20.040, requiring corporations to appear by
34 The essence of the rule is that, unlike individual persons,
licensed attorney.
corporations do not have the right of self-representation.35 But AS 22.20.040 does not
require an incorporated law firm to obtain outside counsel to represent it in court,
34 See AS 22.20.040(a)(2) ("[A] corporation, either public or private, shall
appear by attorney in all cases unless an exception to the corporation's appearance by
an attorney has been explicitly made by law.").
35 See Roberts v. State, Dep't of Revenue, 162 P.3d 1214, 1220-21 (Alaska
2007) (discussing policy reasons for preventing lay persons from representing
corporation in litigation and concluding "[t]o allow an individual the protections of the
corporate form, as well as the option to shed the corporate form when it serves his or her
interest, undermines the purposes of [AS 22.20.040(a)(2)]").
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however advisable that may be; the statute simply means a lay person cannot represent
the law firm.
Second, Kapolchok disputes the court's characterization of the litigation as
"unremarkable" and "not complex." Kapolchok frames the legal malpractice suit as a
case involving the larger dental malpractice case, and he asserts he would have needed
to hire at least 3 experts, conduct 30 depositions, and interview 40 doctors across 4
36 He
different states to defend the suit, which he claims sought $3 million in damages.
contendsretainingasecond attorney "to overseethelitigation was reasonable, necessary,
and prudent."
In Nautilus Marine Enterprises, Inc. v. Exxon Mobil we upheld an award
of fees when 15 attorneys had billed large sums for duplicative efforts; we accepted the
superior court's rationale that "it is often advantageous to have more than one attorney
present," and we concluded the award was not an abuse of discretion.37 But we did so
out of recognition that a trial court is "uniquely situated" to analyze the reasonableness
of fees "because of its 'greater knowledge of the case,' " and we emphasized that "[i]t
is . . . for the trial judge to determine . . . whether too many attorneys were employed."38
Similarly, in Gamble v. Northstore Partnership we affirmed an award even
though the prevailing party's fees were double those of the unsuccessful party, observing
"it is a judgment call . . . whether such a discrepancy reflects over-preparation and over-
billing by one set of attorneys, or under-preparation and under-billing by the other set
36 Boiko and Picarella did not specify damages in their legal malpractice
complaint, stating only that they believed they were owed more than $100,000. The only
other concrete estimate they provided for losses and future expenses was $832,939.81.
37 332 P.3d 554, 561 (Alaska 2014).
38 Id. (alterations in original).
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39
of attorneys." We noted that "there was much discovery practice, two sets of motions
for summary judgment, and a five-day trial" and that the trial court reviewed itemized
billings and "was personally aware of the quality and quantity of the work . . . [done] at
40 Given the record and the court's level of engagement, we concluded
the trial level."
the court had not abused its discretion.41
Here the superior court engaged in the type of analysis for which it is
particularly well-suited: reviewing itemized billing, considering whether the number of
attorneys was appropriate, and assessing the fees' proportionality to the case's
requirements.42 The superior court was "personally aware" of the course and complexity
of the litigation, "the quality and quantity of the work" performed, and the lengths to
which Kapolchok was willing to go in defending his reputation from attack by his former
43 The court found
clients, who were rather unsuccessfully proceeding self-represented.
that Kapolchok had over-billed for a case that was not complex and did not merit the
attention of two attorneys. Assuming none of the court's factual findings were clearly
erroneous, it was within the court's discretion to reduce the percentage of fees awarded
on this basis.
Onreviewwe conclude that the superior court's findings with respect to the
complexity of the case and the number of attorneys needed were not clearly erroneous.
Contrary to Kapolchok's assertions, the legal malpractice claim's primary focus was a
39 28 P.3d 286, 289-90 (Alaska 2001).
40 Id. at 290.
41 Id.
42 See Nautilus Marine Enters. , 332 P.3d at 561.
43 See Gamble , 28 P.3d at 290.
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simpler question: whether Kapolchok knew of and deliberately withheld information
about a favorable court ruling to induce his clients to settle rather than continue the
litigation. It was not clearly erroneous to find that litigation over a document distribution
date was not complex and that billing for two attorneys' time, especially after the scope
of the litigation narrowed, was unreasonable.
