Opinion ID: 2570344
Heading Depth: 1
Heading Rank: 1

Heading: The Superior Court Properly Awarded Full Reasonable Attorney's Fees to Erikson Covering the Trial and Post-Trial Periods, But Erred in Awarding Attorney's Fees Incurred in Litigating Rockstad's Bankruptcy Petition.

Text: 1. Erikson is entitled to an award of full reasonable attorney's fees, including fees incurred on appeal. Rockstad argues that various aspects of the superior court's fee award to Erikson were legally erroneous, and should be reversed even if we uphold all other aspects of the court's rulings and the jury's verdict. Rockstad claims that it has long been the Alaska practice to allow the prevailing party to recover partial fees,  but the court's award of total fees rather than partial fees is manifestly unreasonable. (Emphasis in original.) Generally speaking, Rockstad is correct. We have stated that Civil Rule 82 embodies a policy that the prevailing party is only entitled to recover partial attorney's fees, [31] and have held that full fee awards are manifestly unreasonable unless the prevailing party has shown bad faith or vexatious conduct by the losing party. [32] However, as Rockstad admits, where a contract between the parties allows for one party to recover attorney's fees in the event of litigation, the contract provision must prevail over any limitations otherwise imposed by Rule 82. [33] Such a contract provision was in fact the basis for Erikson's motion for costs and fees, and the superior court's subsequent award. Rockstad does not appear to dispute that both the Note and the deed of trust contain valid clauses requiring him to pay Erikson's reasonable attorney's fees in the event of default. Since the jury determined that Rockstad did in fact default, it was permissible for the superior court to award Erikson full fees, pursuant to the parties' contract. The parties also dispute the propriety of the superior court's order that Rockstad pay Erikson attorney's fees for all post-judgment appellate proceedings, insofar as the judgment is upheld or the appeal dismissed by this court. Rockstad argues that Rule 82 does not cover post-judgment fees and costs. [34] As discussed above, the fees in this case were awarded pursuant to the terms of the parties' agreement, and not pursuant to Rule 82. We have previously held that where a contract provision has the evident purpose of shifting reasonable fees to the winner in litigation concerning the contract, that contract requires fee shifting at all court levels, and not just in proceedings before the trial court. [35] The superior court thus properly construed the terms of the Note and the deed of trust to cover fees incurred in post-judgment appellate proceedings. 2. Erikson is not entitled to any fees incurred in litigating Rockstad's bankruptcy petition. As a final matter, Rockstad argues that attorney's fees and costs for bankruptcy actions can only be awarded by a federal bankruptcy court, and that the superior court erroneously awarded fees in an action other than the one before it, i.e., the bankruptcy case. [36] Erikson's rebuttal is that filing and dismissing a bankruptcy petition, along with other post-judgment conduct by Rockstad, amounted to maneuvers and vexatious conduct, for which attorney's fees were properly awarded. Erikson also argues that the fee-shifting language in the Note and deed of trust entitle him to all actual attorney's fees, including fees incurred while the debtor was in bankruptcy proceedings. We agree with Rockstad on this issue. We have indicated that trial courts may have authority to award attorney's fees incurred by a litigant responding to an opponent's frivolous or vexatious post-judgment conduct. [37] But we have never specifically applied this rule to bankruptcy proceedings. When attorney's fees are awarded based upon misconduct by an attorney or party, and not the outcome of the litigation, the matter is procedural. [38] Federal courts have original and exclusive jurisdiction over all bankruptcy proceedings. [39] Federal and state courts addressing the issue [40] have followed the Ninth Circuit's conclusion that it is for Congress and the federal courts, not the state courts, to decide what incentives and penalties are appropriate for use in connection with the bankruptcy process and when those incentives or penalties shall be utilized. [41] The Ninth Circuit has explained that the need for uniform and expeditious handling of bankruptcy cases compels the application of federal sanctions by federal courts as to procedural abuses in those cases. [42] We have also never explicitly addressed the issue of whether contractual fee-shifting provisions can cover post-judgment bankruptcy proceedings. [43] The interpretation and application of contracts is a question of Alaska state law. Where the substantive issues raised in a bankruptcy proceeding include issues of state law, federal courts have held that attorney's fees may be awarded where permitted or provided under the relevant state law. [44] However, awarding fees is still part of the bankruptcy procedure, and as such it is a decision for the bankruptcy court to make. [45] In sum, it was the sole province of the bankruptcy court, and not the superior court or this court, to award attorney's fees to Erikson for his efforts in responding to Rockstad's bankruptcy petition. [46] Thus we reverse and vacate the portion of the trial court's attorney's fees award that included fees incurred by Erikson in connection with the bankruptcy petition.
Because any error regarding Rockstad's statute of limitations defense was rendered harmless by his trial admissions, we AFFIRM the trial court's grant of summary judgment to Erikson on Rockstad's statute of limitations defense. We AFFIRM summary judgment to Erikson on Rockstad's usury defense. We AFFIRM the trial court's application of quasi-estoppel to enforce the parties' agreement and foreclose on Rockstad's interest in his home. We also AFFIRM the superior court's award of costs and attorney's fees to Erikson, except its award of the costs and attorney's fees incurred in litigating Rockstad's bankruptcy proceeding, which we VACATE.