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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Nixola Doan, Personal Representative v. Banner Health, Inc., d/b/a Fairbanks Memorial Hospital, et al. (4/23/2021) sp-7520
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,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
NIXOLA JEAN DOAN, Personal )
Representative of the Estate of Tristana ) Supreme Court Nos. S-17502/17521
Doan, )
) Superior Court Nos. 4FA-18-00404 PR
Appellant and ) and 4FA-13-01538 CI (Consolidated)
Cross-Appellee, )
) O
P I N I O N
v. )
) No. 7520 - April 23, 2021
BANNER HEALTH, d/b/a )
FAIRBANKS MEMORIAL )
HOSPITAL; NORTHERN HOSPITAL )
ASSOCIATES, LLC; JAMES W. )
CAGLE, D.O.; GOLDEN HEART )
EMERGENCY PHYSICIANS; and )
FAYE LEE, M.D., )
)
Appellees and )
Cross-Appellants. )
)
Appeal from the Superior Court of the State of Alaska,
Fourth Judicial District, Fairbanks, Douglas Blankenship,
Judge.
Appearances: Galen G. Cook, Mike A. Stepovich, and
Sandra Kay Rolfe, Stepovich Law Office, Fairbanks, for
Appellant and Cross-Appellee. Howard A. Lazar and
Whitney L. Wilkson, Delaney Wiles, Inc., Anchorage, for
Appelleeand Cross-AppellantBanner Healthd/b/aFairbanks
Memorial Hospital. John J. Tiemessen, Clapp, Peterson,
Tiemessen & Thorsness, LLC, Fairbanks, for Appellees and
----------------------- Page 2-----------------------
Cross-Appellants Northern Hospital Associates, LLC; James
W. Cagle, D.O.; Golden Heart Emergency Physicians; and
Faye Lee, M.D.
Before: Bolger, Chief Justice, Winfree, Maassen, Carney,
and Borghesan, Justices.
BOLGER, Chief Justice.
I. INTRODUCTION
Two defendants in a wrongful death suit settled with the decedent's estate,
resulting in a recovery for her minor child's benefit. The estate's attorney received
payment fromthe settlement, but the remaining funds were reserved against potential fee
awards to the remaining defendants should they prevail in the ongoing litigation. The
estate appeals, arguing that the remainder of the funds should have been immediately
disbursed for thechild'sbenefit. Thenon-settlingdefendants cross-appeal, asserting that
the entire settlement fund should have been reserved for their recoverable costs and fees.
Because the prevailing defendants would have no other source from which
to recover expenses, we affirm the superior court's reservation of settlement funds. But
because we construe the common fund doctrine to apply, we also affirm the court's
distribution of the estate's attorney's fees and costs.
II. FACTS AND PROCEDURAL HISTORY
In 2011, following medical treatment at Interior Aids Association, Tristana
Doan died at Fairbanks Memorial Hospital. Tristana's mother, Nixola Doan, was named
personal representative of her estate and guardian of her minor child R.D. In 2013 Doan,
as personal representative of Tristana's estate, (the estate) brought a medical malpractice
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1
and wrongful death suit on behalf of R.D., the statutory beneficiary. The complaint
named seven defendants: Interior Aids Association and Dr. Nicole Fliss; Golden Heart
Emergency Physicians and Dr. Faye Lee; Northern Hospital Associates, LLC and
Dr. James Cagle; and Banner Health, d/b/a Fairbanks Memorial Hospital.
In January 2018 the estate reached a settlement with Interior Aids
Association and Dr. Fliss (the settling defendants). The proceeds totaled $177,000;
attorney's fees of $70,800 and costs of $29,200 were to be paid to the estate's counsel.
The remaining $77,000 would not pass through the estate, which would hold the funds
in trust for R.D.'s benefit. The estate asked that the court 'approv[e] the immediate
distribution of the settlement to pay costs, attorney['s] fees and for the establishment of
2 This proposed distribution was contested by the
a trust on behalf of the minor child."
remaining defendants (the non-settling defendants) and is the subject of this appeal.
