Opinion ID: 1171472
Heading Depth: 2
Heading Rank: 3

Heading: additional claims raised by ht

Text: In a motion for summary judgment, HT challenged the agreement between Stevens and Bohna, contending that it constituted an impermissible assignment of Bohna's malpractice claim against HT. After considering case law from Alaska and other jurisdictions, the trial court concluded that [o]n its face, the assignment is for more than the proceeds from the recovery in this case [and thus] the assignment is invalid on its face. The court, however, did not dismiss Bohna's claim for malpractice against HT. HT argues that Bohna's malpractice claim against HT should have been dismissed because Bohna illegally assigned his cause of action to Stevens. [40] We disagree. Assuming that the Stevens-Bohna agreement constituted an assignment, it was held invalid by the trial court. Therefore, Bohna retained his cause of action against HT and proceeded to enforce it.
At the close of Bohna's case-in-chief, HT moved for a directed verdict, claiming that Bohna's experts had failed to establish the standard of care by which the jury was supposed to judge HT's actions. The motion was denied. HT argues that the denial was error, that the judgment for Bohna should be reversed, and the case dismissed or remanded for a new trial. When reviewing the denial of a motion for directed verdict we do not weigh conflicting evidence or judge the credibility of the witness; rather, we determine whether the evidence, when viewed in the light most favorable to the non-moving party, is such that reasonable people could not differ in their judgment. If there is room for diversity of opinion among reasonable people, the question is properly for the jury. Petersen v. Mutual Life Ins. Co., 803 P.2d 406, 410 (Alaska 1990). In Drake v. Wickwire, 795 P.2d 195 (Alaska 1990), we held that expert evidence is required to establish a breach of an attorney's duty of care, except in non-technical situations where negligence is evident to lay people or where the fault is so clear as to constitute negligence as a matter of law. Id. at 196. Such evidence was presented in this case. Leroy Barker, an insurance defense specialist called by HT, admitted on cross-examination that [a] defense attorney who exposed his own client to an excess judgment when he could have used insurance company money to settle the case wouldn't [meet] the standard of care of [the] community. Based on this evidence, reasonable jurors could have concluded that HT breached the duty of care it owed to Bohna. [41] Thus, the trial court properly denied HT's motion for a directed verdict. [42]
HT requests a new trial because it was granted the same number of peremptory challenges as were given Bohna and Allstate considered separately. HT argues that Bohna and Allstate did not have adverse interests, and hence under Civil Rule 47(d) they should have been treated as a single party for the purpose of awarding peremptory challenges. Failure to do so, according to HT, impaired its right to a fair and impartial jury. Bohna responds that HT cannot complain about not being awarded more peremptory challenges when it failed to use all those which it was awarded. [43] Civil Rule 47(d) governs peremptory challenges and provides in part: Each party may challenge peremptorily three jurors. Two or more parties on the same side are considered a single party for purposes of peremptory challenge, but where multiple parties having adverse interests are aligned on the same side, three peremptory challenges shall be allowed to each such party represented by a different attorney. By ruling that Bohna, Allstate, and HT would each be allowed four peremptory challenges, [44] the trial court implicitly determined that Bohna and Allstate were parties having adverse interests. This is a factual determination which we will not disturb unless clearly erroneous. Alaska R.Civ.P. 52(a). We do not believe that the interests of Bohna and Allstate were truly adverse. Allstate's liability to Bohna had been extinguished by the settlement agreement. By virtue of the LRA, both were interested in seeing the jury return a large verdict against HT. Allstate wanted a large verdict because the larger the verdict, the more likely it would recover fully on its loan. Bohna wanted a large verdict because he was obligated to pay Allstate only the loan principal plus interest. Given a sufficiently large verdict (with punitive damages, for example), he would be able to satisfy completely the Stevens judgment and keep any excess. Thus, the trial court's finding that Bohna and Allstate had adverse interests was clearly erroneous. Bohna nevertheless maintains that HT must show that it was prejudiced by the court's erroneous award of peremptory challenges in order to justify reversal. HT responds that a requirement of prejudice in this context is senseless because peremptory challenges allow a party to remove a prospective juror for intuitive and often unexplainable reasons. Thus, to require