Opinion ID: 1443903
Heading Depth: 4
Heading Rank: 2

Heading: Grow v. Ruggles

Text: In awarding attorney's fees to McCarthy, the superior court relied on Grow v. Ruggles, 860 P.2d 1225 (Alaska 1993), to hold that the judgment based on the jury verdict of $4,000 was more favorable than Jaso's Civil Rule 68 offer of judgment of $20,000. [10] The superior court interpreted Grow as mandating that an offer of judgment be construed in light of any subrogation claim asserted against it. Because Allstate asserted that its subrogated interest was $24,620 when Jaso made the offer of judgment, the superior court concluded that Jaso's offer was completely offset by the Allstate lien and was worthless. The court found that the judgment was more favorable to McCarthy because it awarded him $1,000 above the medical expenses award. Therefore, the court held that Jaso was not entitled to attorney's fees under Rule 68 and that McCarthy was the prevailing party. For Jaso to be entitled to fees under Rule 68 he must have made a valid offer of judgment which was more favorable than the judgment finally rendered. For an offer to be valid, it must not be conditional or joint. Grow, 860 P.2d at 1227-28. In Grow, we held that an offer is not conditional although it acknowledges the existence of a lien and notes that a party is responsible for any liens that may exist against a settlement. Id. The offer in Grow stated that the plaintiff would be responsible for paying any lien. Id. Jaso's offer stated that McCarthy would be required to satisfy all liens.... We see no material distinction between these offers and therefore hold that Jaso's offer was not conditional. Neither was Jaso's offer joint. It did not require Allstate to accept its terms. Rather, it merely summariz[ed] standard subrogation theory and did not attempt to coerce collection of the subrogation lien on specific terms as a precondition to settlement of the liability case. Id. McCarthy's arguments to the contrary are unpersuasive. Consequently, we hold that Jaso made a valid Rule 68 offer of judgment. The superior court erred in interpreting Grow and comparing Jaso's offer with the final judgment. In Grow, this court held that the defendant was entitled to attorney's fees pursuant to Rule 68 when his offer of judgment was more favorable than the judgment finally rendered, even though the offer stated that the plaintiff would be responsible for paying any liens against the claims. Id. at 1227-28. [11] The jury awarded the plaintiff $31,777.88 for medical expenses, the exact amount of medical expenses claimed, and $14,760 in lost past and future income. Id. at 1226. In finding that the offer of judgment was more favorable to the plaintiff, we stated that [t]he bottom line is that Grow offered Ruggles $35,000 above her medical expenses. The jury awarded her only $14,760 over medical expenses. Id. at 1228. Grow contains no rule explicitly requiring trial courts to take into account subrogated interests when comparing the relative values of a settlement offer and the judgment finally entered. The superior court interpreted Grow as comparing the net values of the offer and judgment after subtraction of the lien. However, Grow did not compare net values after the lien; rather, it compared the offer and the judgment in terms of medical and non-medical damages awards and found that once the medical expenses were deducted from both, the remaining $35,000 of the offer was more favorable than the $14,760 of the jury award. Id. at 1228. Under this approach, Jaso's all-inclusive offer of $20,000 was more favorable than the judgment based on the jury award of $4,000, as adjusted by the addition of pre-judgment interest, attorney's fees, and costs pursuant to Farnsworth v. Steiner, 601 P.2d 266, 272 & n. 14 (Alaska 1979), rev'd in part on other grounds, 638 P.2d 181 (Alaska 1981). [12] Jaso offered McCarthy $17,000 above the $3,000 medical expense damages the jury attributed to the accident as compared to the $1,000 non-medical damages award. Therefore, we hold that the superior court erred in denying Jaso attorney's fees under Rule 68, reverse the trial court's attorney's fees award to McCarthy, and remand for an award of attorney's fees to Jaso.