Thenon-settling defendants contended that thesuperior court 'should deny
any distribution of the settlement proceeds until the entire wrongful death case . . . has
been finally resolved with respect to all parties." They argued that this was consistent
with Alaska's wrongful death statute, under which '[t]he amount recovered shall be
distributed only after payment of all costs and expenses of suit and debts and expenses
of administration."3 Counsel for Banner Health asserted that the non-settling defendants
1 When a decedent is survived by a statutory beneficiary (such as a minor
child) thepersonal representativemay maintain an action solely on behalf of thestatutory
beneficiary, who receives any award recovered. AS 09.55.580(a).
2 Settlements on behalf of minors must be approved by the court before
taking effect; prior to disbursing proceeds to the minor, '[t]he court shall order that
reasonable expenses . . . , costs and attorney's fees be paid from the settlement." Alaska
R. Civ. P. 90.2.
3 AS 09.55.580(a).
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had collectively accrued $1,214,755 in fees and costs and expected to accrue at least
$330,000 more at trial. Should they ultimately prevail, the non-settling defendants
would be entitled to recover a portion of their fees which would substantially exceed the
4 they therefore sought to have the entire fund reserved until the case
settlement amount;
was fully resolved.
All parties participated in a November 2018 minor settlement hearing
before a probate master. After discussing the terms with the settling parties, the master
heard arguments about possible disbursement of the settlement proceeds. The master's
written findings noted that the estate had not adequately explained the distribution of
litigation costs; the estate supplemented its petition, describing the claimed litigation
costs, its attorney's employment contract and time records, and the nexus between these
costs and the claims against the settling defendants. The estate explained that, for the
purposes of settlement, the settling defendants were one entity; because there were
functionally four entities, the settlement represented one quarter of its attorney's work
to date and thus one quarter of the attorney's costs should be paid from the proceeds.
The superior court 'approved the $177,000 settlement, the attorney['s] fee
amount of $70,800, and costs of $29,00[0]" at a hearing in May 2019, but treated
'distribution of the settlement proceeds" as 'a separate question." The non-settling
defendants requested that it reserve the proceeds 'until [the court could] determine the
full extent of 'costs and expenses of suit,' under AS 09.55.580." Citing In re Soldotna
Air Crash Litigation , they asserted that if not all defendants in a wrongful death case
were party to a settlement, part or all of its proceeds should be retained in a fund to pay
4
As prevailing parties the non-settling defendants would be entitled under
Alaska R. Civ. P. 82(b)(2) to at least 30% of their reasonable actual attorney's fees.
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5
any costs and fees awarded to prevailing defendants. They contended that because the
entire settlement might be required to pay attorney's fees the entire settlement should be
reserved.
The estate responded that Soldotna Air did not authorize the creation of
such a fund prior to the conclusion of litigation and that retaining the settlement proceeds
would be an impermissible prejudgment attachment. It further argued that the settlement
monies were for R.D. and that our holding in Zaverl v. Hanley shields non-party
6 Therefore, the estate asserted
statutory beneficiaries from liability for litigation costs.
that the court should immediately disburse the entire $177,000 to its counsel and R.D.
The superior court ordered the settlement funds be partially disbursed,
explaining that in a wrongful death suit '[t]he amount recovered shall be distributed only
after payment of all costs and expenses of suit and debts and expenses of
administration."7 Because the estate's attorney's efforts had obtained the settlement, the
superior court ordered that their costs of $29,000 and fees of $70,800 be distributed to
compensate for that effort. But because neither the estate nor R.D. could be held
personally liable for costs and fees if the non-settling defendants prevailed,8 the court
concluded Soldotna Air controlled, requiring a reservation of settlement proceeds to pay
the non-settling defendants' costs and fees in case they prevailed. The court ordered that
the remaining $77,200 in settlement funds be held 'until the remaining litigation is
complete and prevailing party status is determined in the wrongful death suit."
5 835 P.2d 1215, 1220 (Alaska 1992).
6 64 P.3d 809, 821-22 (Alaska 2003).
