Opinion ID: 2617106
Heading Depth: 3
Heading Rank: 2

Heading: Reid's Claim for an Enhanced Attorney's Fees Award

Text: Reid, the prevailing party, was entitled to an award of attorney's fees under Rule 82. A schedule fixes attorney's fees at twenty percent of the first $25,000 of a money judgment in a case that is Contested With Trial. Alaska R. Civ. P. 82(b)(1). Following an amendment that became effective in 1993, a trial court may deviate from a scheduled award if, upon considering itemized factors, it determines a variation is warranted. Alaska R. Civ. P. 82(b)(3). A trial court departing from the schedule must explain the reasons for the variation. Id. The superior court awarded Reid attorney's fees under Rule 82(b)(1), and did not issue written findings. Reid first contends that the lack of findings renders the superior court's award unreviewable. We disagree. The superior court was not required to issue findings of fact or otherwise explain its award because it awarded the attorney's fees prescribed by Rule 82(b)(1). There is a presumption that a prevailing plaintiff recovering a money judgment will receive fees in accordance with the schedule. See Babinec v. Yabuki, 799 P.2d 1325, 1337 (Alaska 1990) (Attorney's fees awards made pursuant to the schedule of Rule 82 are presumptively correct.). Entry of the Rule 82(b)(1) award without fact findings was not error, and does not prevent us from reviewing the decision. Reid also argues that the superior court's refusal to award enhanced attorney's fees was an abuse of discretion. We address Reid's contentions in turn. [17]
Reid argues that Rule 82 unfairly subjects plaintiffs and defendants to asymmetrical risks: he claims that if Williams had prevailed, Williams's Rule 82(b)(2) fees award would have been fifteen-to-twenty-five times greater than Reid's. Reid claims that this disparity between the prospective awards renders the trial court's $3,790.82 award manifestly unreasonable; he requests award of an amount that approximates the lower end of the amount that Dr. Williams would have been entitled to under Alaska R. Civ. P. 82(b)(2) had he won. The asymmetry noted by Reid is an inherent result of using two different methods (percentage of damage award for prevailing parties who recover a money judgment and percentage of incurred attorney's fees for prevailing parties who do not) to calculate the presumptive Rule 82 attorney's fees awards. This asymmetry has its converse: assume a claimant recovers damages of $500,000 at trial. Ignoring prejudgment interest, Rule 82(b)(1) presumes an attorney's fee award of $52,500. Whether the trial lasts two days or twenty, the rule presumes the same award. If the defendant were to prevail in that case after a two-day trial (assuming hypothetically twenty-eight additional days of pretrial preparation) the presumptive Rule 82(b)(2) award would be about $10,800 (30% x 30 days x 8 hours/day x $150/hour). This would be substantially less than the prevailing claimant's fee award. The disparity is the product of using, by necessity, two different methods to measure the presumptive awards. This necessity arises out of the conjunction of the purpose of Rule 82to partially reimburse prevailing parties for the fees they must pay their attorneysand the difference in how these classes of litigants usually compensate their attorneys. Usually parties seeking money recoveries in tort cases pay their attorneys under contingent fee agreements requiring them to pay their counsel twenty-five to forty percent of the total recovery. And usually civil litigants not seeking money judgments pay their lawyers on an hourly basis. The presumptive Rule 82(b)(1) and (b)(2) fee awards bear some relationship to the fees these prevailing parties actually pay their attorneys. Using the example of the $500,000 recovery, the presumptive award of $52,500 is probably about twenty-five to thirty percent of the lawyer's contingent fee. This corresponds to the presumptive Rule 82(b)(2) percentage (thirty percent of actual fees if a case goes to trial). Thus, any asymmetry between attorney's fees awards to these classes of parties is the natural consequence of using two different methods to calculate these classes of parties' Rule 82 awards. This asymmetry is usually both acceptable and benign. The asymmetry inherent for normal cases does not in and of itself justify a departure from Rule 82(b)(1). But circumstances in a given case may bring the factors listed in Rule 82(b)(3) into play. Although Rule 82(b)(3) does not specify asymmetry as a basis for relief, it lists ten factorsamong them, the complexity of litigation, the length of trial, vexatious or bad faith conduct, and the relationship between the amount of work performed and the significance of the matters at stakethat adequately address the pertinent considerations. We discuss some of these factors below.
