Whittenton v. Peter Pan Seafoods, Inc. , 421 P.3d 1133 ( 2017 )

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, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
BRANDY WHITTENTON, CHARLES )
WHITTENTON, and DELILA ) Supreme Court No. S-16285
WHITTENTON, a Minor, )
) Superior Court No. 3VA-14-00054 CI
Appellants, )
) OPINION
v. )
) No. 7203 – September 22, 2017
PETER PAN SEAFOODS, INC., )
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Valdez, Daniel Schally, Judge pro tem.
Appearances: Thomas R. Wickwire, Fairbanks, for
Appellants. William H. Ingaldson, Ingaldson Fitzgerald,
P.C., Anchorage, for Appellee.
Before: Stowers, Chief Justice, Winfree, Bolger, and Carney,
Justices. [Maassen, Justice, not participating.]
CARNEY, Justice.
I. INTRODUCTION
After a mother and daughter were involved in a car accident, they and the
father sued the employer of the other vehicle’s driver. The employer made separate
offers of judgment to the mother and daughter under Alaska Civil Rule 68, which they
rejected. At trial all three plaintiffs were awarded damages. But — with respect to the
mother — the superior court awarded partial attorney’s fees to the employer under
Rule 68 because the mother’s award was less than 95% of the offer made to her.
The mother appeals, arguing that the offer of judgment was not a valid
Rule 68 offer and that the superior court wrongly excluded certain costs that, when
included, would have led to an award of more than 95% of the offer of judgment. 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.
II. FACTS AND PROCEEDINGS
A. Facts And Pretrial Proceedings
In September 2011, while Brandy and Charles Whittenton and their
daughter Delila were on vacation in Valdez, a vehicle driven by a Peter Pan Seafoods
employee backed into their vehicle. Only Brandy and Delila were in the vehicle at the
time of the collision.
The Whittentons filed suit against Peter Pan in August 2013. Brandy and
Delila sought damages for pain and suffering from injuries incurred in the collision.
Brandy also sought damages for medical expenses and damage to the vehicle, while
Charles sought damages for loss of consortium.
In June 2015 Peter Pan made Alaska Civil Rule 681 offers of judgment to
1
Civil Rule 68 provides:
(a) At any time more than 10 days before the trial
begins, either the party making a claim or the party defending
against a claim may serve upon the adverse party an offer to
allow judgment to be entered in complete satisfaction of the
claim for the money or property or to the effect specified in
the offer, with costs then accrued. . . .
(continued...)
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Brandy and Delila.2 Peter Pan separately offered to pay Brandy $23,500 and Delila
$2,000, both “inclusive of costs, interest and attorney’s fees.” Neither offer was
accepted. The following month the Whittentons amended their complaint to add a new
claim for loss of parental consortium on Delila’s behalf.
B. Trial And Post-Trial Proceedings
After a trial in October 2015 the jury awarded damages to all three
plaintiffs. Brandy was awarded a total of $15,796.33. The jury awarded Charles $2,000
and Delila $4,524. The award to Delila exceeded the offer of judgment made to her.
Peter Pan then moved to be considered the prevailing party for Rule 68
purposes with respect to Brandy’s claims. It argued that Brandy’s total recovery,
including prejudgment interest, costs, and attorney’s fees, was $21,434.70 — less than
95% of the $23,500 offer of judgment — and that it was therefore entitled to 50% of the
fees and costs it had incurred after the offer was made. The Whittentons opposed,
arguing that the offer was invalid and that they had incurred additional costs prior to the
offer that Peter Pan had not included in its calculation. This included costs related to two
depositions that did not occur as scheduled. In reply Peter Pan conceded that the
1
(...continued)
(b) 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 . . . .
2
At oral argument Peter Pan explained that, based on the facts of the case,
it had assigned little value to Charles’s claim.
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Whittentons were entitled to some additional costs, but not enough to beat the offer of
judgment.
The superior court first denied Peter Pan’s motion, citing Progressive Corp.
v. Peter ex rel Peter.3 It ruled that because the offer was addressed only to Brandy, it
was “invalid as failing to further the goals of [Rule 68] and AS 09.30.065 because it
would not have ended the entire litigation between the parties.” Peter Pan moved for
reconsideration, arguing that the judge had misinterpreted Progressive’s holding. The
superior court reconsidered its decision and declared Peter Pan the prevailing party under
Rule 68.