a showing of prejudice would in effect nullify Civil Rule 47(d). There is no Alaska case law on whether a showing of prejudice should be required in order to obtain a new trial when one party is allowed too many peremptory challenges. However, under our harmless error rule, only errors which are inconsistent with substantial justice are grounds for granting a new trial. Alaska R.Civ.P. 61. [45] Further, where an error has been made in denying the challenge of a prospective juror for cause, Alaska case law requires a showing of prejudice, at least to the minimal extent of requiring that a litigant exercise all available peremptory challenges. Arnold v. State, 751 P.2d 494, 501 (Alaska App. 1988); McGee v. State, 614 P.2d 800, 807 (Alaska 1980); City of Kotzebue v. Ipalook, 462 P.2d 75, 77 (Alaska 1969). The cases in other jurisdictions are divided on whether a showing of prejudice is required to warrant a new trial when excessive peremptory challenges are awarded to a litigant or to multiple litigants having the same interest. See Effect of Allowing Excessive Number of Peremptory Challenges, 95 A.L.R.2d. 957 (1970). The majority rule seems to be that some showing of prejudice is required: The numerical weight of authority in civil cases supports the rule that a judgment will not be reversed for error in allowing one or more peremptory challenges in excess of that provided by statute, unless the complaining party shows that he has exhausted his peremptory challenges and has suffered material injury from the action of the court, and that as a result thereof one or more objectionable jurors sat on the case, or for some other equally cogent reasons. Id. at 963. For the reasons that follow, we align Alaska with this view. An impartial jury is fundamental to the American tradition of trial by jury. Peremptory challenges are thus not for the purpose of securing a jury biased for one's side or against the opponent's side. On the contrary, a primary purpose of peremptory challenges is to help secure an impartial jury. They permit each party to reject certain prospective jurors whom they believe, but cannot demonstrate, harbor some latent predisposition against their position or for the opponent's position. Peremptory challenges are thus not an end in themselves, but rather a means to an end: an impartial jury. Where a party receives an impartial jury, the issue of peremptories is moot. The question is thus whether HT obtained a fair jury despite the imbalance of peremptories. In light of what has been set out above, we know first of all that Bohna and Allstate were able to strike four people from the jury who presumably should have been able to remain there. Whether or not any or all of these people were biased in some fashion, HT has no basis to complain as long as four unbiased people were selected in their places. [46] We have no reason to doubt that this is what happened here. First, HT does not claim that any of the people who ultimately served on the jury should have been removed for cause but were allowed to stay by the trial court. [47] Second, HT did not use all the peremptory challenges which it was awarded. [48] This leads us to believe that HT did not even subjectively perceive that any of the people who served on the jury were biased against HT. Hence, we conclude that HT received a fair jury, and the trial court's erroneous allocation of peremptory challenges was harmless error. Alaska R.Civ.P. 61.
On November 10, 1987, Bohna and Stevens agreed that Stevens would enter into a covenant not to execute upon the judgment against Bohna pending the outcome of the action against HT. In turn, Bohna agreed that he would, among other things, diligently pursue his claims against Allstate and HT. Stevens' partial covenant not to execute was superseded by a permanent covenant not to execute dated October 27, 1989. In the latter document, Stevens covenanted not to execute upon the judgment against Bohna except to the extent that Bohna obtained a recovery against HT. [49] Citing the covenant not to execute, HT urges this court to reverse the judgment and dismiss Bohna's cause of action. HT's theory is that, because of the covenant not to execute, Bohna did not suffer a loss sufficient to permit him to maintain suit against HT. The terms of the covenant fail to support this claim. The proceeds from Bohna's lawsuit were explicitly left subject to execution. By the terms of the November 10 agreement, Bohna was required to pursue diligently his cause of action against HT. Failure to do so would have been a material breach of the agreement. In such a case, Bohna would no longer be able to assert the covenant not to execute in order to bar Stevens from executing on the judgment against Bohna. Because of this vulnerability to execution on the Stevens judgment, Bohna retained the element of loss despite the covenant not to execute. Cf. Continental Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281 (Alaska 1980) (no plain error under similar circumstances).