7 AS 09.55.580(a).
8 See AS 09.60.040 (costs not chargeable against personal representative);
Zaverl, 64 P.3d at 821-22 (costs not recoverable from non-party statutory beneficiaries).
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The estate now appeals, arguing that the court should have disbursed the
entiresettlement. Thenon-settling defendants cross-appeal,arguing that thecourt should
have reserved the entire settlement.
III. DISCUSSION
The estate argues that the superior court erred by applying Soldotna Air to
this case and reserving a portion of the settlement for potential prevailing defendants'
attorney's fees. It alternatively argues that if Soldotna Air compels that result, its
application here violates due process and is contrary to public policy. The non-settling
defendants respond that the court was right to apply Soldotna Air to create a fund but
wrong to first utilize some of the settlement to pay the estate's settlement-related
attorney's fees. These are questions of law to which we apply our independent
judgment. 9
A. The Reservation Of Settlement Funds For Non-Settling Defendants'
Potential Fees Was Proper.
1. The superior court correctly applied Soldotna Air.
We agree with the superior court that Soldotna Air controls here: the
statutes and civil rules governing wrongful death suits and fee awards can be effectuated
only through the creation of a reserved fund. We therefore affirm the superior court's
decision to reserve the settlement and prohibit disbursement to R.D. until prevailing
party status was established with regard to the other defendants.
9 ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc. , 322 P.3d
114, 122 (Alaska 2014) ('Determinations of which legal authorities apply in a case and
interpretations of what those legal authorities mean are questions of law subject to
de novo review." (footnotes omitted)); Alyssa B. v. State, Dep't of Health &Soc. Servs. ,
123 P.3d 646, 648 (Alaska 2005) (applying de novo review to interpretation of state
procedural rules).
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Wrongful death actions may be brought by the decedent's personal
representative, but '[t]he amount recovered, if any, shall be exclusively for the benefit
10 The proceeds 'shall be distributed only after
of the decedent's" statutory beneficiaries.
11
payment of all costs and expenses of suit and debts and expenses of administration."
Costs may be allowed against a personal representative who is party to an action, but
12 Alaska Civil
they are 'chargeable solely upon the estate, fund, or party represented."
Rule 79(a) permits the prevailing party in a civil suit to recover allowable costs 'that
were necessarily incurred in the action"; Alaska Civil Rule 82 provides for the recovery
of attorney's fees.
Alaska Civil Rule 90.2(a) requires court approval of settlements made on
behalf of a minor, including those arising from wrongful death actions. 'The court shall
approve any attorneys' fees and costs that are to be paid from the settlement proceeds
when the minor claimant is represented by counsel."13 'The court shall order that
reasonable expenses . . . , costs and attorney's fees be paid from the settlement."14 And
after all litigation expenses are paid, '[t]he court shall order that the remaining balance
of the settlement . . . be disposed of in a manner which benefits the best interests of the
minor."15 We have examined the interplay between these laws on several occasions, two
of which are particularly instructive here.
10 AS 09.55.580(a).
11 Id.
12
AS 09.60.040.
13 Alaska R. Civ. P. 90.2(a)(3).
14 Id. § (b)(1).
15
Id. § (b)(2).
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In Soldotna Air personal representatives brought wrongful death actions
16
againstmultipledefendantson behalfofstatutory beneficiaries.
Two defendants settled
17 The remaining defendant, SouthCentral
before trial for more than six million dollars.
Airlines, did not settle; it afterwards prevailed at trial and was awarded attorney's fees
and costs.18 But the superior court declined to block disbursement of the settlement
funds or allow SouthCentral to recover from the decedents' personal representatives or
statutory beneficiaries.19 On appeal we concluded that although SouthCentral could not
recover from the representatives in their personal capacities, it could recover settlement
funds already distributed to statutory beneficiaries.20 We also determined that the
superior court had erred in allowing distribution of the settlement, at least some of which
should have been reserved to pay costs and fees to SouthCentral if it prevailed at trial.21
We later clarified the available sources for recovering such costs and fees
22 We explained that the prevailing defendant could not collect
in Zaverl v. Hanley.
attorney's fees from non-party statutory beneficiaries in a wrongful death action
23 We
'because they did not appear and did not make claims in their personal capacities."
distinguished Soldotna Air on the grounds that the prevailing defendant in that case had
16 835 P.2d 1215, 1217 (Alaska 1992).
