Opinion ID: 1198908
Heading Depth: 1
Heading Rank: 3

Heading: pci's appeal

Text: The applicability of estoppel to a particular set of facts is a question of law subject to independent review. See State v. United Cook Inlet Drift Ass'n, 895 P.2d 947, 950 (Alaska 1995). This court adopts the rule of law that is most persuasive in light of precedent, reason, and policy. See Sopcak v. Northern Mtn. Helicopter Servs., 924 P.2d 1006, 1008 (Alaska 1996).
In preparing for trial, TH pursued a strategy aimed at showing that PCI's original suit against A/H and Ebasco would have resulted in a verdict of no more than $115,000 and that this sum was therefore the maximum amount that PCI could claim against TH for its alleged negligence in allowing the original suit to be dismissed. Prior to trial, PCI sought a ruling estopping TH from contending that PCI's damages in the underlying suit would have been anything less than $5,041,134.94. PCI pointed to a November 29, 1989, memorandum by TH attorney Robert Owens estimating PCI's damages in the underlying case at this amount. PCI argued that it would be unconscionable for TH to change its position in the malpractice case. The trial court denied this motion; PCI challenges the denial on appeal. As it did below, PCI relies on Jamison v. Consolidated Utilities, Inc., 576 P.2d 97, 102 (Alaska 1978), where this court stated that quasi-estoppel precludes a party from taking a position inconsistent with one ... previously taken where circumstances render assertion of a second position unconscionable. Jamison set out five relevant criteria for evaluating a quasi-estoppel claim: Among the many considerations which may indicate that an inconsistent position is unconscionable and the doctrine of quasi-estoppel should be applied are whether the party asserting the inconsistent position has gained an advantage or produced some disadvantage through the first position; the magnitude of the inconsistency; whether changed circumstances tend to justify the inconsistency; whether the inconsistency was relied on by the party claiming estoppel to his detriment; and whether the first assertion was made with full knowledge of the facts. Jamison, 576 P.2d at 102-03. Applying these criteria, we conclude that the trial court properly denied PCI's claim of quasi-estoppel. While Owens's assessment of PCI's damages was facially inconsistent with the position adopted by TH at trial, Owens's November 1989 memorandum was by its own terms a tentative, best case scenario estimate. The memorandum expressed numerous qualifications, explaining that it relied on PCI-supplied total cost summaries and other data, and assumed that this information could be proved at trial; it warned that PCI's cost-accounting process was unorthodox and subject to attack at trial; and it cautioned that further analysis and additional discovery will be required before we can determine if any of the claimed expenses are attributable to the City [of Seward]. The express language of the memorandum thus obviously and unmistakably reserved TH's right to change its position on the issue of PCI's damages. In light of this language, it hardly seems surprising that TH would change its position after a full opportunity to discover, analyze, and develop PCI's damages evidence in an adversarial context. Owens's memo must also be assessed in context with other memos addressing PCI's damages that were generated by TH at approximately the same time. For example, in a memo dated September 20, 1989, TH engineer Gregg Gottgetreu (who had analyzed much of PCI's construction cost data) warned Owens of the highly contingent nature of PCI's damages evidence. [2] And in a memo dated November 9, 1989, TH attorney Rube Junes estimated PCI's total cost claim to be within the range of $2.0 to $2.5 million rather than the approximate $7.0 million claim presented [by PCI]. These circumstances make it clear that this initial position, as asserted by TH, as reflected in Owens's memo, was not based on full knowledge of the facts, Jamison, 576 P.2d at 103; that the magnitude of the inconsistency, id. at 102, between its original and later numerical estimates is more apparent than real; and that changed circumstances tend to justify the inconsistency. Id. Moreover, PCI has failed to show how TH gained any advantage or placed PCI at any disadvantage by taking the position stated in Owens's 1989 memorandum. Nor has PCI shown any detrimental reliance. [3] Hence, the Jamison criteria do not support PCI's estoppel claim. [4]

This court reviews superior court summary judgment orders de novo to determine whether there are any genuine issues of material fact and whether the moving party is entitled to judgment as a matter of law on the established facts. See Mount Juneau Enters., Inc. v. City & Borough of Juneau, 923 P.2d 768, 772-73 (Alaska 1996). We draw all reasonable inferences of fact against the moving party and in favor of the non-moving party. See Providence Washington Ins. Co. v. Fireman's Fund Ins. Cos., 778 P.2d 200, 203 (Alaska 1989).