We also note that the billings submitted for computation under Rule 68
show Kapolchok handled the lion's share of the work. It appears the second attorney
billed over $20,000 for communications with Kapolchok, document review, and a single
court appearance; the second attorney neither produced apparent work product nor
engaged expert witnesses, and a significant portion of the fee requested was not
supported by documentation. All court filings, consultation with experts, and discovery
communications were done by Kapolchok alone. On this record, we cannot say the
superior court clearly erred in finding that only one attorney was needed.
We continue to accept that it is often necessary and prudent to retain
44 and we do not at all mean to suggest a legal malpractice defendant
additional attorneys,
should not retain counsel for representation. However, given this record of work
allocation, as well as our general deference to the superior court's personal knowledge
of the parties and the case,45 we cannot say the court's reduction of fees based on the
number of attorneys was an abuse of discretion or premised upon clearly erroneous fact
finding.
Finally, Kapolchok contends that the superior court's concern about a
"chilling effect" on future litigants was improper. But Rule 82(b)(3) explicitly permits
the court to consider "the extent to which a given fee award may be so onerous to the
44 See Nautilus Marine Enters., 332 P.3d at 561.
45 See id; Gamble, 28 P.3d at 290.
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non-prevailing party that it would deter similarly situated litigants fromthevoluntaryuse
of the courts."46
The attorney's fees award here is $17,887.43, hardly an insignificant
sum. Given that the rule explicitly permits consideration of this factor, it was not error
for the court to do so.
Because the court's legal analysis and factual findings are sound, we
conclude the court did not abuse its discretion. We therefore affirm the reduction of
attorney's fees from 20% to 15%.
2. Denial of motion for enhanced attorney's fees
Kapolchok argues that the superior court "failed to appreciate the
unreasonableness" of Boiko's and Picarella's claims and did not adequately penalize the
couple for the difficulties they caused during the discovery process. He asserts that the
superior court erred when it declined to enhance the award under Rule 82(b)(3)(F), "the
reasonableness of the claims," and (G), "vexatious or bad faith conduct."
The superior court's underlying determination that Boiko's and Picarella's
uncooperativeness during the discovery process was more attributable to their
misunderstanding as self-represented litigants than bad faith, particularly in light of the
numerous instances in which Picarella exhibited confusion about the rules and purpose
47 Neither was the court's determination that
of discovery, was not clearly erroneous.
Boiko and Picarella's claims - that Kapolchok "used coercive tactics to induce [them]
to settle" and attempted to hide the possibility of continuing to trial - were reasonable
and brought in good faith. We have reviewed enhanced attorney's fees awards for
unreasonableness and bad faith when, for example, claims lacked any evidentiary
46 Alaska R. Civ. P. 82(b)(3)(I).
47
See Cizek v. Concerned Citizens of Eagle River Valley, Inc., 71 P.3d 845,
850-52 (affirming trial court's decision not to reduce fees because it was not an abuse
of discretion).
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support, were fraudulent from inception, or were clearly brought with the intent to
48
harass.
But the record shows that the order's certificate of distribution is dated
December 13, 2012 and that Boiko and Picarella signed the legally binding settlement
agreement on December 17, 2012, the day before receiving notice of the decision. We
cannot say the court's decision "not to visit a penalty on" them for bringing the legal
malpractice claim was based upon clearly erroneous factual findings or constituted an
49 We therefore affirm the superior court's decision not to vary the
abuse of discretion.
award based on Rule 82(b)(3)(F) or (G).
3. Denial of motion to further reduce attorney's fees
Boiko and Picarella argue that the superior court neglected to consider their
argument that Kapolchok's bad faith conduct in the litigation violated standards of
professional conduct and warranted a further reduction of attorney's fees. They allege
Kapolchok committed perjury in response to an interrogatory asking why he did not
inform his clients that he did not carry legal malpractice insurance. Rather than answer
the question, Kapolchok responded: "Defendants and Plaintiffs discussed this issue at
least three (3) times and signed off on it." Boiko and Picarella also cite as evidence of
48 See, e.g., Kollander v. Kollander, 400 P.3d 91, 96-97 (Alaska 2017)
(affirming 60% attorney's fees award because losing party relitigated claims already
disproved by credible testimony and barred by laches); Crittell v. Bingo , 83 P.3d 532,
534, 537 (Alaska 2004) (affirming enhanced attorney's fees award against party who
brought fraudulent claim based on fabricated documents and fraudulent will of their
creation); Garrison v. Dixon, 19 P.3d 1229, 1235 (Alaska 2001) (affirming full
attorney's fees award because plaintiffs never introduced credible evidence, conceded
after two years they had no individual claims, and appeared to have brought suit to harass
and chill activity of business competitor); Keen v. Ruddy, 784 P.2d 653, 657 (Alaska
1989) (finding no abuse of discretion where claim "was not supported by law or fact"
and clearly brought to hinder litigation of different suit).
