Opinion ID: 1428032
Heading Depth: 3
Heading Rank: 2

Heading: Accountancy Fees

Text: We will overturn an award of costs only if the superior court clearly abused its discretion, [7] such that the award of costs was manifestly unreasonable. [8] Seaward filed a cost bill after entry of final judgment. Under the category Experts retained as consultants, he sought an award of $5,146.11 to pay fees he owed Sramek-Hightower, an accounting firm he had retained. His preliminary witness list had listed Robert Sramek, a CPA, as an expert witness. The court clerk denied this cost item. Invoking Alaska Civil Rule 79(b), Seaward asked the superior court to review the clerk's denial. In support, Seaward cited the court-appointed discovery master's report, issued during pretrial discovery when Seaward sought production of the partnerships' books and records; the report recommended that Strong reimburse Seaward for any reasonable costs and fees [he had] to incur to develop the full accounting information of the two partnerships. The superior court had adopted the discovery master's recommendations before trial. Seaward's counsel also affirmed that Sramek's services were necessary to reconstruct accountings for some of the real estate transactions involved in this dispute. Over Strong's opposition, the superior court awarded Seaward the $5,146.11 he claimed for Sramek's services. Strong attacks the cost award on three grounds: (1) the superior court impermissibly departed from Alaska Administrative Rule 7(c); (2) the superior court improperly allowed Seaward to present materials that had not been before the clerk; and (3) there was no basis for the award under Alaska Civil Rule 79(b). Seaward does not directly address Strong's Administrative Rule 7(c) argument. Rather, he argues that the catch-all provision of the former version of Civil Rule 79(b), which applied at the time of the cost award, permits him to recover the cost of Sramek's services. [9] Former Civil Rule 79(b) provided that, a party shall be allowed any other expenses necessarily incurred in order to enable a party to secure some right accorded the party in the action or proceeding. Seaward may not recover for Sramek's services under Civil Rule 79(b)'s catch-all provision for a cost category expressly addressed in Administrative Rule 7(c). In Yurioff v. American Honda Motor Co., [10] we held that a party may not recover costs for expert witnesses under the Civil Rule 79(b) catch-all provision, if the requested costs exceed the limits of Administrative Rule 7(c). [11] Administrative Rule 7(c) provides for the recovery of fees paid to expert witnesses. [12] Therefore, under Yurioff, Seaward may not invoke Civil Rule 79(b)'s catch-all provision in order to recover the accountancy fees as expert witness fees. This is so even though Administrative Rule 7(c) bars the recovery of expert fees here because Sramek did not testify. [13] So long as the rationale for recovering Sramek's fees is his status as an expert witness, Civil Rule 79(b)'s catch-all clause is inapplicable. Seaward seems to imply that Administrative Rule 7(c) should not apply because Sramek was a consulting expert, rather than a testifying expert witness. Under this theory, had Sramek testified, Seaward's recovery would have been strictly limited by Administrative Rule 7(c) and Seaward could not have recovered Sramek's full fees. It would be anomalous to deny full preparation costs for expert witnesses who testify under Administrative Rule 7(c), but to award full costs under Civil Rule 79(b) for expert consultants who do not testify on the theory Administrative Rule 7(c) does not apply. To do so would encourage parties to classify their experts as consultants so they could recover their full costs without the limits imposed by Administrative Rule 7(c). We decline to encourage that sort of circumvention of Administrative Rule 7(c) even though it means that some costs necessary for litigation success are potentially not recoverable. We have recognized that [w]henever tortious injury is inflicted, the party suffering harm faces, at a minimum, disruption and inconvenience. In the process of protecting a claim and acting upon it, an injured party usually expends time, effort and money. Some of these items are readily quantifiable, while others either defy valuation entirely or are measurable only when the party suffering damage is a large organization with a specialized division to conduct the necessary claims activities. Such costs normally should be regarded as unrecoverable expenses which arise due to the inherent friction within our system of damage recovery through civil litigation. As such, they are not properly included as items of damage. [14] Seaward contends that the superior court was entitled to award the costs based on the discovery master's recommendation that Strong reimburse Seaward for any reasonable costs and fees [he had] to incur to develop the full accounting information of the two partnerships. We reject this argument. The discovery master's recommendation did not give the superior court discretion to award Civil Rule 79(b) costs not otherwise permitted by that rule. Seaward alternatively argues that, because the discovery master found that Strong's production of documents was inadequate, the costs award was a proper discovery sanction under Alaska Civil Rule 37. Seaward appears to raise this argument for the first time on appeal. During discovery, Seaward filed a motion to compel to obtain copies of the partnerships' books and records not produced during the initial round of discovery. Strong provided additional information, but could not provide a check register as requested because he claimed that one had not been kept. Reasoning that Alaska partnership law imposes a fiduciary duty on partnerships to keep such records, the discovery master recommended that Strong be required to pay the cost, including accountancy fees, of reconstructing the check register. In making this recommendation, the discovery master did not rely on or cite Civil Rule 37 or its subparts; did not mention the words sanction or violation; and did not recommend or discuss imposing a sanction. The discovery master did complain that Strong failed to supplement his discovery responses until after Seaward filed a motion to compel. But the discovery master did not find that Strong had wilfully violated any outstanding discovery order or that Strong's conduct in discovery so thwarted the discovery process that the requirements of Civil Rule 37(g) were necessarily satisfied. Instead, he noted that the precise extent of the supplemental materials and written responses that should have been provided initially, versus those that were provided after the motion to compel, cannot be determined. The discovery master did reject as not credible Strong's argument that there were no check registers, and found that it was inconceivable that a business would operate without a check register or some other means to track income and expenses. But this finding was not made in context of a request for Civil Rule 37 sanctions. Considered in isolation, it does not allow us to hold as a matter of law that the discovery master, if asked to do so, would have found sanctionable conduct and recommended Civil Rule 37 sanctions. Nor did Seaward raise Civil Rule 37, expressly or implicitly, when he asked the superior court to review the clerk's refusal to award accountancy fees; Seaward instead relied on the discovery master's recommendations and Alaska Civil Rule 79(b). Strong did not discuss Civil Rule 37 either. Because the issue of wilfulness was not before the superior court, Strong had no reason to offer evidence on that issue, and did not do so. Likewise, the superior court made no findings and did not refer to Civil Rule 37 in adopting the discovery master's recommendations and awarding costs that included the accountancy fees. We will consider a new argument on appeal only if it requires no new factual determinations. [15] Likewise, we can affirm a challenged ruling on an alternative ground, but not if doing so would turn on unresolved material fact disputes. Seaward's new Civil Rule 37 argument requires factual determinations, such as whether Strong wilfully failed to comply with discovery or violated a discovery order. We therefore decline to consider it and decline to affirm the cost award on this alternative ground. We reverse the award of costs to the extent that it included $5,146.11 for the accountant's services.