17 Id.
18 Id. at 1217-18.
19 Id. at 1218-19.
20 Id. at 1222-23.
21 Id. at 1221-22.
22 64 P.3d 809, 822 (Alaska 2003).
23 Id.
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sought recovery from a fund created by the other parties' settlement, concluding the
'prevailing defendant could [not] recover such an award from the statutory beneficiaries
24
in the absence of such a fund."
If in a wrongful death suit the only party plaintiff is the personal
representative in a representative capacity, a prevailing defendant may seek fees and
costs only from a reserved settlement fund. To effectuate our rules governing litigation
expenses, a fund must be reserved for potential attorney's fee awards. The superior court
correctly applied these rules here.
The estate attempts to distinguish Soldotna Air based on differences in the
procedural history and timeline. It argues SouthCentral was already a prevailing party
when it attempted to collect fees and costs, whereas the non-settling defendants here
were not prevailing parties or judgment creditors. Therefore, the estate argues, Soldotna
Air does not control: 'The decision in Soldotna Air is clearly distinguishable and applies
only where there is a prevailing party determination."
We disagree, and conclude that Soldotna Air controls the outcome.
Prevailing defendants are entitled to recover fees and costs, and plaintiffs in wrongful
death suits may collect proceeds only after all debts and litigation expenses are paid. The
non-settling defendants may not recover fees from Doan, as she appears only in her
representative capacity. Nor may they seek fees from R.D., as R.D. was never a party
to the suit. Their only option for fee recovery is from a reserved fund such as the
superior court created.
Our analysis does not change based on the relative size of the parties'
awards. In Soldotna Air only part of the settlement was needed to cover the prevailing
24 Id.
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25
defendant's fees, leaving the bulk of the proceeds for the statutory beneficiaries. But
we clearly contemplated a situation in which the beneficiaries might receive no
settlement proceeds when we advised that '[t]he trial court here should have reserved
distribution of some or all of the settlement monies until it could determine the full extent
26 Even though costs and fees had already exceeded the
of 'costs and expenses of suit.' "
settlement amount, the superior court did not err by reserving the funds.
The estate additionally argues that Soldotna Air should not be applied in a
minor settlement proceeding under Rule 90.2. It argues that the superior court should
have considered the child's best interests before that of the non-settling defendants. But
Soldotna Air also concerned the settlement of claims on behalf of a minor beneficiary of
one of the decedents.27 We nonetheless concluded in that case that prevailing
28 The same
defendants' attorney's fees were 'chargeable" against the settlement fund.
result must apply here.
2. Soldotna Air 's application here does not violate due process or
public policy.
The estate argues in the alternative that Soldotna Air as applied here results
in an unconstitutional prejudgment attachment to the settlement and should therefore be
overturned. We disagree. Under the wrongful death statute and Rule 90.2, R.D. had no
property interest in the settlement until it was approved by the court and the litigation
25 835 P.2d at 1217, 1219.
26 Id. at 1221 (emphasis added) (quoting AS 09.55.580(a)).
27 Id . at 1218.
28 Id. at 1222 (quoting AS 09.60.040).
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29
entirely concluded. Neither Doan nor R.D. suffered any constitutional violation
through the application of Soldotna Air .
The estate finally argues that the application of our holding in Soldotna Air
is contrary to public policy, alleging that it discourages parties from settling pre-trial and
urging us to overrule or narrow it. But we 'will overrule a prior decision only when
clearly convinced that the rule was originally erroneous or is no longer sound because
of changed conditions, and that more good than harm would result froma departure from
30
precedent." We decline to do so here.