The Whittentons filed for reconsideration of the new order, arguing that the
Rule 68 comparison could not be made until the clerk ruled on their costs bill and
attorney’s fees. The superior court denied the motion and awarded Peter Pan attorney’s
fees and costs. The Whittentons then moved to correct a “clerical mistake,” arguing that
Peter Pan’s motion to be considered the prevailing party had omitted some costs. The
Whittentons claimed that they had incurred $2,446.13 in costs before the offer of
judgment — $2,290.02 more than Peter Pan had originally calculated — and that those
costs all should be added to Brandy’s award for comparison with the offer. Peter Pan
again conceded that two of the additional cost items, totaling $207.50, should have been
included, but argued that the others were not recoverable under Alaska Civil Rule 79.
The court ultimately denied the Whittentons’ motion except as to the additional $207.50
Peter Pan had conceded; Brandy’s total damage award remained less than 95% of the
offer of judgment. After subtracting attorney’s fees and costs in favor of Peter Pan,
Brandy’s total recovery was $3,374.68.
The Whittentons appeal.
3
195 P.3d 1083, 1087 (Alaska 2008).
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III. STANDARD OF REVIEW
“The interpretation of Rule 68 ‘is a question of law that [we] review[] de
novo, adopting the rule of law that is “most persuasive in light of precedent, policy, and
reason.” ’ ”4 Whether an offer of judgment complies with Rule 68 is also a question of
law which we review de novo,5 because “[a]n offer of judgment and acceptance thereof
is a contract.”6
IV. DISCUSSION
Rule 68 is intended “to encourage reasonable settlements and avoid
protracted litigation.”7 It allows a party, before trial, to make an offer of judgment to an
opposing party “in complete satisfaction of the claim . . . with costs then accrued.”8 If
the offer is not accepted and the judgment finally rendered “is at least 5 percent less
favorable to the offeree than the offer,” the offeree must pay all costs allowed under the
Civil Rules and a percentage of “reasonable actual attorney’s fees incurred by the offeror
from the date the offer was made.”9
The Whittentons argue that Peter Pan’s offer of judgment to Brandy did not
satisfy the requirements of Rule 68 because it would not have ended the entire litigation.
4
Cook Schuhmann & Groseclose, Inc. v. Brown & Root, Inc., 116 P.3d 592,
597 (Alaska 2005) (quoting Mackie v. Chizmar, 965 P.2d 1202, 1204 (Alaska 1998)).
5
See Marshall v. Peter, 377 P.3d 952, 956 (Alaska 2016) (quoting Tagaban
v. City of Pelican, 358 P.3d 571, 575 (Alaska 2015)).
6
Pagenkopf v. Chatham Elec., Inc., 165 P.3d 634, 638 (Alaska 2007)
(alteration in original) (quoting Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska 1996)).
7
Id. at 644 (citing Cook Schuhmann & Groseclose, 116 P.3d at 598).
8
Alaska R. Civ. P. 68(a); see also AS 09.30.065(a).
9
Alaska R. Civ. P. 68(b).
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They also argue that even if the offer was valid, Brandy beat the offer because it should
be construed to include all costs incurred, not just costs allowable under Rule 79.10
A. Peter Pan’s Offer Of Judgment Was Valid.
In order to trigger Rule 68 penalties, an unaccepted offer of judgment must
“include all claims between the parties and be capable of completely resolving the case
by way of a final judgment if accepted.”11 An offer that addresses only some of a
plaintiff’s claims would not have that effect and therefore would not satisfy Rule 68.12
The Whittentons argue that Peter Pan’s offer to Brandy was invalid because it would
have resolved only her claims and would not have ended the entire litigation.
We have held that unapportioned offers are invalid,13 as are apportioned
offers that are conditioned on joint acceptance by all parties.14 But we have also upheld
an offer of judgment that made a separate offer to each plaintiff such that one plaintiff
10
The Whittentons’ Statement of Points on Appeal lists other issues that they
do not address in their briefs. These issues are waived. Oels v. Anchorage Police Dep’t
Emps. Ass’n, 279 P.3d 589, 598 (Alaska 2012) (“[I]ssues not argued in opening appellate
briefs are waived.” (quoting Hymes v. DeRamus, 222 P.3d 874, 887 (Alaska 2010))).
