Opinion ID: 1159929
Heading Depth: 2
Heading Rank: 4

Heading: did the superior court err in its award of attorney's fees and costs?

Text: Pursuant to Alaska Civil Rule 68, the superior court awarded Xerox attorney's fees and costs. Alaska Civil Rule 68 provides in pertinent part: At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against him for the money or property or to the effect specified in his offer, with costs then accrued... . If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer... . The Hayeses attack the superior court's award of attorney's fees to Xerox on two grounds: First, the Hayeses claim that Xerox's offer of judgment was invalid because it was a joint offer and was indefinite as to the amount of fees. Second, the Hayeses argue that the award was unjust and an abuse of discretion.
The Hayeses rely upon this court's rule that joint offers of settlement are generally excluded from the penal cost provisions of Civil Rule 68. Brinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 943 (Alaska 1983). Xerox argues that its offer of judgment was severable and not conditional upon both plaintiffs' acceptance. Xerox's offer of judgment provides: Pursuant to Civil Rule 68, Defendants offer to allow entry of judgment against them for each individual Plaintiff as follows: 1. James C. Hayes in the amount of Ninety-one Thousand Five Hundred and 00/100 ($91,500.00) Dollars, plus costs and attorney's fees. 2. Murilda C. Hayes in the amount of Twenty-three Thousand Five Hundred and 00/100 ($23,500.00) Dollars, plus costs and attorney's fees. The above offers are each made as additional money offers over and above monies already paid by Defendants, which are intended by this offer to act as a setoff against any ultimate verdict which might be rendered in this case in the present amounts of $959.95 to James C. Hayes and $4,631.21 to Murilda C. Hayes. These amounts will not act as setoffs to this offer if accepted, but only as additional damage items which should be added to the total for the purpose of determining the Rule 68 affect of this offer if a jury verdict is rendered. The superior court held that this was not a joint offer because [a]ny one reading the offer of judgment can easily determine the amount that is being offered to James C. Hayes and the amount which is being offered to Murilda C. Hayes. Plaintiffs could easily have accepted one offer and gone to trial on the other case. Because an offer of a lump sum presents problems of apportionment between offerees, it is treated as a joint offer and excluded from the penal cost provisions of Rule 68. Brinkerhoff, 663 P.2d at 943; Randles v. Lowry, 4 Cal. App.3d 68, 84 Cal. Rptr. 321, 325 (1970) (court held lump sum offer of judgment to three plaintiffs invalid since offer did not designate how it should be divided between plaintiffs, making it impossible to say any one plaintiff received a less favorable result than he would have under the offer). The offer in this case clearly does not present apportionment problems. An offer will also be considered joint if it requires both plaintiffs to accept it. In Hutchins v. Waters, 51 Cal. App.3d 69, 123 Cal. Rptr. 819, 822 (1975), the problem of apportionment was solved but the court held that an offer containing an express proviso that it had to be accepted by both plaintiffs was a conditional offer which would not trigger the penal cost provision of the California rule. The California Court of Appeal stated that the language of the statute did not contemplate a conditional settlement offer requiring joint acceptance. Hutchins, 123 Cal. Rptr. at 821. In addition, one plaintiff might think his or her offer is fair while the other may not and it would not only be unfair to require joint acceptance but also would frustrate the chances of settlement which is the purpose behind Civil Rule 68. The Hayeses argue that Xerox's offer of judgment required the Hayeses' joint acceptance and therefore under the Hutchins principle it is invalid. The Hayeses claim that they and their attorney understood the offer to require joint acceptance. Relying upon basic principles of contract law, the Hayeses contend that the understanding of the parties to the settlement agreement is probative of the meaning of an offer of judgment. This court has stated that an offer of judgment and acceptance thereof is a contract. Davis v. Chism, 513 P.2d 475, 481 (Alaska 1973). While a party's understanding of a contract is probative we have also held that interpretation of words in a contract is a matter for the court. Rules v. Sturn, 661 P.2d 615, 617 n. 3 (Alaska 1983) citing Tsakres v. Owens, 561 P.2d 1218, 1222 (Alaska 1977). In order to give legal effect to the parties' reasonable expectations, the court examines the written agreement