In its complaint against TH, PCI requested an award of punitive damages. This claim was based on allegations that TH, while representing PCI in the suit against A/H and Ebasco, made active efforts to be retained as counsel by a company named Enserch, a subsidiary of Ebasco. PCI asserted that TH's efforts created a conflict of interest and amounted to gross negligence ... evidencing a reckless indifference to PCI's best interests. In granting summary judgment to TH on punitive damages, the trial court started from the premise that, in order to prevail on its claim, PCI would be required to prove the existence of a conflict before PCI's original action was dismissed  in other words, a showing of post-dismissal contacts between TH and Enserch would not suffice to trigger punitive damages. PCI did not dispute this reasoning. [5] While acknowledging that PCI had presented evidence indicating that TH made contact with Enserch and was retained to represent that company in a matter unrelated to PCI's case after the case was dismissed, the court found that PCI had presented no evidence to substantiate its claim that TH and Enserch had engaged in social interactions beginning in the summer of 1988  several months before the dismissal. Accordingly, the court found no evidence of pre-dismissal conflict to support a claim of punitive damages. In its opening brief, PCI cites Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 760 (Alaska 1992), for the propositions that the attorney-client relationship involves a fiduciary duty and that punitive damages may be awarded when this duty is breached through conduct manifesting reckless indifference to the client's rights. PCI insists that TH's contacts with Enserch were sufficient to show this kind of reckless indifference. In advancing this argument, however, PCI does not address the trial court's pivotal finding: that PCI had failed to prove any pre-dismissal contacts at all between TH and Enserch. Our review of the record establishes that the trial court's finding was accurate when the court ruled on the punitive damages issue. In its reply brief, PCI points for the first time to later evidence indicating that a TH attorney agreed to represent Enserch a month before the dismissal of PCI's original case  at about the same time the superior court issued notice of its intent to dismiss for lack of prosecution. [6] But as PCI admitted below, this evidence was not included in the trial court record when the court ruled on summary judgment, so it was not available for the court's consideration. While the superior court is not limited to evidence expressly called to its attention by a party moving for summary judgment and should examine the entire record before ruling on the motion, see American Restaurant Group v. Clark, 889 P.2d 595, 598 (Alaska 1995), the court must necessarily base its decision on the record before it when it rules. The later evidence referred to by PCI did not join the record until shortly before trial, when PCI filed it as an exhibit in support of a motion unrelated to the previously resolved issue of punitive damages. [7] At no time thereafter did PCI call the evidence to the court's attention in connection with its punitive damages claim or seek reconsideration of the trial court's earlier summary judgment ruling on the issue. [8] Moreover, even assuming the later evidence established a conflict of interest and a breach of TH's fiduciary duty to PCI, PCI has failed to allege or show that this breach had any causal connection to the dismissal of PCI's case, which resulted from an apparently unrelated eighteen-month-long period of procedural inactivity. Nor has PCI alleged or shown any other actual prejudice resulting from the alleged breach of fiduciary duty. Finally, to the extent that the later evidence might support a finding of conflict of interest, that conflict would seem de minimis. PCI cites no convincing authority that a fiduciary breach of this kind would, standing alone, constitute reckless indifference sufficient to sustain an award of punitive damages. We find no error in the trial court's decision striking PCI's punitive damages claim.

Issues involving the adequacy of jury instructions generally raise questions of law and are subject to de novo review. See Sever v. Alaska Pulp Corp., 931 P.2d 354, 361 n. 11 (Alaska 1996). As long as the jury is properly instructed on the law, however, the trial court has broad discretion to determine whether to give instructions specially tailored to the case at hand. See Buchanan v. State, 561 P.2d 1197, 1207 (Alaska 1977). Rulings on such instructions are reviewed for abuse of discretion. See, e.g., Stoneking v. State, 800 P.2d 949, 951 (Alaska App. 1990). An instruction erroneously stating the law will not be grounds for reversal unless it results in actual prejudice. See Beck v. State, Dep't of Transp. & Pub. Facilities, 837 P.2d 105, 114 (Alaska 1992). And an instruction that is not objected to will be reviewed only for plain error  that is, for obvious error creating a high likelihood of injustice. See Conam Alaska v. Bell Lavalin, Inc., 842 P.2d 148, 153 (Alaska 1992).
