ANCHORAGE, Alaska (Legal Newsline) – The Alaska Supreme Court has affirmed a ruling after a plaintiff claimed she beat the offer of judgment by the defendant sea food company and alleged that the Superior Court wrongly excluded costs for her award.
"We conclude that the offer of judgment was valid and that the court did not err in excluding costs not covered by Alaska Civil Rule 79 when comparing the offer to the mother’s recovery," the court ruled Sept. 22.
According to the opinion, Brandy and Charles Whittenton filed suit in 2013 after Brandy and daughter Delila were injured when an employee for Peter Pan Seafood hit their car with his in 2011. The father, Charles, was not in the vehicle, but filed for loss of consortium.
The opinion states that Peter Pan tried to settle by offering judgment amounts to the three plaintiffs, but they were rejected. The Whittentons were awarded a sum at trial, and though Delila’s was more than the offer Peter Pan extended, Brandy’s was less than the offer from Peter Pan.
The seafood company filed a motion to be considered the prevailing party, arguing that under Alaska’s Rule 68, it was entitled to a portion of the fees and costs it had incurred after the offer was made.
The motion was granted, and the plaintiffs filed to reconsider, alleging a clerical error and that Brandy had beat the judgment, and then appealed to the Supreme Court.
Brandy claimed that the awarded judgment to her was calculated incorrectly, and was less due to costs incurred after the fact. She argued that the offer of judgment was not a valid Rule 68 offer, which states that "if the judgment finally rendered by the court is at least 5 percent less favorable to the offeree than the offer, or, if there are multiple defendants, at least 10 percent less favorable to the offeree than the offer, the offeree, whether the party making the claim or defending against the claim, shall pay all costs as allowed under the Civil Rules and shall pay reasonable actual attorney’s fees incurred by the offeror from the date the offer was made," the opinion stated.
Whittenton claimed that the Superior Court wrongly excluded certain costs that would have led to an award of more than 95 percent of the offer of judgment.
The Whittentons claimed that to satisfy the requirements of Rule 68, to end the entire litigation, Peter Pan was required to make offers to all three of them. Relying on the court’s decision in Windel v. Mat-Su Title Insurance Agency, the Whittentons claimed that the courts have applied Rule 68 to require an offer of judgment to be able to resolve the case completely.
The Whittentons alleged that even if Brandy had accepted Peter Pan’s offer of judgment, they still would have had to prove her injuries, which underlay Delila’s and Charles’ claims.
Referencing another ruling in which the court had expressed its disapproval of potentially abusive offer of judgment tactics, the Whittentons said Peter Pan’s offer to Brandy would have coerced them into abandoning Delila’s and Charles’ claims.
Responding to the reliance on those cases, Justice Susan M. Carney pointed out that Windel did not address a situation like this with a defendant attempting to offer judgment with multiple plaintiffs and separate claims.
Carney said that the difference between the Whittenton’s case and Progressive, in which the insurer attempted to include a payment made to the insured in the recovery, was that “the possibility of abuse was based in large part on the risk of plaintiffs potentially having to pay very high Rule 68 fee awards if the offeror’s legal argument in that case were adopted…. the risk that such payments could be used to abuse Rule 68 and trigger ‘ruinous penalties’. ... But the situation described by the Whittentons here is inherently limited to relatively small potential losses: It relates only to small claims that would not be cost effective to litigate separately.”
The Whittentons also attempted to say that it was impossible for Brandy to have known that the costs she would be awarded would be only those that fall under Alaska Civil Procedure 79, which lays out how a prevailing party will be entitled to costs in civil cases. Carney was not persuaded, and said that this was not a reasonable argument, that civil case awards are governed by Rule 79.
The court essentially said that part of going to trial is taking the risk that you may or may not receive more than the defendant offered you.
Carney furthered this by saying, “The uncertainty around the court clerk’s decisions on discretionary costs is no greater than the uncertainty around the amount the jury will award. When faced with an offer of judgment, every offeree must weigh the probability of recovering a greater amount against her own tolerance for risk.”
The Supreme Court concluded that the court did not err in excluding costs not covered by Alaska Civil Rule 79 when comparing the offer to the Brandy’s recovery.
Supreme Court for the State of Alaska, case number S-16285