itself and also extrinsic evidence regarding the parties' intent at time the contract was made. Norton v. Herron, 677 P.2d 877, 880 (Alaska 1984) (citations omitted). Examining the words of the offer and the extrinsic evidence of the parties' intent, we conclude that Xerox did not make a joint offer of judgment. Unlike the offer in Hutchins, here the offer does not contain a proviso mandating joint acceptance. On its face, the offer is consistent with Judge Blair's construction permitting one plaintiff to accept and the other to go to trial. Moreover, the extrinsic evidence also suggests that the offer was severable. Xerox sent a letter with the offer of judgment that stated: We have enclosed offers of judgment to your clients which, if the attorneys' fees are computed pursuant to Civil Rule 82 as a case without trial the total offer intended for James C. Hayes is $99,000, and for Murilda C. Hayes is $26,000. We are willing to settle for either those round figures, or if you wish to accept the offers of judgment formally, then of course you must proceed to apply for attorneys' fees to the Court. The language enclosed offers of judgment and we are willing to settle for either those round figures shows that the offer was not conditional upon joint acceptance. The Hayeses also argue that the offer of judgment is invalid because it was not sufficiently definite with respect to the amount or calculation of attorney's fees offered. In Davis v. Chism, 513 P.2d 475, this court noted that the determination of proper attorney's fees may require a certain amount of fact finding but normally these fees would be computed under the Civil Rule 82 schedules. Id. at 482 n. 6. In Rules v. Sturn, 661 P.2d 615, we read an offer of judgment with a provision for attorney's fees stating, and an attorney's fee based upon Civil Rule 82, as specifying a definite sum plus Civil Rule 82 attorney fees. Id. at 617. The offer itself and Xerox's letter indicate that attorney's fees could be calculated by using Civil Rule 82 or by having the court determine the fees after a certain amount of fact finding. Davis, 513 P.2d at 482 n. 6. [7] We conclude that Xerox's offer of judgment was not invalid as a joint offer or as indefinite with respect to an amount of attorney's fees.
The Hayeses contend that the superior court erred in its award of attorney's fees in two respects: First, the amount is unjust, excessive and the court did not explain its reasons for arriving at the amount finally awarded; second, Xerox's fee request did not detail the amount of time devoted to specific tasks. Alaska Civil Rule 68 controls the determination of attorney's fees and costs in this case. See supra for text of Rule 68. When the judgment recovered is less than an offer of judgment made under Rule 68, then the offeree must pay partial attorney's fees incurred subsequent to the offer. See Truckweld Equipment Co. v. Swenson Trucking, 649 P.2d 234, 240 (Alaska 1982); Miklautsch v. Dominick, 452 P.2d 438, 440-41 (Alaska 1969). The cost provision of Rule 68 confers a limited prevailing party status on a defendant. Scott v. Robertson, 583 P.2d 188, 194 (Alaska 1978). This court has held that a court can not award actual fees but may award some fees as partial compensation. Jakoski v. Holland, 520 P.2d 569, 578-79 (Alaska 1974). In reviewing an award of attorney's fees under Rule 68, we must ask whether the award was manifestly unreasonable. Scott, 583 P.2d at 194-95. This court has held that a trial court should state its reasons when it makes an award of attorney's fees which varies from the schedule in Rule 82(a)(1). [8] Farnsworth v. Steiner, 601 P.2d 266, 272 (Alaska 1979). In the present case, Judge Blair stated that he awarded defendants $25,000 attorney's fees in order to partially compensate them. Although he applied the correct standard of partial compensation in determining the fees, he did not state his reasons for awarding $25,000. We must know the court's reasons for awarding a specific amount to determine whether it is manifestly unreasonable. In addition, the court should have required Xerox to itemize its fee request. In Moses v. McGarvey, 614 P.2d 1363, 1374 n. 32 (Alaska 1980), we stated that when counsel requests attorney's fees, other than based on the schedule in Rule 82(a)(1), accurate records of the hours expended and a brief description of the services reflected by those hours should be submitted. Under Moses, Xerox's counsel should have specified the services included in those hours submitted. Therefore, we remand this issue so that the superior court can order Xerox's counsel to itemize the hours and nature of the work spent on this case then award partial attorney's fees accompanied by an explanation of its reasons for choosing its final award.