PCI challenges the superior court's refusal to give Proposed Instruction Number 40: The failure of [PCI] to present evidence that supports claims it and the City of Seward had against Acres/Hanscomb and EBASCO in the underlying case, should not be construed against [PCI], if failure to present such evidence is due to the failure of defendant attorneys to preserve such evidence. To the contrary, you are instructed that in the absence of such evidence, you may construe the missing evidence in favor of [PCI]. PCI argues that the proposed instruction was warranted in light of evidence establishing that TH, while acting as PCI's counsel, failed to preserve evidence developed by key witnesses who are now deceased. In Sweet v. Sisters of Providence, 895 P.2d 484, 492 (Alaska 1995), observing that for every wrong there is a remedy, we recognized that under certain circumstances, burden shifting may be an appropriate remedy for an opposing party's spoliation of evidence. See id. (quoting Smith v. Superior Court, 151 Cal. App.3d 491, 198 Cal. Rptr. 829, 832 (1984)). In the present case, however, PCI's claim of entitlement to a spoliation instruction suffers from a lack of supporting facts. The evidence assertedly lost by TH was evidence developed by PCI's own employees. This evidence was apparently within PCI's control at all relevant times. PCI has not shown that the loss of this evidence resulted from TH's negligent handling of the A/H-Ebasco lawsuit. [9] Nor has PCI made a convincing showing of actual prejudice. Our review of the record persuades us that the trial court did not err in refusing to give the proposed instruction.
PCI next contends that the trial court erred in instructing the jury to apply the trial-within-a-trial approach in deciding PCI's legal malpractice claim. Jury Instruction Number 20 directed the jury to determine what the outcome would have been if [PCI's] lawsuit against [A/H] and Ebasco Services had not been dismissed. Thus, you are hearing this case as if you were the jury in the [PCI v. A/H-Ebasco] case. The instruction required PCI to prove that it would have been successful in the underlying suit, that it would have been awarded damages, and that the judgment would have been collectible from A/H or Ebasco. In challenging the trial court's instruction, PCI urges us to leave it within the discretion of the trial judge to determine the manner in which the plaintiff may proceed to prove its claim for damages. However, PCI has failed to establish that the trial court believed itself precluded from exercising discretion on the issue. Although our decisions have twice approvingly mentioned the trial-within-a-trial approach, [10] we have not expressly adopted it. Given that we have never formally embraced the approach, the trial court was not necessarily constrained to use it. PCI cites Lieberman v. Employers Insurance of Wausau, 84 N.J. 325, 419 A.2d 417, 426-27 (1980), for the proposition that the trial-within-a-trial approach should not have been applied to this case. Yet Lieberman is readily distinguishable; there, in finding the approach improper, the court relied primarily on the reversed roles of the parties in the malpractice and underlying actions: the plaintiff in the malpractice case had been the defendant in the underlying suit. See id., 419 A.2d at 426. The court in Lieberman stated that, if the trial-within-a-trial approach were used in those circumstances, the jury would not obtain an accurate evidential reflection or semblance of the original action. Id. at 427. [11] PCI claims that the trial-within-a-trial approach was unsuitable to this case for an entirely different reason: because several witnesses with testimony favorable to PCI have died. PCI's argument is unpersuasive. As we have previously noted in discussing PCI's proposed spoliation instruction, PCI has failed to demonstrate that it lost any materially favorable evidence as a result of negligence by TH. Hence, the claim of lost evidence does not support PCI's argument that the trial court erred in adopting the trial-within-a-trial approach. [12]
PCI further argues that the trial court erred in instructing that PCI was required to prove that any judgment would have been collectible from A/H or Ebasco. Professional negligence consists of four elements: duty, breach, causal connection between negligent conduct and injury, and actual loss or damage resulting from the professional's negligence. Belland v. O.K. Lumber Co., 797 P.2d 638, 640 (Alaska 1990). When a legal claim is lost through professional negligence, actual damage occurs only if the claim is meritorious and has value; the plaintiff bears the burden of proving these elements of damage. See Ridenour v. Lewis, 121 Or. App. 416, 854 P.2d 1005, 1006 (1993). In such cases, however, it is far from clear whether proof of a lost claim's value requires evidence showing that a judgment on the lost claim would actually have been collectible. This court has never faced the issue; authorities elsewhere are divided. See generally Jourdain v. Dineen, 527 A.2d 1304, 1306 (Me. 1987). Some decisions hold that collectibility of the [underlying] judgment is an element of proof in a legal malpractice action and that the burden is ... placed on the plaintiff to prove collectibility. Id. at 1306. [13] Others, like Jourdain itself, adopt a contrary view. See id. at 1307 (uncollectibility of a judgment should be treated as a matter constituting an avoidance or mitigation of the consequences of one's negligent act). [14] Recently, in Kituskie v. Corbman, 452 Pa.Super. 