HT lists as error various rulings by the trial court excluding the presentation of certain testimony and the introduction of certain documents into evidence. We review such rulings for abuse of discretion. We will find that a trial court abused its discretion when we are left with a definite and firm conviction, after reviewing the whole record, that the trial court erred in its ruling. In re D.J.A., 793 P.2d 1033, 1035-36 n. 2 (Alaska 1990). Moreover, a party may not assign as error the exclusion of evidence unless the exclusion is inconsistent with substantial justice. Alaska R.Civ.P. 61; see also Alaska R.Evid. 103(a). We decline to overturn the jury verdict based on any of these evidentiary rulings since, assuming they were erroneous, we find the error to be harmless. The first point raised by HT is the trial court's refusal to allow the expert testimony of Kenneth Treadwell, a former bankruptcy judge, on the issue of the dischargeability of Bohna's excess judgment in bankruptcy. The court determined that, at the time Powell proposed the excess offer strategy, whether or not Bohna could discharge the judgment in bankruptcy was legally uncertain. The court viewed the question facing the jury as: Given that contingency, what would a reasonable, prudent attorney do under those circumstances? HT claims that it may have been prejudiced by this ruling because there is no way of knowing the relation between the jury's finding of negligence and Hughes Thorsness' advice to Bohna on the contingency of non-dischargeability. As it happens, examining the special verdict form provides an easy way to determine this. Answering Question 1, the jury found that HT was negligent. However, Question 3 specifically asked if HT was negligent in making excess offers of judgment. The jury answered No. Instead, the jury indicated in its answer to Question 6 that HT was negligent for reasons other than making excess offers of judgment. Given these findings, we see no manner in which HT may have been harmed by the court's refusal to allow Treadwell's testimony on the dischargeability of the judgment. Next, HT contends that the trial court erred by refusing to allow HT to introduce evidence of Bohna's blood alcohol level at the time of the collision or any similar evidence regarding Stevens. According to HT, the excluded evidence went to the heart of the question of negligence. Yet HT fails to explain how any of this evidence, if introduced, might have affected the jury's finding that HT was negligent in ways other than making excess offers of judgment. HT vaguely claims that [t]he jury was prevented from assessing the full factual basis from which Hughes Thorsness acted. This still does not identify the manner in which HT was prejudiced. Thus, we cannot say that we are left with a definite and firm conviction that the trial court erred. Finally, HT assigns as error the trial court's refusal to allow into evidence Bohna's opposition to a motion made by Allstate, pursuant to Civil Rule 60(b), to deem the excess judgment against Bohna satisfied. [50] The trial court ruled that Bohna's opposition was irrelevant. HT alleges four ways in which the evidence of Bohna's opposition was relevant: 1) it relates to Bohna's failure to mitigate damages, 2) it shows Bohna's contributory negligence in that he breached his duty to assist Allstate in its defense of the Stevens suit, 3) it demonstrates a greater concern for amassing personal wealth than for eliminating the judgment against him, and 4) his memorandum in opposition contains a prior inconsistent statement on who caused the excess judgment. HT's demand for a new trial on the ground that it was denied the opportunity to introduce evidence of Bohna's opposition to Allstate's Civil Rule 60(b) motion must be rejected. Even assuming that Bohna's opposition to the Civil Rule 60(b) motion was relevant, we cannot say that HT's inability to present this evidence probably affected the jury's verdict. Allstate's motion was so lacking in merit [51] that, even if the jury had been informed of Bohna's opposition, it is unlikely that the jury would have concluded that his opposition affected the amount of damages he suffered. See Poulin v. Zartman, 542 P.2d 251, 261 (Alaska 1975). Nor are we convinced that this evidence was so probative in exposing Bohna's motive or shaking his credibility that its exclusion probably affected the jury's verdict. Id. Thus, to the extent that the trial court's ruling was error, it was harmless error not justifying reversal and a new trial. Alaska R.Civ.P. 61; In re D.J.A., 793 P.2d 1033, 1035-36 n. 2 (Alaska 1990).
