Court Opinion

ID: 9789082
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:27:41.258771+00
Date Added: 2024-06-11T07:37:19.420383
License: Public Domain

CARPENETI, Justice,
concurring.
I agree with the result of today's opinion, but I disagree with its reasoning. For that reason, I write separately to explain how I would resolve this case.
Today's result-reversal of the award of attorney's fees and costs to Jewel Lake and entry of judgment in favor of Jackman-is correct because Jewel Lake's offer of judgment did not clearly specify how the previous medical payments made on behalf of Jewel Lake should be treated for Rule 68 purposes. This ambiguity, under our law, is charged against Jewel Lake, the offeror. Accordingly, the medical payments should not be offset for Rule 68 purposes. Without offset, Jewel Lake's offer of judgment was plainly inferior to the jury verdict, and thus Jewel Lake is not the prevailing party under Rule 68.
The key point in this analysis is that Jewel Lake's failure to specify whether the earlier payments were part of its offer of judgment redounds to Jewel Lake's detriment. In Rules v. Sturn1 we held that an ambiguous offer is strictly construed against the offering party.2 In upholding the trial court's decision to disallow offset of earlier payments from the Rule 68 offer of judgment, we noted that "the [offeror]'s offer of judgment mentions nothing about advance payments made or about offsetting them against any part of the offer, and that the offer does not otherwise indicate an intent by the offerors to offset payments already made."3 Accordingly, we upheld the trial court's refusal to offset. We have also held, in Thomann v. Fouse,4 that a plaintiff is not required to gamble on the meaning of an ambiguous settlement offer.5 Thomann is significant for purposes of this case, for there the defendant's offer specifically notified the plaintiff that it consisted of "new money"-the kind of specificity lacking in Jewel Lake's offer-but it added that this "new money" was "offered in addition to the medical payments which have been assumed by Defendant Fouse's insurance carrier for resolution in a subsequent arbitration." 6 We held that the un*181derlined language rendered the offer too indefinite: "the presence of this detail invited confusion and could reasonably have led [plaintiff] to wonder what effect the 'subsequent arbitration' might have had on her medical claim."7 Because the offer's ambiguity created uncertainty for the plaintiff, we held that "it failed to meet the requirements of Rule 68 and could not support an award of costs and attorney's fees in favor of [the offeror]." 8
Jewel Lake's offer of judgment was far more uncertain than Fouse's offer. It made no mention of the earlier payments. It did not state that it was in addition to payments already made on its behalf, Jewel Lake acknowledges that no writing clarified whether the earlier payments would be credited to any judgment obtained by Jackman. Indeed, Jewel Lake did not claim any offset until it moved for offset of the judgment over five months after making the offer of judgment to Jackman. Thus, Jackman had no indication of Jewel Lake's intentions regarding offset at the time of the offer.9 It is not even clear that Jackman's attorney was aware of all the payments or their total amount at the time of the making of the Rule 68 offer. Because Jewel Lake created ambiguity in its offer to Jackman, we construe that ambiguity against Jewel Lake. Thus, the settlement offer must be read in favor of Jackman for the purposes of Rule 68 calculations.
Instead of this straightforward approach to resolving this case, today's opinion is based on the questionable hypothesis that "Jewel Lake's insurer apparently paid Jackman's expenses unconditionally, without any indication that it based the payments on Jewel Lake's potential fault." 10 I respectfully suggest that this approach defies both common sense and the common law.
It defies common serise because there is no reason to think that the defendant's insurer was making payments to the injured plaintiff for any reason other than to cover its insured's potential fault. (The court certainly provides no hint of any other reason for such a phenomenon.) Indeed, it admits as much, when it states: "It is undisputed that Jack-man received the advanced payments from Jewel Lake's insurer and that those payments compensated her for injuries included in her pending lawsuit-injuries she suffered when she slipped and fell on the Jewel Lake staircase." 11
And the opinion is a stark departure from the common law which credits defendants fully for payments made by themselves or their insurance companies regardless of whether the payments were medical payments or payments based on predicted liability. Today's opinion distinguishes between "pure liability payments" and "uncondition-alf ] reimburse[ment] for ... medical expenses" made by Jewel Lake's insurer.12 The court suggests that absent evidence establishing the "actual basis for the insurer's payments" there are no "obvious grounds" for crediting the entire amount of the advance payments against Jewel Lake's share of the fault. This approach is at odds with the common law.
The Commentary to the Restatement (See-ond) of Torts explains:
Payments by or for defendant. If a tort defendant makes a payment toward his tort liability, it of course has the effect of reducing that liability. This is also true of payments made under an insurance poli*182cy that is maintained by the defendant, whether made under a liability provision or without regard to liability, as under a medical-payments clause. This is true also of a payment by another tortfeasor of an amount for which he is liable jointly with the defendant or even by one who is not actually liable to the plaintiff if he is seeking to extinguish or reduce the obligation. (See § 885).[13]
While the Restatement does not mention payments by the defendant (or by another on his or her behalf) in the specific context of comparative liability, there is no reason that offset should not apply in a comparative negligence situation, given the Restatement's equal treatment of payments whether made under a liability policy or under a medical-payments clause. Therefore, just as payments made under a liability policy would be credited fully to a defendant, payments under a medical-payments clause should be as well.
The two cases relied on by the court, Norman v. Farrow14 and Hickenbottom v. Schmidt,15 are inapposite. They involved personal injury protection (PIP) benefits which were not paid from the pockets of (or on behalf of) the defendant tortfeasors.16 They were therefore collateral source payments rather than prior payments by (or on behalf of) the defendant. Furthermore, statutes in both Florida (Farrow ) and Colorado (Hickenbottom ) established that the payments could not be recovered by plaintiffs in litigation, and thus must be offset.17 There is no similar statute here.
Finally, the court's approach creates the risk of consequences that would ill serve the administration of justice in Alaska. We have long held that the purpose of Civil Rule 68 is to encourage early settlement of disputes.18 Early medical payments for injured plaintiffs would certainly assist early settlement of disputes. But even a hypothetically purely generous insurer of a potential defendant may become involved in litigation, and will want to receive full credit for payments made in respect of its insured's potential liability. Giving the payor less than full eredit for "unconditional" payments, as the court does today, may put such a burden on the insurer-to specify that each payment is in respect of its insured's potential liability-as to discourage early payment.
In the final analysis, perhaps the only practical difference between the court's approach and mine is in the number of clarifying qualifications the defendant, its insurer, or its counsel, must make. Under the court's approach, each pre-settlement or pretrial payment must be accompanied by notice that it was "based on [defendant]'s potential fault for the accident," 19 or some such qualification. Under my approach, only one notification-in the Rule 68 offer-would be necessary. Perhaps this difference is insignificant. But given Alaska's preference for early payment and early settlement, it seems prefera*183ble to keep the burden on the maker of a Rule 68 settlement offer to speak clearly rather than placing it on the maker of multiple ameliorative payments.
Jewel Lake had the obligation to say exactly what its Rule 68 offer included. It did not do so. Because its offer was ambiguous, and because Jewel Lake under our case law must bear the burden of its offer's ambiguity, I believe that the superior court's order on attorney's fees should be reversed. I therefore concur in today's result. But I would not reach that result on the legal fiction that the payments to Jackman were made for anything other than to cover Jewel Lake's potential fault.
Thus, I concur with the holding but not the reasoning of today's opinion.