467, 682 A.2d 378, 382 (1996), appeal granted in part, 548 Pa. 628, 693 A.2d 967 (1997), the Pennsylvania Supreme Court concluded that, when legal malpractice results in the loss of a meritorious claim, the malpracticing attorney should bear the burden of disproving collectibility. In reaching this decision, the court reasoned that the plaintiff should not have the added burden ... since he or she has already been allegedly wronged by two parties (the third party and the attorney). Id. We find Kituskie persuasive. Because the need to determine collectibility is caused by professional negligence, and the requirement of proving collectibility arises only after malpractice has been proved, [15] policy would seem to militate in favor of requiring the malpracticing attorney to bear the inherent risks and uncertainties of proving uncollectibility. Practicality seems to point to the same conclusion: there is no good reason to presume from a record silent on the issue of collectibility that the underlying judgment at issue would not eventually be collected. [16] We thus adopt the rule imposing upon defendants the burden of proving uncollectibility. Accordingly, we conclude that the trial court erred in instructing the jury that PCI bore the burden of proving collectibility. But the error does not require reversal. Here, by awarding damages to PCI, the jury necessarily found that PCI had met its burden of proving collectibility. [17] Accordingly, the error did not result in actual prejudice and was therefore harmless. See Beck v. State, Dep't of Transp. & Pub. Facilities, 837 P.2d 105, 114 (Alaska 1992).
PCI's next argument arises from the trial court's impromptu decision to amend jury instructions dealing with the elements of PCI's misrepresentation and nondisclosure claims against A/H in the underlying breach of contract action. To explain our resolution of this argument, we must describe the factual context in which it arose. During pre-final-argument discussions on instructions, PCI asked the trial court to instruct the jury on PCI's claims in the underlying case that A/H had misrepresented and failed to disclose material facts to both PCI and the City. The court agreed to instruct on misrepresentation and nondisclosure as to the City and on misrepresentation as to PCI, but questioned the legal basis for an instruction on the claim that A/H had failed to disclose facts to PCI. The court reasoned that, because an action for nondisclosure presupposes a contractual duty to disclose, and because A/H's contract in the underlying case was with the City rather than PCI, PCI's nondisclosure claim could apply only as between A/H and the City. PCI pointed out, however, that A/H had acted as the City's agent in dealing with PCI on the construction project and had thus inherited the City's contractual duty of disclosure toward PCI. The court accepted this argument and agreed to instruct on PCI's theories that A/H had misrepresented and failed to disclose material facts to both the City and PCI. A day later, however, as the court read the instructions to the jury after the parties' final arguments, the scope of PCI's nondisclosure claim became confused. PCI had apparently neglected to delete extraneous language from the final form of two instructions that immediately preceded the instructions on misrepresentation and nondisclosure. As the court read these instructions to the jury, it caught the errors and corrected them by blacking out the extraneous language and instructing the jury to disregard the blackouts. The court then began reading aloud the next instructions, which dealt with misrepresentation and nondisclosure. Apparently distracted by the mistakes it had just corrected, and evidently recalling its earlier concern over the scope of PCI's nondisclosure claim but failing to recall the previous day's discussions on the topic, the court erroneously assumed that the nondisclosure instruction's references to A/H's failure to disclose facts to PCI were also mistaken: [Court reading to the jury]: Power Constructors claims that it was damaged because of Acres/Hanscomb's  because Acres/Hanscomb failed to disclose certain information. In order to win on this