49 See Cizek , 71 P.3d at 851-52 (affirming superior court's decision not to
vary attorney's fees because decision was not "manifestly unreasonable").
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bad faith Kapolchok's motion to compel production of tax returns they had not filed,
which he knew from privileged communications in his capacity as their attorney.
Alaska Rules of Professional Conduct require attorneys to disclose in
50 Alaska's
writing whether they carry requisite amounts of malpractice insurance.
professional rules also require that a lawyer "not reveal a client's confidence or secret
unless the client gives informed consent, except for disclosures that are impliedly
authorized."51 "Confidence" is defined as "information protected by the attorney-client
privilege under applicable law" and "secret" refers to "information gained in the
professional relationship if the client has requested it be held confidential or if it is
reasonably foreseeable that disclosure of the information would be embarrassing or
detrimental to the client."52 However, a lawyer is permitted to breach this confidence "to
establish a claim or defense on behalf of the lawyer in a controversy between the lawyer
and the client."53
We conclude the superior court's decision not to vary the award on this
ground was within its discretion. The court decided Kapolchok's actions were best
characterized as "harsh litigation tactics" rather than bad faith or vexatious conduct.
Moreover, Kapolchok's request for the couple's tax returns to prove lost income did not
violate attorney-client confidentiality. The tax returns conceivably were necessary to
establish the defense that Boiko's income loss was less than alleged, a permitted use
50 Alaska R. Prof. Conduct 1.4(c) ("A lawyer shall inform an existing client
in writing if the lawyer does not have malpractice insurance of at least $100,000 per
claim and $300,000 annual aggregate.").
51 Alaska R. Prof. Conduct 1.6(a).
52 Id.
53 Alaska R. Prof. Conduct 1.6(b)(5).
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54
under the rules. Even if Kapolchok knew from his previous representation that the
couple did not possess the requested tax returns, he did not himself divulge the
information or actually breach confidentiality. The court's findings were not clearly
erroneous, nor was its decision manifestly unreasonable or arbitrary.
4. Refusal to consider evidence of attorney misconduct in the
underlying dental malpractice case
Boiko and Picarella contend that the superior court erred when it neglected
to consider the "overwhelming" evidence of Kapolchok's vexatious or bad faith conduct
while litigating the dental malpractice case. The court relied upon Alderman v. Iditarod
55
Properties, Inc.
to support its holding, noting that "[c]onduct undertaken in 'bad faith'
for the purposes of . . . Rule 82(b)(3)(G) must relate to conduct during the course of
litigation, and not to actions during the underlying transaction." Boiko and Picarella cite
56 57
Crittell v. Bingo and Garrison v. Dixon for the proposition that when varying an
award under Rule 82(b)(3)(G) the court must consider both the "filing of the case and
the prosecution of it." They interpret this to mean that the court should go outside the
bounds of the immediate litigation to consider the merits of their legal malpractice claim
and Kapolchok's misconduct more broadly.
58
We agree with the superior court that our holding in Alderman controls.
An allegation of bad faith conduct under Rule 82 "must relate to conduct during the
litigation, and not to actions taken during the underlying transaction or other litigation
54 See id.
55 104 P.3d 136 (Alaska 2004).
56 83 P.3d 532, 537 (Alaska 2004).
57 19 P.3d 1229, 1234 (Alaska 2001).
58 104 P.3d at 145.