HT argues that it is entitled to a new trial because the trial court refused to give the jury certain proposed instructions concerning attorney malpractice. Specifically, HT wanted the trial court to: first, instruct the jury that an attorney's conduct cannot be judged by subsequent case law and that an attorney must be judged under circumstances similar to those existing at the time of the conduct; and, second, provide the jury with proposed clarifying instructions. In light of the trial court's actual instructions and because the issue of whether an attorney's conduct should be judged by subsequent case law was not raised before the jury, we hold that the trial court did not err by refusing to provide the jury with HT's proposed instructions. On the issue of attorney negligence, the trial court's instruction provided in part: An attorney is negligent in the representation of a client if he breaches the required standard of care by failing to use such skill, prudence, and diligence as other attorneys commonly possess and would exercise under similar circumstances... . An attorney is not necessarily negligent because he makes errors in judgment or because his efforts are unsuccessful. An attorney is negligent if the error in judgment or lack of success is due to his failure to use such skill, prudence and diligence as other attorneys commonly possess and would exercise under similar circumstances. (Emphasis added.) During HT's presentation of its case, HT's expert witness testified that the required standard of care for an attorney is to analyze the law that is in existence at that time. ... [and] to exercise the diligence, skill, competence, prudence of a lawyer who is in similar practice here in Anchorage. [52] (Emphasis added.) HT did not cite to any instances where either Bohna or Allstate offered evidence that an attorney should be judged by subsequent case law. Thus, there was no need for the trial court to give the jury HT's proposed instruction on attorney negligence because the issue of whether HT should be judged by subsequent case law was never presented to the jury. As mentioned, HT also claims that the trial court erred by not providing the jury with proposed clarifying instructions. HT argues that because the trial court instructed the jury that it had ruled that Allstate had breached its duty of care to Bohna, the jury may have been confused into thinking that the trial court's ruling applied to HT as well. [53] HT claims it was further prejudiced from instances of opposing counsel eliciting testimony which allegedly suggested that HT was at fault for not making a policy limits offer. We hold that the trial court's actual instructions adequately dealt with any possible confusion. On the issue of duty, the trial court's instruction provided in part: The court has ruled in this case that Allstate had certain duties to Bohna in this case and that it breached those duties. The court's rulings are based upon the policy language and the law which interprets those duties... . These rulings of the court regarding Allstate, however, do not establish any duties owed by [HT] to Phillip Bohna. The duties owed by [HT] to Bohna are established by the expert testimony which you have heard in this case. The jury must evaluate and weigh the expert testimony to decide first what duties were owed by [HT]; secondly, which, if any, of those duties were breached; and thirdly, whether those breaches legally caused loss to Bohna. (Emphasis added.) The trial court further instructed the jury: The insurance policy issued to Bohna provided coverage which had a dollar value to him. This dollar value is called policy limits. It is the duty of an insurance company to determine the dollar value of its policy limits. No one else has the duty to determine the dollar value of the policy limits for an insurance company. (Underline in original, italics added.) These instructions clearly informed the jury that the trial court's ruling as to Allstate's breach of duty did not apply to HT, and that HT was not responsible for determining the value of policy limits nor making a policy limits offer. [54] As such, they were highly favorable to HT, since Allstate contended that it was relying on HT to advise it as to what policy limits would be given the uniqueness of Alaska law regarding court awarded attorney's fees. Moreover, the instructions proposed by HT would not have substantially clarified any confusion which may have existed. HT's proposed Instruction 8 would have advised the jury that an attorney is not liable for being in error as to a question of law on which reasonable doubt may be entertained by well-informed lawyers, and that, prior to 1988, rational disagreement was possible as to what comprised a tender of policy limits. This adds little if anything to the trial court's actual instruction which informed the jury that [n]o one [besides the insurance company] has the duty to determine the dollar value of the policy limits for an insurance company. As for HT's other proposed instructions, they would not have aided HT in this regard. [55] We therefore conclude that the trial court did not err in denying HT's proposed clarifying instructions.
After trial, Bohna moved for costs and attorney's fees. The trial court awarded Bohna $34,454.47 in costs and $92,700.00 in attorney's fees. HT claims that this was a double recovery because of the way in which part of the $4 million paid by Allstate was allocated: $250,000 was dedicated to a litigation fund out of which the litigation against HT was financed, while a total of $625,000 went directly to Bohna's attorneys. Thus, according to HT, the court awarded costs and fees constituted a double recovery. The award of costs and attorney's fees is committed to the broad discretion of the trial court. We will not find an abuse of that discretion absent a showing that the award was arbitrary, capricious, manifestly unreasonable, or ... stem[med] from an improper motive. Tobeluk v. Lind, 589 P.2d 873, 878 (Alaska 1979). Since, in the present case, the trial court awarded fees in line with the Civil Rule 82 schedule, they are presumptively correct. Babinec v. Yabuki, 799 P.2d 1325, 1337 (Alaska 1990). This case involves a private contract which funded the litigation for which costs and fees were ultimately awarded. The question is whether such a contract should affect the award of costs and fees. We have said that Civil Rule 82 is meant to provide partial compensation to a prevailing party. Tobeluk at 876. In our view, since all litigation must be financed in some way, the purpose of Civil Rule 82 is not defeated by private agreements which accomplish this. In this case, Bohna was able to obtain financing as part of the overall agreement with Allstate and Stevens. In the course of the litigation against HT, he incurred substantial legal costs and attorney's fees. He was thus entitled to partial compensation like any other prevailing party. There was no abuse of discretion. We note, however, that on remand, the court may revise its award of costs and fees when entering the judgment directed in this opinion.