claim Power Constructors must establish that it is more likely true than not true that, one, Acres/Hanscomb failed to disclose information to Power Constructors  [Court addressing counsel]: Counsel, please approach.... After a brief conference at the bench, the court excused the jury, discussed the matter with the attorneys, and proposed to delete all references to A/H's duty to disclose information to PCI. Despite the previous day's discussions, PCI's counsel expressly agreed with the proposal: [Court]: [I]t's my understanding that what was decided yesterday in fixing that instruction was that the ... failure to disclose theory, was the City of Seward's ... theory because of the contractual relationship it had with [A/H]. However, this entire instruction is done as if it were [A/H that] had a contract with [PCI] and it was their claim. And so I think we just clarified at the bench it should be City of Seward, correct? [PCI's counsel]: That's correct. The court proceeded to make the changes, asking item by item if counsel agreed with its rewording of the instructions. PCI's counsel repeatedly and consistently agreed. As changed, the instruction limited PCI's nondisclosure claim to A/H's failure to disclose information to the City. Upon completing the revision, the court called back the jury, apologized for the inconvenience, explained that the need to modify the instructions is my fault, and read aloud the remainder of the instructions, including the newly modified instructions on nondisclosure. After allowing the jury to retire for deliberations, but before sending it the written jury instructions, the court again asked the parties if they had anything else regarding jury instructions. PCI's counsel replied, No, Your Honor. Late the next day, PCI filed a motion challenging the revised nondisclosure instructions and asserting its earlier claim that A/H had failed to disclose information to PCI. PCI asked for curative instructions or, alternatively, a mistrial. By then, the court had received word that the jury had reached a verdict. The court convened the parties and, as a potential curative measure, suggested sending the jury a copy of the original nondisclosure instructions and an amended verdict form, together with a note advising the jury that the confusion over the instructions was the court's fault, not counsel's. Counsel for TH objected vigorously, contending that PCI's counsel had waived any objection by agreeing to the previous day's last-minute revisions. The court then asked PCI's counsel why he had failed to object. Counsel replied that [t]he whole thing caught me off guard. When reminded by the court that he had expressly agreed to various revisions, and when pressed to explain why, counsel demurred, asserting that he did not specifically recall agreeing to any revisions. The court was unpersuaded. Noting that PCI had waited more than twenty-four hours to assert its changed position, during which time the jury had completed its deliberations, the court concluded that no curative measures were warranted. [18] The jury was called in, and returned its verdict. PCI now claims that it was prejudiced by the court's decision to change the instructions in the jury's presence, after closing arguments had been completed. According to PCI, the court's action amounted to a violation of Alaska Civil Rule 51(a). [19] In our view, however, PCI has waived this argument by expressly endorsing the modified instructions that were read to the jury. See Conam Alaska v. Bell Lavalin, Inc., 842 P.2d 148, 152 n. 6, 153 (Alaska 1992). [20] Nor has PCI established plain error. PCI did not claim below that the revised instruction caused it prejudice by undercutting any position asserted by its counsel in final argument. Cf. Rollins v. State, 757 P.2d 601 (Alaska App. 1988). It advances this claim on appeal, but fails to substantiate it. [21] PCI also argues that the trial court handled the matter in a manner that was likely to prejudice the jury against it. But the record belies this claim: it establishes that the trial court assumed all blame and did nothing to disparage the parties. More significant, it appears that the complained-of error had no actual effect on the verdict. PCI's claims of nondisclosure were intrinsically tied to its claims of misrepresentation. And although the jury found that A/H had injured PCI by a misrepresentation, it awarded no compensation for this injury beyond the amount it awarded for A/H's negligence. Given these circumstances, the possibility of an incremental award of damages based on a finding of nondisclosure seems virtually nil. We find no reversible error on this point.

Calculation of the value of a verdict to determine if it exceeded an offer of judgment presents questions of law, which we review de novo. See Pratt & Whitney Canada, Inc. v. Sheehan, 852 P.2d 1173, 1182 n. 13 (Alaska 1993).