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59
between the parties." Boiko and Picarella misconstrue the rule recited in Crittell and
Garrison, which permits a court to consider the plaintiff's motives for filing the lawsuit,
i.e., whether the underlying case was frivolous or brought in bad faith, when awarding
enhanced attorney's fees to a prevailing defendant. In Crittell we upheld an enhanced
attorney's fees award to a prevailing defendant when evidence showed that the plaintiffs
fabricated a will and then advanced their fraudulent claim through fraudulent actions at
60 Similarly, in Garrison we upheld a full attorney's fees award to a real estate
trial.
agencythat successfully defended against an unfair tradepracticeclaimbecausethecourt
found the plaintiffs had "prosecuted the case in bad faith and to gain an advantage over
a business competitor."61 Neither case - nor any other of this court - supports what
Boiko and Picarella suggest here: that in determining attorney's fees, the court must
consider the misconduct of the party who successfully defended against those very
claims of misconduct. We conclude the superior court was correct to decline to do so.
C. Upholding The Previously Imposed Sanctions Was Not An Abuse of
Discretion.
Alaska Civil Rule 37(b)(2) permits the court to impose sanctions for
reasonable expenses caused by failure to comply with a discovery order.62 Boiko and
Picarella argue that the court erred in imposing sanctions for their "single discovery
violation" -a failure to supply requested tax returns - and should have permitted them
59 Id.
60 83 P.3d at 537.
61 19 P.3d at 1230.
62 Alaska R. Civ. P. 37(b)(2) ("[T]he court shall require the party failing to
obey the order . . . to pay the reasonable expenses, including attorney's fees, caused by
the failure, unless the court finds that the failure was substantially justified or that other
circumstances make an award of expenses unjust.").
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to revisit the issue when litigating the motion for attorney's fees, particularly as self-
represented litigants. They also raise the point that Kapolchok's motion to compel did
not contain a certification that he had attempted in good faith to confer with them on
production of the tax returns prior to involving the court, as required, but rather had
included a general statement about difficulties throughout the discovery process.
We review an imposition of sanctions under Rule 37(b) for abuse of
63 Rule 37 " 'affords trial courts broad power to enforce discovery orders by
discretion.
the use of sanctions' up to and including dismissal of a party's claim because 'outright
failures to respond to discovery halt the case development process dead in its tracks, and
threaten the underpinnings of the discovery system.' "64 Self-represented litigants are
held to a less stringent standard than lawyers.65 Before imposing sanctions, we expect
the trial court to "inform a pro se litigant of the proper procedure for the action he or she
is obviously attempting to accomplish."66
We conclude that it was not an abuse of discretion to impose sanctions.
The superior court fulfilled its responsibilities to Boiko and Picarella as self-represented
litigants before issuing sanctions. The court made every attempt to supply guidance and
informthe couple of the procedures necessary to comply with the discovery process, and
they had ample notice that sanctions loomed. There was a pattern of noncompliance, and
63 Roderer v. Dash , 233 P.3d 1101, 1107 (Alaska 2010).
64
Khalsa v. Chose, 261 P.3d 367, 372 (Alaska 2011) (quoting DeNardo v.
ABC Inc. RVs Motorhomes , 51 P.3d 919, 921-22 (Alaska 2002)).
65 Johnston v. Brumlow, Nos. S-14275, S-14306, 2012 WL 3764426, at *6
(Alaska Aug. 29, 2012) (quoting Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 1987)); see
also Azimi v. Johns, 254 P.3d 1054, 1066-67 (Alaska 2011) (discussing dismissal as a
discovery sanction for self-represented litigants).
66 Johnston, 2012 WL 3764426, at *6.
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the court levied sanctions only after numerous motions to compel and repeated warnings
regarding other discovery violations. Boiko and Picarella had adequate opportunity to
cure the defects in their discovery production, yet they failed to do so.
Moreover, Boiko and Picarella recognized that they forfeited their right to
revisit the sanctions issue when they voluntarily dismissed the legal malpractice case.
Their motion expressly stated that it was not conditioned on the couple's ability to
contest the sanctions imposed. Given they neither cured the defect nor contested the
sanctions prior to voluntarily dismissing the case, it was not an abuse of discretion to
deny them the opportunity to revisit the sanctions. We affirm the superior court's
decision to uphold the previously imposed sanctions.
V. CONCLUSION
The superior court's judgment is AFFIRMED.
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