11
Windel v. Mat-Su Title Ins. Agency, Inc., 305 P.3d 264, 280 (Alaska 2013)
(quoting Progressive Corp. v. Peter ex rel. Peter, 195 P.3d 1083, 1088 (Alaska 2008)).
12
Progressive, 195 P.3d at 1088 (holding that an offer of judgment that
explicitly excluded one of the plaintiff’s claims was not valid for Rule 68 purposes).
13
Windel, 305 P.3d at 279 n.39 (“[A]n offer of judgment must not be a joint
and un-apportioned offer to multiple offerees.” (citing Jaso v. McCarthy, 923 P.2d 795,
801 (Alaska 1996))).
14
Hayes v. Xerox Corp., 718 P.2d 929, 937-38 (Alaska 1986) (holding that
an offer of judgment was not conditional upon joint acceptance and therefore was not
invalid on those grounds).
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could have accepted an offer while the other went to trial.15 The Whittentons
acknowledge these cases, but they argue that we have applied Rule 68 to require that an
offer of judgment must be capable of ending the entire litigation between all parties
involved, not merely between the parties to the offer. Because a single offer to multiple
parties is barred by our decisions rejecting unapportioned and conditional offers, they
argue that Peter Pan was required to make offers to all three plaintiffs.
The Whittentons base their argument on Windel v. Mat-Su Title Insurance
Agency, which they say held that Rule 68 has a goal “of completely resolving the case.”16
They argue that if we intended to hold that an offer must entirely resolve the claims of
only one party to be valid, we would have stated that an offer of judgment must be
capable of resolving the claim.17 Because we did not, they argue, Windel requires offers
of judgment to resolve the entire litigation among all parties. Peter Pan responds that this
reading is prevented by other case law and that it would be unreasonable for Rule 68 to
require offers to each opposing party, regardless of the strength of their respective
claims.
In Windel we stated that “an offer of judgment must encompass every claim
in the litigation,” emphasizing “the requirement that ‘an offer of judgment include all
claims between the parties and be capable of completely resolving the case by way of a
final judgment if accepted.’ ”18 Windel involved an easement dispute in which the
15
Id.
16
Windel, 305 P.3d at 280 (quoting Progressive, 195 P.3d at 1088).
17
See id. (“[A]n offer of judgment [must] include all claims between the
parties and be capable of completely resolving the case by way of a final judgment if
accepted.” (emphasis added) (quoting Progressive, 195 P.3d at 1088)).
18
Id. at 279-80 (quoting Progressive, 195 P.3d at 1088).
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defendant landowner made an offer of judgment to the plaintiff landowners.19 The issue
before us was whether the offer encompassed additional claims later asserted by both
parties.20 We reiterated only the well-established rule that an offer of judgment must
encompass all claims between the parties to the offer.21 We did not address a situation
such as this one: an offeror defendant who was faced with multiple plaintiffs and
potential offerees, each of whom brought separate claims.
We agree with Peter Pan’s interpretation. Other cases undercut the
Whittentons’ reading of Windel and Rule 68. In Hayes v. Xerox Corp. the defendant
made an offer of judgment to two plaintiffs.22 The offer was addressed to both plaintiffs
in one document, but it explicitly offered to allow entry of judgment in a separate amount
to each individual plaintiff.23 The superior court concluded that this was not a joint offer
and awarded attorney’s fees and costs to the defendant under Rule 68.24 We affirmed,
19
Id. at 267-68.
20
Id. at 280.
21
Id.; see, e.g., Progressive, 195 P.3d at 1087-88 (holding that an offer of
judgment was not valid under Rule 68 because it explicitly excluded one of the causes
of action between the two parties and therefore “would not have ended the entire
litigation between [them]”); Pagenkopf v. Chatham Elec., Inc., 165 P.3d 634, 636-37,
640 (Alaska 2007) (indicating that, in a case involving a third-party complaint by the
defendant, an offer of judgment was not ambiguous under Rule 68 because it identified
the parties involved and “clearly indicated all claims between the parties would be
resolved if the offer were accepted” (quoting John’s Heating Serv. v. Lamb, 46 P.3d
1024, 1042 n.85 (Alaska 2002))).
22
718 P.2d 929, 931 (Alaska 1986).
23
Id. at 936.
24
Id. at 936-37.
