Opinion ID: 1186335
Heading Depth: 3
Heading Rank: 3

Heading: Attorney's Fees as Compensatory Damages

Text: Sykes additionally challenges the trial court's decision to award attorney's fees, both as compensatory damages for Sykes's breach and under Alaska Civil Rule 82. MCM correctly points out that Sykes has failed to include this issue in his points on appeal. Accordingly, the point is not properly preserved. [17] Moreover, Sykes's conclusory briefing of the point would warrant a finding of abandonment. [18] While these considerations dissuade us from attempting to resolve Sykes's arguments, some brief comments on the attorney's fees issue are in order, both in the interest of justice [19] and to provide guidance to the trial court on remand. As we have already explained, Sykes signed a written agreement to sell MCM his mineral rights for $10,000; his refusal to follow through on the agreement led MCM to file suit against him, alleging, among other things, that he had intentionally failed to honor the contract. After learning that Sykes conveyed the rights to Ferre, MCM joined Ferre as Sykes's codefendant. MCM later agreed to acquire the rights from Ferre for $10,000  the same price previously agreed upon with Sykes; upon receiving a deed from Ferre, MCM dismissed its suit against him but persisted in its claims against Sykes. In continuing to press its action against Sykes, MCM claimed that Sykes should be held responsible for all costs MCM had incurred as a result of Sykes's breach  including the full costs of MCM's litigation, through settlement with Ferre. Upon conclusion of trial, the superior court ruled in favor of MCM on this issue, declaring that MCM was entitled to recover these legal expenses from Mr. Sykes as contractual and tort damages for his intentional breach of the Agreement and his misrepresentation and fraud. These fees, incurred before the MCM/Ferre settlement, totaled slightly more than $105,000. [20] After receiving the favorable verdict, MCM moved for an award of prevailing party attorney's fees to cover legal services rendered after the MCM/Ferre settlement. Emphasizing the intentional nature of Sykes's breach, MCM argued for an award of full fees, from the settlement date through trial. [21] The trial court denied MCM's request for full compensation but awarded partial attorney's fees computed pursuant to Civil Rule 82(b)(1)  that is, calculated as a percentage of MCM's judgment, which already included full compensation for pre-settlement legal fees and costs. We have previously held that attorney's fees generally cannot be awarded as damages  that fee awards are instead controlled by Civil Rule 82. Ehredt v. DeHavilland Aircraft Co. of Canada, 705 P.2d 446, 452 n. 8 (Alaska 1985). In Curt's Trucking Company v. City of Anchorage, 578 P.2d 975 (Alaska 1978), we concluded that costs of protecting one's legal claim are unrecoverable as damages. Id. at 981. Likewise, in Alaska Pacific Assurance Company v. Collins, 794 P.2d 936 (Alaska 1990), we stated that [o]ur trial courts are precluded from awarding fees other than those allowed by `rule or order.' Id. at 949 (quoting AS 09.60.010) (footnote omitted). [22] We thus found error in the superior court's allowance of an award of legal fees as compensatory damages on a tort claim involving bad faith failure to provide insurance coverage. Id. In his treatise on contracts, Professor Corbin recognizes an exception to the general rule against attorney's fees that permits reasonable expenditures for litigation to be awarded when a defendant's breach of contract results in litigation between the plaintiff and a third party. See Arthur L. Corbin, 5 Corbin on Contracts § 1037, at 225-26, 234 (1964). Yet Corbin emphasizes that this exception to what he calls the American rule against recovery of attorneys' fees is a limited one: This treatise has always supported recovery of attorneys' fees incurred at another time, incurred in another place, and incurred in another lawsuit than the action in which indemnity has been sought. It is another matter entirely to say that ... claims against different people in the same lawsuit, in the same place, and capable of being heard at the same time, should be treated as different lawsuits for the purpose of invoking that exception to the American rule. Id. § 1037, at 86-87 (Supp. 1997) (emphasis in the original). MCM evidently called none of these authorities to the superior court's attention; and the superior court cited no authority supporting its treatment of attorney's fees as compensatory damages. Given the serious legal question surrounding the propriety of this award, we conclude that, on remand, if the superior court again finds that Sykes should be held liable for misrepresentation and breach, the court should reconsider its compensatory damage award; and if the court again finds that attorney's fees should be treated as compensatory damages, it should fully explain the legal basis for its finding. [23]