Opinion ID: 1134814
Heading Depth: 2
Heading Rank: 2

Heading: bobich's appeal

Text: Bobich argues that the court erred in concluding that the earlier offers were not more favorable to the Hugheses than the final judgment. In interpreting offers of judgment, we rely on contract principles and apply our independent judgment. See Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska 1996). The interpretation of Alaska Civil Rule 68 is also a question of law that we review de novo. See Jaso, 923 P.2d at 801. Under Rule 68, if the Hugheses' final judgments were less favorable than Bobich's 1992 offers of judgment, which they rejected, they would have been required to pay Bobich's post-offer attorney's fees and would not have been entitled to receive post-offer attorney's fees from Bobich. [1] But the superior court concluded that the 1992 offers of judgment were not more favorable to the Hugheses than their 1995 settlement. The court thus awarded $3000 to Alvie and $9000 to Wanda in unpaid overtime wages; under former AS 23.10.110(a), [2] the court also awarded like amounts in liquidated damages. [3] Finding that the Hugheses were prevailing parties, the court additionally awarded attorney's fees to both. In concluding that Bobich's 1992 offers of judgment were less favorable than the 1995 settlement, the court explained that, because the 1992 offers did not refer to liquidated damages, they were unclear and ambiguous, and therefore were unenforceable. The court went on to conclude, alternatively, that if the 1992 offers were unambiguous, they included both unpaid overtime wages and liquidated damages. In reaching this conclusion, the court reasoned that there is no principled method by which liquidated damages can be considered to be separate claims [from overtime compensation claims], as they are derived from the statutory cause of action for violation of [the AWHA].... [T]he calculation and award of liquidated damages under the AWHA are automatic and mandatory once compensatory damages are found. Adding the Hugheses' estimated pre-1992 attorney's fees to their actual awards of compensatory damages, liquidated damages, and prejudgment interest, the court determined that the 1992 offers of judgment were inferior. Bobich challenges the court's ruling. Emphasizing the distinction between overtime compensation and liquidated damages, he argues that his 1992 offers of judgment unambiguously covered only overtime compensation, thus clearly excluding liquidated damages. Bobich further argues that, for purposes of Rule 68, his unambiguous 1992 offers must be compared only to the Hugheses' actual awards for unpaid overtime wages, not to the total of their awards for both unpaid wages and liquidated damages. So calculated, the Hugheses' judgments are less favorable than Bobich's original offers. The Hugheses respond by pointing to a letter that Bobich's attorney sent to their attorney in 1995, along with Bobich's second set of offers of judgment. The letter estimated that, with prejudgment interest and attorney's fees added to the 1995 offers of judgment, the total value of this offer is $50,000.00 to $60,000.00. According to the Hugheses, this letter implicitly acknowledged their right to receive reasonable attorney's fees if they settled. The Hugheses assert that they relied on this representation in agreeing to settle. They argue that Bobich is estopped from arguing that the 1992 offers exceeded the 1995 settlement and that his current position breaches the covenant of good faith and fair dealing implied in the parties' settlement contract. The trial court reached the correct conclusion. Each 1992 offer stated that Bobich would allow entry of judgment ... as to [the] claims for overtime compensation in the amount of [$10,000 for Alvie; $20,000 for Wanda], inclusive of all costs, interests and attorneys' fees. Under former AS 23.10.110(a), awards of liquidated damages were mandatory once an employer was found liable for compensatory damages. Since an employee's successful claim for overtime compensation always led to a liquidated damages award, the original offers' proposal to enter judgment on claims for overtime compensation... inclusive of all costs, interests and attorneys' fees could most plausibly be read to include liquidated damages. But given the offers' silence as to liquidated damages, it is perhaps arguable that they might be read to exclude liquidated damages. If such a reading is possible, the offers are ambiguous and, therefore, unenforceable. If the offers are read in light of available extrinsic evidence and applicable case law, their facial ambiguity must be resolved in favor of the Hugheses. In Davis v. Chism, 513 P.2d 475, 482 (Alaska 1973), we held that an offer of judgment that specifies only a total sum must be construed as including the defendant's assessment of all of the damages that [the] plaintiff is entitled to. In adopting this rule of construction in Davis, we emphasized that [b]y our holding, some certainty in the operation of Rule 68 will be achieved. Id. Cases cited by Bobich for a contrary construction of the 1992 offers are not persuasive. For example, LaPerriere v. Shrum, 721 P.2d 630 (Alaska 1986), involved a dispute over an accepted offer, made pursuant to AS 09.30.065, to have judgment entered ... in the amount of Ten Thousand Dollars ($10,000). Id. at 633. After holding that an offer under AS 09.30.065 should be interpreted according to our cases regarding Rule 68 offers, we reversed the superior court's ruling that the offer included costs and attorney's fees, and held that the court should have awarded the LaPerrieres costs and attorney's fees in addition to the offer amount of $10,000. See id. at 633-35. Bobich interprets LaPerriere to support his assertion that, as his offers did not specifically mention the mandatory liquidated damages awards, they did not include these awards. We based the holding in LaPerriere upon our observation in Davis that, under Rule 68, costs and attorney's fees should normally be added to the amount in the offer of judgment. See LaPerriere, 721 P.2d at 633-35 (citing Davis, 513 P.2d at 480, 482 n. 6). But an award of liquidated damages under AS 23.10.110 is distinct from awards of attorney's fees and costs. Like an award of overtime compensation, it relates to the substantive aspects of the employee's claim. While Rule 68 specifically provides that costs then accrued shall be added to the amount in the offer of judgment, see Davis, 513 P.2d at 480, and while we found in Davis that attorney's fees should be treated similarly, see id. at 482 n. 6, nothing in Rule 68 implies that mandatory awards of liquidated damages should also be automatically added on to offers of judgment. Under Davis, the 1992 offers must be construed to include all of the damages that [the Hugheses were] entitled to. Id. For parallel reasons, we also agree with the superior court that, for purposes of Rule 68, the Hugheses' actual award of liquidated damages must be added to their award for overtime wages. Under Rule 68(b), the offer must be compared to the judgment finally rendered by the court. The judgment finally rendered includes the jury verdict (or, in this case, the court-awarded recovery), plus the prejudgment interest, attorney's fees, and costs incurred prior to the offer. See Farnsworth v. Steiner, 601 P.2d 266, 269 n. 4 (Alaska 1979). Though Bobich purports to base his calculations upon Farnsworth, he does not adequately justify his failure to include the Hugheses' liquidated-damage awards in his figures. He cites Grow v. Ruggles, 860 P.2d 1225 (Alaska 1993), as supporting his assertion that the trial court was required to ignore the amount of liquidated damages and compare the amount of overtime actually recovered to the amount of overtime offered. But Grow does not support this proposition. See id. at 1227-28. As the superior court noted, since the Hugheses' final judgments include liquidated damages, these damages must be included in the Rule 68 calculation.