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holding that the offer was not joint because it did not require both parties to accept it.25
The offer was valid for Rule 68 purposes precisely because one plaintiff could accept
while the other continued to trial.26
Because the language in Windel could be interpreted to diverge from our
holding in Hayes, we now clarify what will trigger Rule 68’s penalty. An offer of
judgment to one of several opposing parties that would end the entire litigation between
the parties to the offer triggers Rule 68 cost penalties against the offeree, regardless of
whether other plaintiffs have outstanding claims that may go to trial.27
The Whittentons attempt to distinguish Hayes based on the high cost of trial
on Delila’s and Charles’s loss of consortium claims. They argue that even if Brandy had
accepted the offer, “no trial time or expense would have been saved” because they still
would have had to prove her injuries, which underlay Delila’s and Charles’s claims.
They argue that this situation rendered Peter Pan’s offer a coercive attempt to force
Delila and Charles to abandon their claims and point to our disapproval of potentially
abusive offer of judgment tactics in Progressive.28
But our concern in Progressive about 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.29 There the defendant insurance
25
Id. at 938.
26
See id. at 937-38.
27
See Windel v. Mat-Su Title Ins. Agency, Inc., 305 P.3d 264, 279-80 (Alaska
2013); Hayes, 718 P.2d at 937-38.
28
195 P.3d 1083, 1091-92 (Alaska 2008).
29
See id.
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company made two offers of judgment to the plaintiff.30 Then after five years of
litigation it made a large payment under the disputed insurance policy.31 The insurer
argued that the payment should not be considered part of the plaintiff’s recovery because
it was a “voluntary” payment rather than part of a judgment.32 We held that, under the
circumstances, it was not erroneous for the superior court to consider the payment as part
of the plaintiff’s recovery, in part because of the risk that such payments could be used
to abuse Rule 68 and trigger “ruinous penalt[ies]” like the fee award exceeding $622,000
requested there.33
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. And their argument that Peter Pan’s offer to Brandy
would have coerced them into abandoning Delila’s and Charles’s claims is undercut by
Peter Pan’s $2,000 offer of judgment to Delila, served on the same date as the offer to
Brandy.34 The Whittentons have not persuaded us of a need to amend our interpretation
of Rule 68 based on a risk of coercion under such circumstances.
30
Id. at 1086.
31
Id.
32
Id. at 1091.
33
Id. at 1090-92.
34
The offer was much better than the $524 Delila eventually recovered on the
general damages claim it was based on; her overall recovery exceeded the offer based
only on the $4,000 she received for loss of parental consortium, but that claim was
brought after the offer was made.
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B. Brandy Did Not Beat The Offer Of Judgment.
To determine whether an offeree beat an offer of judgment, courts are
directed to begin with the jury award and add prejudgment interest and costs incurred
prior to the offer of judgment.35 This sum is compared with the offer of judgment.36
Where, as here, there is one defendant, the offeree must pay the offeror’s fees and costs
if the judgment “is at least 5 percent less favorable to the offeree than the offer.”37
Peter Pan’s offer of judgment to Brandy was for $23,500, including costs,
interest, and attorney’s fees; 95% of that is $22,325. The jury awarded Brandy
$15,796.33, which increased to at most $21,926.21 when prejudgment interest and costs
were included. The Whittentons argue that the court wrongly excluded some costs and
that Brandy beat the offer of judgment when those costs are included.
Rule 68(a) requires a valid offer of judgment to include “costs then
accrued.” Unlike Rule 68(b), it does not explicitly state that these costs are the costs
allowable under the Civil Rules. But we have held that an earlier version of Rule 68(a),
containing nearly identical language about the content of the offer,38 required “costs
allowable under Rule 79” to be awarded when an offer of judgment did not include
them.39 This interpretation is consistent with the meaning of costs in Rule 68(b), and the
35
Andrus v. Lena, 975 P.2d 54, 57 n.3 (Alaska 1999) (citing Farnsworth v.
Steiner, 601 P.2d 266, 269 n.4 (Alaska 1979); Alaska R. Civ. P. 82(b)(1)).
36
Id. (citing Farnsworth, 601 P.2d at 269 n.4; Alaska R. Civ. P. 82(b)(1)).
37
Alaska R. Civ. P. 68(b).