Our holdings in Soldotna Air and Zaverl protect personal representatives
andnon-party beneficiaries frompersonal liability for attorney's fees. Alaskalawallows
prevailing parties to recoup part of the costs of defending their rights in court, but we
have determined that they may not fairly do so from non-parties. It is consistent with
public policy to reserve settlement funds until all parties' rights and obligations are
determined - otherwise our protective stance toward wrongful death plaintiffs would
prevent prevailing defendants from vindicating their legal rights. Given these
considerations, we are not 'clearly convinced" that departing from our precedent in
Soldotna Air and Zaverl would result in 'more good than harm."
29 See AS09.55.580(a) ('Theamount recoveredshallbedistributed only after
payment of all costs and expenses of suit and debts and expenses of administration.");
Alaska R. Civ. P. 90.2(a)(1) & (b)(1) (providing that before settlement on behalf of a
minor 'is effective, it must be approved by the court" and that the court must order
reasonable 'costs and attorney's fees be paid from the settlement" before disbursing the
remainder of the funds in the interest of the minor).
30 Harrold-Jones v. Drury, 422 P.3d 568, 576-77 (Alaska 2018) (quoting
Thomas v. Anchorage Equal Rights Comm'n, 102 P.3d 937, 943 (Alaska 2004)).
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B. The Superior Court Did Not Err In Distributing Funds For Plaintiff's
Attorney's Fees Under The Common Fund Doctrine.
The non-settling defendants cross-appeal, arguing that the superior court
erred by allowing payment of the estate's attorney's fees and costs from the settlement
fund. They assert that all settlement proceeds should have been reserved to pay the
eventual prevailing party. But it is only through the efforts of the estate and its attorney,
by pursuing the claim against the settling defendants, that a fund for the defendants'
recovery exists at all. We therefore construe the wrongful death statute to incorporate
the common fund doctrine, and we affirm the superior court's decision to allow payment
of costs and attorney's fees incurred in obtaining the settlement.
Under the common fund doctrine, 'a litigant or a lawyer who recovers a
common fund for the benefit of persons other than himself or his client is entitled to a
31 This prevents a third party from
reasonable attorney's fee from the fund as a whole."
'securing a windfall" at another's expense, keeps 'the entireburden ofthelitigation from
being borne by the injured plaintiff, prevent[s] unjust enrichment, and requir[es] passive
beneficiaries to share in the costs of recovery."32
We explained the doctrine in Alaska Native Tribal Health Consortium ,
holding that a health care consortium could enforce a lien on settlement proceeds
received by patients from third-party tortfeasors but that the consortium's liens must be
reduced by a pro rata share of the patients' attorneys' fees.33 Otherwise, the consortium
would be unjustly enriched by litigation efforts for which it bore no expense. It was able
31 Alaska Native Tribal Health Consortium v. Settlement Funds Held for or
to Be Paid on Behalf of E.R. ex rel. Ridley , 84 P.3d 418, 433 (Alaska 2004) (quoting
Edwards v. Alaska Pulp Corp. , 920 P.2d 751, 754 (Alaska 1996)).
32 Id .
33 Id. at 421.
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to collect on its liens only because 'the plaintiffs' lawyers created a fund that would not
otherwise exist." 34
Under Alaska law, the four elements of a common fund recovery are met
when: '(1) [T]he efforts of one party (2) result in the creation of a fund benefit[t]ing a
third party (3) who is benefitted in a clear and well-defined manner, and (4) the third
party is ready and willing to accept the benefits so obtained."35 We have applied this
doctrine in workers' compensation cases,36 class action suits,37 and insurance
settlements.38 We now hold that the wrongful death statute should be construed to
incorporate the common fund doctrine if these four necessary elements are present.
The efforts of the estate and its attorney 'created a fund that would not
otherwiseexist."39 Theestate's settlementwiththesettling defendants occurred over five
34 Id. at 434 (quoting Edwards, 920 P.2d at 756).
35 O'Donnell v. Johnson, 209 P.3d 128, 134 (Alaska 2009) (discussing
doctrine in context of insurer collecting lien from patient's recovery fund).
36 See Cooper v. Argonaut Ins. Cos., 556 P.2d 525, 527 (Alaska 1976)
(interpreting statute to require reducing amount insurer is reimbursed from a worker's
compensation disbursement by proportionate share of attorney's fees).
