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Jackson v. American Equity Insurance Co. (04/02/2004) sp-5791
Jackson v. American Equity Insurance Co. (04/02/2004) sp-5791
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
LAURA JACKSON and DALE )
JACKSON, ) Supreme Court No. S-10328
)
Appellants, ) Superior Court No. 3AN-99-9862
CI
)
v. ) O P I N I O N
)
AMERICAN EQUITY INSURANCE ) [No. 5791 - April 2, 2004]
COMPANY, a foreign insurance )
corporation authorized in the State )
of Alaska, )
)
Appellee. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Rene J. Gonzalez, Judge.
Appearances: Neil T. O'Donnell, Atkinson,
Conway & Gagnon, Anchorage, for Appellants.
Mark A. Sandberg and William M. Wuestenfeld,
Sandberg, Wuestenfeld & Corey, Anchorage, for
Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Bryner, and Carpeneti, Justices. [Matthews,
Justice, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
This case presents questions about the duty a
liability insurer owes its insured when personal injury
plaintiffs make a policy limits settlement demand. A jury
ultimately returned a special verdict for the liability insurer
following a trial of the insured's bad faith claim against the
insurer. We hold that it was not error, under the circumstances
of this case, to decline to give the trial jury a special verdict
form that would have allowed the jury to find that the insurer
breached a duty to give the insured an assurance that it would
pay any judgment even if it exceeded the insured's policy limits.
We also hold that the insured did not preserve his assertion that
the court misinstructed the jury about the duties an insurer owes
its insured, and hold that it was not plain error to give the
instruction. We therefore affirm the judgment.
II. FACTS AND PROCEEDINGS
Laura and Dale Jackson sustained serious bodily
injuries on July 25, 1997 when a trailer separated from its
towing truck, crossed the centerline of the Seward Highway, and
crashed into their car. The Jacksons settled their claims
against the owner and operator of the trailer and truck, Great
Alaska Lawn & Landscaping Company (Great Alaska) for about $1.2
million. This sum represented the policy limit of the Alaska
National Insurance Company insurance policy covering Great
Alaska, plus attorney's fees and interest. Great Alaska also
assigned the Jacksons its contractual indemnity rights against
James N. Evridge, the mechanic who installed the trailer hitch,
and his company, Jim's Mobile Equipment Repair. The Jacksons
filed suit against Evridge. The Jacksons' complaint against
Evridge alleged negligence per se and strict products liability
claims.
About a year before the Jacksons' accident, Evridge,
doing business as Jim's Mobile Equipment Repair, had entered into
a year-long contract with Great Alaska under which Evridge had
repaired a number of Great Alaska's trucks and trailers. The
contract provided that Evridge was to procure insurance "to hold
harmless Great Alaska Lawn and Landscaping . . . from all
liability and responsibility for work performed by Jim's Mobile
Equipment Repair." Evridge had obtained a liability insurance
policy through his insurance broker, CHI of Alaska, Inc.
American Equity Insurance Company (AEI) issued Evridge's policy.
AEI's policy covered Evridge at the time of the Jacksons'
accident.
After the Jacksons' accident, AEI retained lawyer
Patrick McKay to defend Evridge and AEI's interests in the action
brought by the Jacksons. AEI later hired Paul Stockler to
replace McKay as Evridge's defense counsel. Evridge also
retained his own private counsel, Marshall Coryell.
The Jacksons and Evridge both moved for summary
judgment on the negligence per se and strict liability claims.
Evridge also moved for summary judgment on the issue of his
liability for punitive damages. In July 1999 Superior Court
Judge Karen L. Hunt dismissed the strict liability claims against
Evridge, but allowed the Jacksons' negligence per se claims
brought under 13 Alaska Administrative Code (AAC) 04.002 (2003)
and 13 AAC 04.005(a) (2003) and their punitive damages claims to
proceed to trial.
The Jacksons made Evridge an offer of judgment under
Alaska Civil Rule 68, offering to settle for the amount of his
policy limits with AEI. Marshall Coryell, Evridge's personal
attorney, wrote several letters to AEI requesting that AEI either
accept the Jacksons' offer of judgment and settle the case for no
more than the policy limits, or, alternatively, issue an
assurance to Evridge that AEI would pay any excess judgment
against Evridge if the case went to trial. On three separate
occasions, AEI informed Evridge that it was not obligated to pay
a judgment in excess of his policy limit of $1 million, and that
it would not agree to provide Evridge written assurance that it
would pay a judgment in excess of the policy limits if the case
went to trial.
AEI, the Jacksons, Evridge, and their attorneys
participated in a mediation in July 1999 at the office of the
Jacksons' attorney, Baker Brattain, LLC. AEI declined the
Jacksons' policy limits settlement offer, and instead offered to
settle the Jacksons' claims for $400,000. AEI had conducted an
assessment of Evridge's liability and concluded that the
Jacksons' claims were worth substantially less than the policy
limits, and that Great Alaska, the owner of the truck and trailer
involved in the Jacksons' accident, was primarily at fault. The
Jacksons refused AEI's offer. Evridge's personal attorney,
Marshall Coryell, again asked AEI to issue a written assurance
that AEI would cover a judgment against Evridge in excess of his
policy limits if no settlement was reached and the case went to
trial. Paul Stockler, the attorney AEI retained to defend
Evridge, explained to Coryell and Evridge that if AEI lost the
case and a judgment was actually entered for more than Evridge's
policy limits, it might be liable for the excess judgment but it
was not willing to guarantee in writing prior to trial that it
would pay a judgment in excess of the policy limits. Roger
Holmes, the mediator, testified that AEI intimated to Evridge and
Coryell that:
[W]e're not in the position . . . of
guaranteeing that, if you buy a million
dollars worth of insurance, we're going to
pay three or four million. You didn't pay a
premium for that, so we'll see what happens.
