Court Opinion

ID: 9557923
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:00:18.913222+00
Date Added: 2024-06-11T09:07:43.382318
License: Public Domain

MATTHEWS, Chief Justice,
with whom EASTAUGH, Justice, joins, dissenting in part.
Under today’s opinion GEICO, having with Allstate paid $5,000 to State Farm on State Farm’s subrogated claim, will have to pay the same amount for the same loss to Falconer. Double payment here is thus not merely a fear, it is a reality.
Today’s opinion acknowledges this but suggests that the parties can undo the double payment “through negotiations or separate proceedings.” Op. at 413, n. 8. If State Farm agrees to pay the $5,000 back to Allstate and GEICO, State Farm will have an unsatisfied subrogation claim which then could only be satisfied by obtaining money from Falconer. If he agrees to pay $5,000 to State Farm, no one will have paid, or recovered, twice for the same loss. But that is the very result from, which Falconer has brought this appeal and which today’s opinion has changed. Given Falconer’s appeal in this case, it seems doubtful that he will agree to relinquish his hard-won $5,000. And it is by no means clear that Allstate and GEICO will be able to undo their settlement with State Farm to start the process. Thus, as a result of today’s opinion, either one insurance company must pay twice for the same loss or expensive and time-consuming negotiations and proceedings of uncertain efficacy must take place.
This undesirable result is not required by any statute or principle of common law. Alaska Statute 09.17.070 does not apply, because that statute only applies to amounts received by a claimant “from collateral sources that do not have a right of subrogation .... ” State Farm obtained the right of subrogation when it paid $5,000 of Falconer’s medical expenses. Since the statute does not apply, the common law does.
Under the common law, when State Farm paid the $5,000 it became subrogated to Falconer’s claim. State Farm had a variety of options which it might have exercised in order to collect this claim. It might have permitted Falconer to include its claim in his action against Adams and Taylor-Welch, in which case Falconer would have been required to reimburse State Farm, less pro-rata costs and attorney’s fees for prosecuting the claim. State Farm might have intervened in Falconer’s action and pressed the claim on its own. Or State Farm might have asserted the claim against the defendants’ insurers and negotiated- it privately. See Rice v. Denley, 944 P.2d 497, 500 n. 5 (Alaska 1997).
State Farm evidently chose a combination of the first and third options. It seems to have permitted, at least tacitly, Falconer to prosecute its claim until, during trial, it settled the claim by accepting payment from Allstate/GEICO. As the claim was State Farm’s to settle, it had a right to do this. But given the timing of the settlement, State Farm might be responsible for its share of pro-rata costs and attorney’s fees incurred by Falconer in the successful prosecution of the claim.1 See Edwards v. Alaska Pulp Corp., 920 P.2d 751, 754, 755-56 (Alaska *4161996); Cooper v. Argonaut Ins. Cos., 556 P.2d 525 (Alaska 1976).
At common law a plaintiff may not recover for a subrogated claim that the subrogee has settled. Brinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 942 (Alaska 1983). Thus, leaving aside for the moment Falconer’s claim that the jury award of $5,054 in medical expenses did not include all the expenses paid by State Farm, the trial court acted correctly by deducting $5,000 from the verdict. However, the court should have determined whether the settlement was the product of this litigation. If so, the court should then have decided the question of who, as between Falconer and Taylor-Welch, is the prevailing party for purposes of court-awarded fees and costs.2
Alaska Statute 09.17.070 does not apply as to amounts received by a claimant from collateral sources which have a right of subro-gation. It is uncontested that State Farm had a right of subrogation. It should follow that AS 09.17.070 does not apply and the common law does. Today’s opinion asserts that Taylor-Welch has implicitly argued that when Allstate/GEICO paid State Farm, State Farm’s subrogated payment became unsub-rogated and thus subject to AS 09.17.070. Op. at 411-412. I have read Taylor-Welch’s brief with great care and cannot find that implicit argument. Indeed, I could find no mention of AS 09.17.070 at all. But if such an argument had been made, it would lack merit. Accepting such a position would mean that a plaintiff would regain the right to claim a subrogated amount when the sub-rogee settles its claim with a defendant. Such a result would eliminate the ability of subrogees to settle their claims independently. This could not have been contemplated by the legislature in enacting the tort reform package of which AS 09.17.070 is a part.
A complicating factor in this case is that Falconer claimed medical expenses resulting from the accident of a little over $8,000, but the jury awarded medical expenses of only slightly more than $5,000. Falconer argued before the trial court, and argues on appeal, that in the absence of evidence that the $5,000 paid by State Farm was the same $5,000 awarded by the jury the reduction should be made from the whole claim. He notes that after the jury announced its verdict, but before it was discharged, he requested that the court direct the jury to specify which expenses it had not awarded. The defendants objected and the information was not obtained.
Citing Wood v. Diamond M Drilling Co., 691 F.2d 1165, 1171 (5th Cir.1982) and cases cited therein, Falconer contends that the burden is on the party claiming duplication of damages to show that the damages assessed against it have “been previously covered.” Taylor-Welch has cited nothing to the contrary. I would accept this rule.
The trial court made no findings as to why it concluded that the expenses paid by State Farm coincided with the expenses which the jury found to have been caused by the accident. It is possible that there is a defensible, but unexpressed, basis for this conclusion. I would therefore remand this aspect of the ease to the trial court for a determination of whether the expenses awarded by the jury were the expenses paid by State Farm. The burden of proof on this question should be on Taylor-Welch, and, if the burden is not satisfied, the court should conclude that the overlap is the minimum possible given the amounts of the claimed and awarded expenses.3 In that event the court should modify its reduction of the medical expenses award accordingly.
*417Falconer also contends that the trial court should have awarded him pre-judgment interest on the expenses paid by State Farm. This argument lacks merit. State Farm was the owner of the subrogated claim. It could settle the claim for any amount it and the defendants might agree to. If that settlement was for less than full value, (and did not for example include pre-judgment interest) the difference could not be claimed by Falconer. See Brinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 942 (Alaska 1983). The rule Falconer advocates would make it impossible for a subrogee to compromise a claim for discounted value.
Based on the foregoing, I would remand this ease to the superior court with instructions to determine whether the medical expenses awarded by the jury were the expenses paid by State Farm and make the appropriate reduction, supported by written findings. The burden of proof on this question should be on Taylor-Welch. The court should then consider whether the $5,000 settlement was the product of the litigation. If it was, the court should consider this as a factor in determining whether Falconer or Taylor-Welch is the prevailing party for the purpose of awarding costs and attorney’s fees. Finally, the court should determine whether Falconer or Taylor-Welch is the prevailing party based on this and other relevant factors and award costs and attorney’s fees accordingly.4

. State Farm is not a party to this litigation. Until and unless it is joined as a party no decision as to whether it should pay a share of Falconer's costs and fees can be made.

. The rationale would be akin to the "catalyst” theory discussed and assumed valid for the purposes of our decision in State, Dep't of Natural Resources v. Tongass Conservation Soc’y, 931 P.2d 1016, 1017 (Alaska 1997). Arguably the same rationale might apply to Adams, but in his case the fact that he prevailed at trial should control, in my opinion.

. The problem posed here could have been prevented in two ways. The court might have granted Falconer's request and asked the jury to specify which medical bills were not incurred as a result of the accident. (It was known that State Farm had paid the first $5,000 claimed.) Or the court might have granted the defendants’ request to instruct the jury in advance of deliberations that it should not award any part of the first $5,000 in medical expenses because these had been paid by a third party.

. I agree that Adams’s judgment should be affirmed and that the only point on Taylor-Welch’s cross-appeal has been inadequately briefed,