Under Alaska Civil Rule 68, an offeree who receives a judgment less than an offer of judgment must pay the costs incurred after the making of the offer. Alaska R.Civ.P. 68. This court has stated that Rule 68 explicitly awards actual costs in [these] circumstances, although it does not award actual attorney's fees. Truckweld Equipment Co., 649 P.2d at 240. Xerox requested and was awarded $13,752.57 in costs. The Hayeses challenge this award of costs on various grounds and rely on Civil Rule 79(b) (items allowed as costs) and Administrative Rule 7(c) (costs permitted for expert witnesses). [9] Xerox indicates that it applied for an award of costs under Civil Rule 68, not 79(b). The question presented is whether costs under Civil Rule 68 means costs as allowed under Civil Rule 79 and Administrative Rule 7. We read the cost provision in Rule 68 to mean those costs permitted by the relevant Alaska rules. The Federal courts presented with the similar issue have construed the cost provision in Federal Rule of Civil Procedure 68 as meaning permissible costs under Federal Rule of Civil Procedure 54. Greenwood v. Stevenson, 88 F.R.D. 225, 232 (D.C.R.I. 1980) (this court does not see how it can seriously be contended that the term `costs' in [68] means something radically different from the word `costs' in Rule 54); Waters v. Heublein, Inc., 485 F. Supp. 110, 117 (N.D.Cal. 1979) (Rule 68 does not alter the definition of costs. The court stands on the relevant authority setting forth these definitions). Similarly, the state courts interpret their state Rule 68 costs as synonymous with costs permitted by the relevant state rules. Divine v. Groshong, 235 Kan. 127, 679 P.2d 700, 711 (1984) (cost recovery by successful offeror limited to those items enumerated in relevant state law on taxation of costs); Jordan v. Berkey, 26 Wash. App. 242, 611 P.2d 1382, 1385 (1980) (cost recovery by successful offeror limited to those costs prescribed in relevant Washington law); Person v. Fletcher, 582 S.W.2d 765, (Tenn. App. 1979) (cost recovery by prevailing offeror limited to taxable costs permitted by state law even though Rule 68 allows recovery of all costs incurred after making of offer). We see no reason to read the term costs differently under our Rule 68 and the rules governing the taxing of costs such as Civil Rule 79 and Administrative Rule 7. The Hayeses object to many items of costs such as duplicative deposition witness fees and travel expenses for defendant Green to attend trial. The reason for some of these duplicative costs is that the court granted the Hayeses' motion to quash certain depositions and then had to continue trial to permit these depositions to be taken. The continuance also required Xerox to pay Green's travel expenses again. An award of costs is within the superior court's discretion and will be affirmed absent a clear abuse of discretion. Kaps Transport, Inc. v. Henry, 572 P.2d 72, 77 (Alaska 1977) (citations omitted). The superior court did not abuse its discretion in its award of these costs. The Hayeses also contend that the court erred in its award of costs for expert witnesses. Administrative Rule 7(c) controls the taxing of costs for expert witnesses. Alaska Rule of Administrative Procedure 7(c) provides: (c) Expert Witnesses. A witness called to testify as an expert shall receive additional compensation to be fixed by the judge with reference to the value of the time employed and the degree of learning or skill required; but such additional compensation shall not exceed $25.00 per hour while so employed and testifying, except as otherwise provided in these rules. No more than three expert witnesses shall be allowed to testify on each side as to the same issue in any given case, unless the judge trying the case, in his discretion, permits an additional number of witnesses to testify as experts. The Hayeses claim that the superior court could not determine the reasonableness of the fees requested or whether they exceeded the maximum $25.00 per hour since Xerox did not specify the number of hours spent testifying. It is impossible to determine on review whether or not the requirements of Rule 7(c) are met since no hourly breakdown was provided by Xerox. See Truckweld Equipment Co., 649 P.2d at 241. A time sheet is required. Id. Therefore, we remand this item of costs for the superior court judge to redetermine according to Rule 7(c). The Hayeses also challenge the court's award of investigative service fees because Xerox did not describe these services. We conclude that the award of these fees was an abuse of discretion since they were insufficiently detailed. Truckweld Equipment Co., 649 P.2d at 241. The Hayeses also contend that the court erred in awarding costs for photocopies of cases during law library research. We find that the award of photocopying costs was within the court's discretion under Civil Rule 79.