For purposes of comparing the value of PCI's $419,905 verdict with the value of TH's million-dollar pretrial offer of judgment, the trial court made a single award of prejudgment interest; the interest ran from December 18, 1985  the date on which PCI submitted its cost overrun claim to the City of Seward  to February 4, 1994  the date of TH's offer of judgment. PCI claims error, contending that two awards of prejudgment interest should have been calculated  one for the underlying claim against A/H and one for the malpractice claim against TH. PCI asserts that the court should first have calculated a total value for its underlying claim against A/H by awarding prejudgment interest from the accrual date of PCI's original cause of action against A/H to the accrual date of its malpractice claim against TH (that is, the date the court dismissed PCI's original case against A/H), and adding this award  together with an appropriate award of prevailing-party costs and attorney's fees  to the principal amount of PCI's recovery against A/H, as found by the jury. In PCI's view, the court should then have awarded prejudgment interest on the total value of the underlying judgment from the date PCI's malpractice cause of action accrued until the date of the offer of judgment. [22] PCI's argument has merit. We have long recognized that the purpose of prejudgment interest is to compensate the injured party for the time it has been less than whole. See Davis v. Chism, 513 P.2d 475, 481 (Alaska 1973). Since prejudgment interest is a form of consequential damages, see Farnsworth v. Steiner, 638 P.2d 181, 184 (Alaska 1981), an award of prejudgment interest becomes a part of the judgment proper. See Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 759 (Alaska 1992). Two judgments are at issue in a legal malpractice case, the judgment in the underlying cause affected by the malpractice and the judgment sought against the attorney for malpractice. In Bohna, we recognized that the value of each of these judgments must be separately considered when the trial court determines whether a jury award for malpractice exceeds a pretrial offer of judgment. See id. Since the malpractice award compensates for the loss of a favorable judgment or the entry of an unfavorable one, the total value of the lost or unfavorable judgment must first be established; this entails calculation of prejudgment interest and attorney's fees on that judgment. See id. Costs and attorney's fees in the malpractice case must then be based on the underlying judgment's total value. See id. TH seeks to distinguish Bohna because it was not a lost-claim case: the plaintiff in the malpractice action in Bohna had been held liable in the underlying action, and a judgment had actually been entered against him. See id. at 751. TH contends that the circumstances here are different, since no judgment was ever entered on PCI's lost claim against A/H. TH reasons that, because it is impossible to determine the date a final judgment would have been rendered in the underlying suit, prejudgment interest should not have been added to the fictitious judgment. This claim of uncertainty is more illusory than real. TH's negligence caused PCI to lose its claim against A/H. This loss constitutes PCI's injury in the malpractice case. The loss occurred when the superior court dismissed the underlying cause. It follows that the value of the underlying cause must be determined as of the date of the dismissal. Since the purpose of the malpractice award is to restore PCI as closely as possible to its position on the date of loss, [23] prejudgment interest accrued as of that date is properly included in the total value of the underlying recovery. See Bohna, 828 P.2d at 759. On the same date, PCI's malpractice action against TH accrued, thereby triggering accrual of prejudgment interest on the second cause. PCI also claims that $44,495 should have been added to the total judgment on the underlying case to reflect attorney's fees it would have received under Civil Rule 82 as a prevailing party against A/H. While the addition of these fees might have been appropriate had PCI's underlying claim been against A/H alone, PCI also proceeded against Ebasco in the underlying case, and it did not prevail against Ebasco. This added a twist to the attorney's fees issue in the underlying case, for, as the trial court correctly recognized: It would be logically inconsistent in determining the total loss to plaintiffs due to dismissal of the lawsuit to allow plaintiff to recover for attorney's fees as prevailing party against [A/H] in the underlying suit without deducting the amount which it would have had to pay to Ebasco as a prevailing party in the underlying suit. The trial court noted that Ebasco undoubtedly would have been awarded prevailing-party fees. Finding that Ebasco's fees against PCI actually might have exceeded PCI's fees against A/H, the court treated the overall outcome of the attorney's fees issue as a wash and declined either to add prevailing-party attorney's fees to the underlying judgment to reflect PCI's recovery against A/H or to deduct fees from the judgment to reflect Ebasco's entitlement to a recovery against PCI. In our view, the trial court's analysis of the attorney's fee issue is sensible and supportable. The court correctly determined that Ebasco would have been entitled to prevailing-party fees. See Myers v. Snow White Cleaners & Linen, 770 P.2d 750, 753 (Alaska 1989). Recognizing and providing for this award in the calculation of the total underlying judgment entails no more uncertainty than recognizing and providing for the award of fees PCI would have recovered against A/H. And given the breadth of trial court discretion in fixing reasonable fees under Civil Rule 82, we find no basis for concluding that the trial court abused its discretion in treating the opposing fee awards as a wash. In sum, the trial court erred in failing to allocate prejudgment interest separately to each judgment; the error will necessitate recalculation of the awards in both the underlying and malpractice actions. [24] The trial court did not abuse its discretion in failing to add prevailing-party attorney's fees to the underlying judgment.