A trial court may depart from the Rule 82(b)(1) schedule if a party is guilty of vexatious or bad faith conduct. Alaska R. Civ. P. 82(b)(3)(G). Reid alleges that Williams escalated litigation costs by refusing to settle, and that Williams's insurance carrier pursued a scorched earth litigation policy to deter future litigants. Williams contends that Reid's high expenses are due to Reid's litigation strategy, which complicated a garden variety medical malpractice case. Reid has not shown that the superior court abused its discretion by denying Reid's motion for enhanced attorney's fees on this ground. The superior court was in the best position to determine whether a party's behavior was excessively litigious or in bad faith. [18] The superior court also had discretion to consider Reid's unsuccessful claims when it awarded attorney's fees. See Alaska State Bank v. General Ins. Co., 579 P.2d 1362, 1369 (Alaska 1978) (stating that it was not manifestly unreasonable for the court to take into account that it ruled against the prevailing party on one of the contested issues when determining attorney's fees and costs). The superior court did not abuse its discretion by refusing to award enhanced attorney's fees based on Williams's refusal to settle. See Van Dort v. Culliton, 797 P.2d 642, 645 (Alaska 1990) (stating that trial court may not consider settlement negotiations as reasons to reduce or increase an attorney's fee award). Rule 68 did not apply, and the final judgment in the case was much less than the settlement offers. Rule 68 applies when the judgment finally rendered by the court is not more favorable to the offeree than the offer. Alaska R. Civ. P. 68(b).
A lawsuit's complexity may justify departure from the Rule 82(b)(1) schedule. Alaska R. Civ. P. 82(b)(3)(A). Reid argues that medical malpractice cases are more complex than ordinary negligence cases, and that this was an unusually complex malpractice case. The complexity of this case, however, did not mandate enhanced attorney's fees. See Moses v. McGarvey, 614 P.2d 1363, 1370 (Alaska 1980) (stating that complexity is only one factor, which alone does not justify full attorney's fees). The superior court did not abuse its discretion by failing to award enhanced attorney's fees based on this factor.
Reid argues that the nominal award of attorney's fees will deter access to the courts and discourage non-wealthy individuals from litigating good faith claims. He contends that individuals cannot seek judicial redress if the cost of litigating outweighs the damages awarded. Williams argues that Reid simply miscalculated the value of the case and that Williams should not shoulder the expense of Reid's miscalculation. We have expressed concern that financially ruinous fee awards against good faith civil litigants could deter access to the courts. See, e.g., Malvo v. J.C. Penney Co., 512 P.2d 575, 586-88 (Alaska 1973); see also Van Huff v. Sohio Alaska Petroleum Co., 835 P.2d 1181, 1189 (Alaska 1992) (Matthews, J., dissenting); Bozarth v. Atlantic Richfield Oil Co., 833 P.2d 2, 5-7 (Alaska 1992) (Matthews, J., dissenting). In those cases, we were concerned that fee awards levied against losing litigants could deter access to the courts. This case is different because it involves a claim that inadequate fee awards to winning litigants will deter access to the courts. Reid in essence argues that he should not have to bear his own litigation expenses, which he claims are so high that Williams should be required to reimburse him. In comparison, the unsuccessful plaintiffs in Malvo and Bozarth claimed that they should not have to bear the defendants' litigation expenses, which they claimed were financially ruinous. Although it may seem that both situations equally chill judicial resolution of disputes, we see a fundamental difference. In Malvo and Bozarth, the question was whether it was an abuse of discretion to shift very substantial litigation expenses to the losing plaintiffs. Here the question is whether it was an abuse of discretion to decline to shift additional expenses from the party that incurred them. Even though a party's litigation expenses are in part the result of the opponent's litigation tactics, to a large extent the party has the ultimate control over the way it assesses its case and litigates its position. Rule 82 already provides protection for the winning litigant who is forced to respond to an opponent's excessive efforts or bad faith litigation tactics. See, e.g., Alaska R. Civ. P. 82(b)(3)(F) (the reasonableness of the claims and defenses pursued by each side) & (G) (vexatious or bad faith conduct). But the record does not compel a conclusion that it was error not to apply this factor here. Civil Rule 82 also distinguishes between parties in the position of Reidwho was awarded allegedly inadequate attorney's feesand non-prevailing partieswho must pay attorney's fees to their opponents. A trial court may consider the extent to which a given fee award may be so onerous to the non-prevailing party that it would deter similarly situated litigants from the voluntary use of the courts. Alaska R. Civ. P. 82(b)(3)(I) (emphasis added). Because Reid is the prevailing party, this factor does not justify departing from the Rule 82(b)(1) schedule. Some of the factors noted by Reid would have justified an enhanced fee award if the superior court had found that they were relevant to this case. It was not obliged to do so, and we conclude that the superior court did not abuse its discretion by declining to deviate from the Rule 82(b)(1) schedule.