Opinion ID: 2604278
Heading Depth: 3
Heading Rank: 2

Heading: Bad Faith Litigation

Text: The trial court may award full attorney's fees if it finds that the losing party acted in bad faith in asserting a claim or a defense. Keen v. Ruddy, 784 P.2d at 657. State Farm argues that the Wrights litigated in bad faith when they refused to acknowledge that the settlement was for all claims arising from the accident. Although the superior court made no express finding on this issue, the court's award indicates that it found that the Wrights had not litigated in bad faith. [4] We conclude that the trial court's implicit finding is not clearly erroneous. [5] See Alaska R.Civ.P. 52(a). In its motion for full attorney's fees, State Farm relied on correspondence between the attorneys for State Farm, AMMIC, and the Wrights to establish that all sides knew what the issue was in the case, attorneys fees on the $10,000 [i.e. the interpleader fund].... However, rather than deal with that issue, they forced State Farm to litigate for two years. This is vexatious. State Farm is entitled to full attorneys fees. Although the correspondence cited, as well as the trial court's decision on the merits, could probably support a finding of bad faith on the part of the Wrights, [6] the undisputed facts do not require such a finding. Despite State Farm's attempt to characterize itself as an innocent stakeholder, it was in fact exposed to potential liability from two separate parties; the Wrights and AMMIC. State Farm chose to settle with the Wrights well aware that AMMIC had an independent cause of action against it. State Farm did not bring AMMIC into the settlement negotiations, even though it knew the Wrights had no authority to settle AMMIC's claim. State Farm should not have been surprised to discover that its settlement with the Wrights failed to resolve all issues in the case. Furthermore, the settlement agreement itself was poorly drafted if its purpose was to require the Wrights to pay AMMIC's claim out of the $45,000 settlement. State Farm could have clearly set forth the Wrights' duties in the agreement, rather than rely on the factually contradicted warranty/indemnity language. As we read it, the document does not require the Wrights to pay AMMIC any money directly, but merely provides State Farm with a separate indemnity cause of action if it suffers a loss as a result of an outstanding medical lien. Considering these problems, it is understandable that the superior court refused to award full attorney's fees to State Farm. Although State Farm tries to characterize this appeal as a breach of contract or indemnity case, it actually involves a Rule 82 award for partial attorney's fees. The trial court provided a reasonable basis for its award, and we must, therefore, uphold it. As for the Wright's cross-appeal, we agree with State Farm that the Wrights have waived a challenge to the form of the award because they neither raised this issue below nor included it in their points on appeal. It was State Farm, not the Wrights, who requested that the attorney's fees be deducted from the fund itself. The Wrights originally attempted to appeal the trial court's decision on the merits as well as its award of attorney's fees. The summary judgment appeal was ordered stricken, and the Wrights never amended their points on cross-appeal. The Wrights raised their challenge to the form of the award for the first time in their cross-appellant brief. As we discern no plain error, we refuse to consider their appeal on this point. See Sea Lion Corp. v. Air Logistics of Alaska, 787 P.2d 109, 115 (Alaska 1990). AFFIRMED.