PCI separately challenges the trial court's determination setting December 18, 1985, as the date that prejudgment interest began to accrue. On that date, PCI submitted its cost-overrun claim to the City of Seward. PCI claims that the date should properly have been January 7, 1985, the date it first incurred damages from A/H's misrepresentations. Damages normally carry interest from the time a cause of action accrues. See State v. Phillips, 470 P.2d 266, 274 (Alaska 1970). A cause of action for misrepresentation in a business transaction is complete when the injured person has ... suffered pecuniary loss or has incurred liability as a result of a misrepresentation. Austin v. Fulton Ins. Co., 444 P.2d 536, 539 (Alaska 1968) (citing Restatement of Torts § 899 cmt. c (1939)). In the present case, the record provides no clear indication of the date when PCI first suffered pecuniary loss resulting from A/H's negligence and misrepresentation. Construction of the powerline occurred over many months, and PCI incurred costs over the entire period of construction. PCI's attempts to link specific cost increases to specific acts of negligence or misrepresentation were imprecise, and the submission of its overrun claim marked the first point at which its construction-related losses were clearly shown to have been incurred. The construction-related damages awarded by the jury were pegged to no particular event or expenditure. And a major part of the jury verdict covered the City's and PCI's arbitration expenses, which accrued after the construction project was completed. Under these circumstances, trying to determine exactly when PCI actually suffered the losses that the jury found compensable would be a futile endeavor. We are not persuaded that the trial court erred in selecting the date of PCI's cost-overrun claim as the date of commencement for prejudgment interest.
The trial court began its prejudgment-interest calculation by applying the normal statutory rate of 10.5%. See former AS 09.30.070(a). [25] PCI contends that the court should instead have applied interest at 11.5%. PCI asserts that during the powerline construction project, as a result of A/H's negligence and misrepresentations, it was forced to borrow two million dollars from Alaska Mutual Bank at 11.5% for operations. According to PCI, its rate for prejudgment interest should have been fixed at the rate it actually paid to Alaska Mutual. In support of this argument, PCI cites Tookalook Sales & Service v. McGahan, 846 P.2d 127, 130 (Alaska 1993). Tookalook is not entirely on point. Tookalook establishes that an aggrieved party who is forced to borrow funds may pursue and receive a compensatory damages award that includes the interest actually paid for the loan; in such cases, however, to avoid double recovery, the borrower is barred from claiming prejudgment interest on the compensatory interest award. See id., Tookalook thus gives borrowers in these circumstances an option: they may seek actual interest from the jury as damages or statutory interest from the court as prejudgment interest. Here, in presenting its underlying case against A/H and Ebasco to the jury, PCI chose not to claim the Alaska Mutual loan or the interest thereon as items of damage; the jury's damage award did not include these items. Having bypassed that option, PCI's remaining recourse was to seek prejudgment interest from the court, at the rate prescribed by law; this it did. [26] We find no error.
Under former Rule 68(b)(1) and former AS 09.30.065(1), [27] the normal statutory rate for prejudgment interest is reduced by 5% per year when a party's award of damages proves less favorable than an offer of judgment. After determining that PCI's jury verdict was less favorable than TH's pretrial offer of judgment, the trial court reduced the rate on PCI's prejudgment interest award from 10.5% to 5.5%. Because the trial court did not separately calculate prejudgment interest for the malpractice and underlying claims, however, its reduction of the prejudgment interest award reached back to December 18, 1985  the accrual date for prejudgment interest on the underlying claim. PCI claims error: Neither Rule 68 nor A.S. 09.30.065 clearly address[es] a malpractice action where part of the damages would be the prejudgment interest on the loss from the underlying action. This argument has merit. As we have previously indicated, prejudgment interest on the underlying claim in a legal malpractice action becomes part of the underlying judgment; as such, it stands apart from interest awarded on the judgment for the malpractice claim. Within the malpractice case, the interest component of the underlying judgment is part of the principal upon which interest is awarded. It follows that a reduction of interest under former Rule 68(b)(1) and former AS 09.30.065 should reach back only to the accrual of the malpractice claim. On remand, the trial court should recalculate the reduction accordingly.
TH's offer of judgment was inclusive of all costs (including court awarded attorney's fees and prejudgment interest)[.] PCI claims that the offer to pay all costs should be taken to mean the entire amount of the costs incurred by PCI, whether or not taxable under Civil Rule 79. PCI goes on to assert that the all costs provision has significance in assessing the relative values of the offer of judgment and the actual judgment, since the actual judgment incorporates only properly taxable costs. PCI thus argues that, for comparison purposes, the actual judgment should have been increased by an amount reflecting untaxable costs that TH ostensibly would have paid had PCI accepted the offer of judgment. In our view, however, this argument proceeds from a strained and untenable reading of the offer's all costs language. The trial court did not err in rejecting the argument.