38
LaPerriere v. Shrum, 721 P.2d 630, 632 n.2 (Alaska 1986) (requiring the
offer to be “for the money or property or to the effect specified in [the] offer, with costs
then accrued” (quoting former Alaska R. Civ. P. 68(a))).
39
Id. at 635.
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Whittentons do not argue that we should change or expand our interpretation of what
costs must be included in a valid offer of judgment under Rule 68(a). They instead argue
that, whatever Rule 68 might require, Peter Pan’s offer included all costs, not only Rule
79 costs.40
Because “[a]n offer of judgment and acceptance thereof is a contract,”41 the
terms of the offer of judgment control what the offer includes. Even when an offer is not
accepted, we examine it as we would a contract, looking at the text of the agreement and
any extrinsic evidence of the parties’ intent at the time of the offer to determine its
meaning.42 The offer’s terms must be viewed “as a reasonable offeree would have
understood them at the time the offer was made.”43 The question is therefore whether a
reasonable offeree would have understood Peter Pan’s reference to “costs” to mean “all
costs” or “costs allowable under Rule 79.”
40
The Whittentons also argue that the court erred in excluding the costs of
attempting to depose two Peter Pan seasonal employees. Because they make no attempt
to argue that these costs, or any of the other costs excluded from the calculations relied
on by the superior court, were allowable under Rule 79 and therefore proper to be
considered, this argument is abandoned. Oels v. Anchorage Police Dep’t Emps. Ass’n,
279 P.3d 589, 598 (Alaska 2012) (“On appeal . . . , the ‘[f]ailure to argue a point of law
constitutes abandonment.’ ” (alteration in original) (quoting Smallwood v. Cent.
Peninsula Gen. Hosp., Inc., 227 P.3d 457, 460 (Alaska 2010))).
41
Pagenkopf v. Chatham Elec., Inc., 165 P.3d 634, 638 (Alaska 2007)
(alteration in original) (quoting Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska 1996)).
42
See Hayes v. Xerox Corp., 718 P.2d 929, 937 (Alaska 1986) (citing Norton
v. Herron, 677 P.2d 877, 880 (Alaska 1984)) (applying this method to unaccepted offers
of judgment).
43
Thomann v. Fouse, 93 P.3d 1048, 1050 (Alaska 2004) (citing Bayly, Martin
& Fay, Inc., of Alaska v. Arctic Auto Rental, Inc., 517 P.2d 1406, 1407 (Alaska 1974);
Hayes, 718 P.2d at 937).
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The Whittentons do not rely on the contract interpretation approach we
have established for determining the meaning of a Rule 68 offer of judgment. Instead
they argue that “[i]t would be straining reason to expect Brandy to have understood” the
reference to costs to mean only costs allowable under Rule 79. This would be
unreasonable, they argue, because in order to evaluate the offer she would have to “try
to predict how the Clerk . . . would rule on discretionary items” when applying Rule 79.
But the entire exercise of evaluating an offer of judgment involves predicting uncertain
future outcomes; 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.44
There is no reason to believe that a reasonable offeree would have
understood the offer to include all costs. This was a civil case, where cost awards are
generally governed by Rule 79.45 The term “costs” in the offer of judgment context
generally refers to allowable costs under the applicable Civil Rules.46 The Whittentons
presented no extrinsic evidence to show that the parties intended to depart from this
44
This type of uncertainty, which is inherent in the process, is different from
the ambiguity prohibited in the offer of judgment. See Pagenkopf, 165 P.3d at 638 (“In
applying Rule 68, we have consistently emphasized that an enforceable offer must be
unambiguous . . . .”). Brandy’s gain under Peter Pan’s offer is not ambiguous; if Brandy
had accepted it, she would have received $23,500.
45
Alaska R. Civ. P. 79 (outlining how a prevailing party is generally entitled
to recover certain costs).
46
Rule 68(b) requires offerees to pay “all costs as allowed under the Civil
Rules.” See LaPerriere v. Shrum, 721 P.2d 630, 635 (Alaska 1986) (holding that “costs
allowable under Rule 79” must be awarded in addition to an unconditional offer that did
not include costs).
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meaning; they focus only on the absence of an explicit reference to Rule 79. Under these
circumstances, a reasonable offeree would not have interpreted the offer to include costs
beyond those allowed under Rule 79. The offer therefore included only Rule 79 costs.
V. CONCLUSION
The judgment of the superior court is AFFIRMED.
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