. 661 P.2d 615 (Alaska 1983).

. Id. at 617.

. Id.

. 93 P.3d 1048 (Alaska 2004).

. Id. at 1051 ("[W]e do not think it fair to expect [offeree] to gamble on this assumption {that pending arbitration was irrelevant to the claim].").

. Id. at 1049 (emphasis in original).

. Id. at 1051.

. Id. at 1052.

. Indeed, this is the precise objection that Jack-man made before the superior court to Jewel Lake's motion for attorney's fees under Rule 68:
[Defendants'] offer made no mention that from this stated amount of $1,400 the value of their prior medical payments' should be added for purposes of a Rule 68 calculation. From the plain terms of defendants' offer it would have been impossible for plaintiff to ascertain that defendants intended the "actual" value of their offer to be $1,400 plus $3,474.00 more for purposes of a potential Rule 68 motion.

. Opinion at 175 ('These reimbursements appear to have been paid unconditionally; nothing in the record suggests that they were based on Jewel Lake's potential fault for the accident."); see also id. at 178 ('the record fails to disclose the specific basis for the medical payments").

. Opinion at 178.

. Opinion at 178.

. Restatement (SEconp) or Torts § 920A emt. a (1979) (emphasis added). Note that while AS 09.17.070 abrogated the common law rule with respect to offsets from collateral sources which are discussed in this section of the Restatement, nothing in the Alaska statutes appears to have upset the common law rule regarding payments from non-collateral sources such as are at issue here.

. 880 So.2d 557 (Fla.2004).

. 626 P.2d 726 (Colo.App.1981).

. The language of both Farrow and Hickenbottom makes this clear. In Farrow the court cited the statute directing how recovery for tort claims is impacted by "an insured plaintiff's receipt of PIP benefits" and stated, "[the statute] dictates that an insured plaintiff has 'no right to recover' damages paid or payable by PIP benefits." 880 So.2d at 559-60. In Hickenbottom the court similarly noted that the Colorado statute "provides that an injured party is precluded from recovering damages from a tortfeasor which are recoverable as direct benefits under {[the PIP statute]." 626 P.2d at 727. Furthermore, the use of the descriptors "insured plaintiff" in Far row and "direct benefits" in Hickenbottom is additional evidence that the courts in those cases were considering payments from a source tied to the plaintiff and wholly collateral to the defendant tortfeasor.

. Farrow, 880 So.2d at 558; Hickenbottom, 626 P.2d at 727.

. See Miklautsch v. Dominick, 452 P.2d 438, 441 (Alaska 1969); accord Continental Ins. Co. v. U.S. Fid. & Guar. Co., 552 P.2d 1122, 1125-26 (Alaska 1976).

. Opinion at 175.