Advancing an appropriate calculation of value adjusted to reflect all of its claims of miscalculation, PCI argues that the total judgment resulting from its jury verdict is worth $1,084,458. Because this amount exceeds the million-dollar pretrial offer of judgment, PCI proposes that the trial court erred in treating the offer as superior. This argument is governed by our rejection of most of PCI's miscalculation claims. The limited points on which we have found error will not affect the overall comparison.

An award of attorney's fees under Civil Rule 82 will be overturned only when it is manifestly unreasonable. See Feichtinger v. Conant, 893 P.2d 1266, 1268 (Alaska 1995). The same standard applies to an award of fees under Rule 68, which governs offers of judgment. See Hayes v. Xerox Corp., 718 P.2d 929, 938 (Alaska 1986). It is primarily for the trial court to decide whether and to what extent multiple representation is reasonable and should be compensated. See Integrated Resources Equity Corp. v. Fairbanks N. Star Borough, 799 P.2d 295, 304 (Alaska 1990). In determining whether the trial court's decision to compensate multiple attorneys is manifestly unreasonable, we consider a variety of relevant factors, including whether differing legal theories are present, whether one aspect of the litigation requires independent counsel, and whether the trial court granted substantially less than actual billings. See id.
PCI filed its malpractice action against the law firm of Taylor & Hintze and against various individual members of the firm, one of whom was Robert G. Taylor. Two law firms entered appearances for the defendants: Taylor & Hintze and all individual members except Taylor were represented by one firm; Taylor had separate counsel. All defendants joined in TH's pretrial offer of judgment. Because their offer proved more favorable than PCI's verdict, they were entitled to an award of post-offer prevailing-party attorney's fees calculated under Civil Rule 82. Former Alaska R. Civ. P. 68(b)(1). Applying Rule 82's contested with trial schedule, the trial court awarded defendants 30% of their actual attorney's fees from the date of the offer of judgment through trial; the fee award covered billings submitted by both sets of defense counsel, totaling $143,397 to TH and $144,489 to Taylor. PCI challenges the dual attorney's fee award on numerous grounds: (1) Taylor and TH asserted virtually identical defenses; (2) TH and Taylor were a single party under Civil Rule 68(b)(1); (3) the award of double fees amounted to a windfall for defendants' malpractice insurer and was inequitable because PCI had to litigate against an insurance carrier which spent 2 million dollars contesting the amount of plaintiff's damages; (4) the dual award covered fees that both counsel had not actually needed to incur; and (5) the award deprived PCI of access to the courts as guaranteed by the constitutional rights of equal protection and due process. These arguments are meritless. PCI's suit named a law firm and six individual attorneys as defendants in a malpractice claim arising from the dismissal of a sizable and complex breach of contract action. Taylor and TH asserted substantially different positions: TH admitted liability and disputed only damages; Taylor denied liability. An affidavit submitted by TH's counsel declared that [counsel for Taylor] and [I] made every effort to minimize expense and duplication. We coordinated our efforts on motion work, deposition preparation and trial preparation to the extent possible. The trial court found this affidavit credible, concluding that the fees incurred after the offer of judgment by each firm were reasonable and necessary, and that the lead attorneys for the co-defendants made every effort to minimize expense and duplication and coordinated their efforts on motion work, deposition preparation and trial preparation to the greatest extent possible. The court further found that all of the hourly rates charged by the various attorneys and paralegals are reasonable. PCI has failed to show that these findings are manifestly unreasonable. See Integrated Resources Equity Corp., 799 P.2d at 304; Conant, 893 P.2d at 1268. Nor has PCI shown that they are beyond the contemplated scope of the offer-of-judgment rule [28] or are otherwise oppressive. The purpose of Rule 68 is to encourage settlement and to avoid protracted litigation. See Continental Ins. Co. v. U.S. Fidelity & Guar. Co., 552 P.2d 1122, 1125-26 (Alaska 1976). The joint offer of judgment clearly indicated all claims between the parties would be resolved if the offer were accepted, Taylor Constr. Serv., Inc. v. URS Co., 758 P.2d 99, 102 (Alaska 1988), and unequivocally put PCI on notice that, in failing to accept the offer, [PCI] assumed the risk of the penalty. Id. A sizable and experienced company, PCI assumed this risk with open eyes. The trial court's fee decision is not manifestly unreasonable.