Opinion ID: 1129351
Heading Depth: 2
Heading Rank: 2

Heading: plaintiffs' award of attorney's fees

Text: The Myers argue that Civil Rule 82 does not allow the use of informal settlement offers as a basis for departure from the basic standard of the Rule, which is to provide partial compensation to a prevailing party. Instead, the Myers argue that Civil Rule 68, relating to offers of judgment; provides the appropriate basis for consideration of settlement offers in assessing attorney's fees against non-settling parties. We agree. Under Civil Rule 82(a)(1), an award of attorney's fees to the prevailing party is committed to the broad discretion of the trial court and will be set aside only if manifestly unreasonable. Haskins v. Shelden, 558 P.2d 487, 495-96 (Alaska 1976); Alaska Placer Co. v. Lee, 553 P.2d 54, 63 (Alaska 1976). We have noted, however, that this discretion is not without limits: Although the trial court's discretion under Rule 82 is broad enough to warrant denial of attorney's fees altogether, denial of a proper motion for attorney's fees by the prevailing party may not result from improper motive. Haskins, 558 P.2d at 495-96. As we noted in Adoption of V.M.C., 528 P.2d 788, 795 (Alaska 1974): It has been consistently recognized by this court that the fundamental purpose of Civil Rule 82 in providing for the award of attorney's fees is ... to partially compensate a prevailing party for the costs to which he has been put in the litigation... . The rule was not designed to be used capriciously or arbitrarily, or as a vehicle for accomplishing any purpose other than providing compensation where it is justified. Personal differences and the complexity of disputed issues frequently frustrate even the most sincere efforts at achieving a pre-trial settlement. A trial must take place when the parties have an honest difference of opinion regarding whose evaluations of the disputed issues are reasonable and appropriate under all the facts and circumstances of the case. This is understandable. We know from experience that any two jury panels, even though they hear the same evidence, the same arguments of counsel, and the same jury instructions, can reach directly opposite results. Suffice it to say that no party has a crystal ball. No party can accurately predict whether or not the jury will award damages higher than or lower than a party's final offer of settlement submitted before the trial begins. Civil Rule 68 controls whether a trial court can penalize a party for its refusal to settle prior to trial when the jury verdict awards an amount of money virtually identical to the pre-trial offer. Here, the trial court found the offer of judgment defective under Civil Rule 68. In our view, Civil Rule 68 expresses the exclusive way by which settlement offers can be taken into account in determining costs and attorney's fees for the reasons that follow. Settlement offers come in a wide variety of forms, and their meaning as well as their worth is by no means always easy to evaluate. [2] This case is an example. The defendants made an offer of judgment just before trial of $72,500. However, $25,000 of this was to be paid by way of an unsecured promissory note of unspecified terms, payable by two of the defendants who had previously been represented as being on the brink of bankruptcy. The value of such a note is obviously uncertain and would require additional litigation to determine, if it could be determined at all. One of the protections afforded by the Civil Rule 68 procedure is that the offer of judgment must be definite. Davis v. Chism, 513 P.2d 475, 481 (Alaska 1973). This protection is designed to avoid post-trial litigation concerning the meaning of the offer. There are also other protections inherent in the Civil Rule 68 procedure which are lacking in ordinary settlement offers. One example is that a Civil Rule 68 offer is irrevocable for ten days, Rules v. Sturn, 661 P.2d 615 (Alaska 1983), thus ensuring that the offeree has adequate time for consideration of the offer. Further, the offer must be made more than ten days before the trial is to begin, ensuring that the offer is made before the offeree has made a final commitment to litigation with the expenses ordinarily thereby entailed. The absence of these protections in the context of an ordinary offer persuades us that no offers not in compliance with Civil Rule 68 should be considered in determining questions of costs and attorney's fees. Thus, the trial court erred when it used past settlement negotiations as a reason to justify a reduction in the amount of attorney's fees that it would have awarded.