37 See Edwards, 920 P.2d at 753 (concluding plaintiffs' attorneys entitled to
fees from settlement fund under common fund doctrine).
38 See Sidney v. Allstate Ins. Co., 187 P.3d 443, 445, 454-55 (Alaska 2008)
(concluding that injured passenger's insurance carrier, which had reduced its payment
to her by the amount she had received from a settlement with the driver's insurance
carrier, was liable for a pro rata award of attorney's fees). But cf. O'Donnell, 209 P.3d
at 135 ('[I]f an insurer chooses not to rely on services of plaintiff's counsel and provides
notice of this, there is no benefit conferred and no unjust enrichment, and thus common
fund rule does not apply.").
39 Alaska Native TribalHealth Consortium, 84P.3d at 434 (quoting Edwards,
(continued...)
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----------------------- Page 14-----------------------
years into the litigation, and the estate has explained the 'nexus" between its attorney's
work and the settlement amount. Without this work, the non-settling defendants would
have no source from which to recover any costs or fees. They are third parties
benefitting in a clear and well-defined manner from the fund created by the estate's
efforts, and this appeal demonstrates that they are 'ready and willing" to accept those
40 We therefore apply the common fund doctrine to avoid unjust enrichment and
benefits.
prevent the injured plaintiff from bearing the litigation costs alone.
Thenon-settlingdefendantsarguethatthey areonly 'indirectbeneficiaries"
of the estate's efforts to obtain a settlement,41 more akin to general creditors than
insurance providers or holders of a medical lien, and that the common fund doctrine is
inapplicable. We disagree.
It is true that the common fund doctrine does not extend to 'general
obligations that existed before the plaintiff's injury."42 We declined to apply the doctrine
in Hendricks-Pearce v. State, Department of Corrections after the State recovered on a
43 The State was only an
medical debt from a prisoner's award in an unrelated suit.
'indirect beneficiar[y]" of the prisoner's suit because his medical expenses were
unrelated to the judgment in his favor, and so we rejected the prisoner's argument that
39 (...continued)
920 P.2d at 756).
40 O'Donnell, 209 P.3d at 134.
41 Hendricks-Pearce v. State, Dep't of Corr., 323 P.3d 30, 39 (Alaska 2014).
42 Id.
43 Id.
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44
the State should pay part of his attorney's fees. The non-settling defendants claim they
are similarly indirect beneficiaries. But this ignores the nature and origin of their claim
on the settlement fund.
The interplay of Alaska statutes and rules, as we recognized in Soldotna
Air , necessitates consideration of a wrongful death action as a whole, even when some
45 The non-settling defendants only have a claim on the
parties settle independently.
proceeds of the estate's settlement because that settlement arose from the same suit as
their litigation expenses. If these were treated as two separate legal actions, the
defendants would have no right to collect anything; the award would already have been
disbursed to the estate's attorney and R.D., putting it beyond the defendants' reach.46 It
would be inconsistent with our precedent in Soldotna Air, the course of this litigation,
and the non-settling defendants' own argument to treat their claim as a general
obligation, independent of the settlement.
Applying the common fund doctrine, we conclude that the non-settling
defendants would be responsible for a pro rata share of the estate's litigation costs in
procuring the settlement. Thus, thesuperior court correctly awarded the estate's attorney
the costs and fees for the attorney's work securing the settlement.47
44 Id.
45 See In re Soldotna Air Crash Litig., 835 P.2d 1215, 1221-22 (Alaska 1992);
AS 09.55.580(a), 09.60.040; Alaska R. Civ. P. 82, 90.2.
46 See Zaverl v. Hanley, 64 P.3d 809, 822 (Alaska 2003); AS 09.60.040.
47 After reviewing the terms of the settlement and the estate's agreement with
its attorney, the superior court approved both the settlement and the amounts of the
attorney's fees and costs. The parties have not disputed this decision or argued that the
fees and costs were unreasonable.
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IV. CONCLUSION
We AFFIRM the superior court's judgment.
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