We want to try the case, but we're not going
to put this in writing.
After the mediation attempt failed, Coryell wrote a
letter to AEI's legal counsel, William Wuestenfeld, advising him
that Evridge was poised to enter into settlement negotiations
with the Jacksons because of AEI's refusal to provide him any
assurance that it would cover any excess damages if the case went
to trial. Coryell's letter asserted that AEI's conduct "is a
textbook case of an insurer's bad faith conduct against its
insured." (Emphasis omitted.)
On the eve of trial, Evridge entered into a settlement
agreement with the Jacksons and confessed judgment for
approximately $6 million. Per the settlement agreement, the
Jacksons agreed to prosecute in Evridge's name all of his claims
against AEI at the Jacksons' expense and discretion. Evridge
agreed to pay over the proceeds of any recovery, less attorney's
fees, to the Jacksons in satisfaction of the amount of the
confessed judgment. The Jacksons also agreed to "indemnify and
hold Evridge harmless from . . . [any] award of attorney fees or
costs which might be asserted against him by [AEI] if the case is
lost." Judge Hunt approved the settlement agreement.
In a letter to Coryell, AEI claimed that it was not
bound by the settlement agreement because its policy "bars an
insured from settling directly with the injured party without
[its] consent so long as [they] are providing a defense." AEI
warned that "settlement of the case without [its] consent will
constitute a breach of the insurance contract resulting in total
forfeiture of coverage."
The Jacksons hired Baker Brattain, LLC, the firm that
represented the Jacksons in the prior case against Evridge, to
litigate the bad faith suit on behalf of Evridge. In September
1999 Evridge, individually and for the benefit of Laura and Dale
Jackson, brought suit against AEI, Montgomery & Collins (M&C)
(AEI's managing agent), and CHI of Alaska (Evridge's insurance
broker). The complaint alleged, among other things, that AEI,
CHI, and M&C acted in bad faith towards the insured, Evridge, by
not advising him of the coverage his policy gave him, and by not
giving him written assurance that it would cover any judgment in
excess of the policy limits. The complaint also asserted
negligence claims against each defendant.
Evridge moved for partial summary judgment, requesting
dismissal of AEI's affirmative defenses. In a cross-motion for
summary judgment, AEI argued that Evridge breached his policy's
cooperation clause by entering into the settlement agreement and
consent judgment without AEI's consent. Superior Court Judge
Rene J. Gonzalez granted Evridge's summary judgment motion in
part, striking AEI's affirmative defenses asserting failure to
state a claim, collateral estoppel/res judicata, comparative
negligence, failure to name indispensable parties, Rule 11
violations, and unclean hands. The superior court also denied
AEI's cross-motion for summary judgment because it found
unresolved issues of fact about whether AEI or Evridge breached
the insurance policy. The superior court also granted M&C's
motion for summary judgment, holding that because M&C was an
agent of a disclosed principal - AEI - M&C was not vicariously
liable to AEI's insured for any contracts made on behalf of AEI.
The breach of good faith and fair dealing claim went to
trial in May 2001. Although Evridge does not argue that the
verdict was contrary to the weight of the evidence, we note that
at trial Evridge testified that he shared the view of Stockler
that the Jacksons' claim was not worth $1 million. He also
testified that he had thought the settlement and consent judgment
were a mistake and a fraud. The jury returned a special verdict
in favor of AEI, finding that AEI's refusal to settle the
Jacksons' claims against Evridge for policy limits was not a
breach of the duty of good faith and fair dealing. The court
entered judgment against Evridge for attorney's fees and costs in
the amount of $101,194.68.
The Jacksons moved for a new trial, arguing that the
court's special verdict form was improper. The trial court
denied the Jacksons' motion. The Jacksons then moved to amend
the judgment under Alaska Civil Rule 60 to require AEI to collect
its attorney's fees and costs from the Jacksons instead of
Evridge, the named plaintiff. The court denied this motion,
observing that "the Jacksons chose to have Evridge bring the
claim for their benefit, but in his name. A consequence of that
action is that Evridge, not the Jacksons, is subject to any
judgment for costs in the event the claim failed." The judgment
against Evridge therefore stood.
Evridge and the Jacksons appealed to this court. AEI
and CHI each filed cross-appeals. As of September 2001, the
Jacksons had not yet indemnified Evridge, per their settlement
agreement, for the outstanding attorney's fees and costs he owed
AEI. AEI offered not to execute upon any of Evridge's personal
assets if, in exchange, Evridge would assign his contractual
right to be indemnified by the Jacksons to AEI, dismiss the
appeal, and write a letter to William Brattain, the Jacksons'
attorney, directing him to dismiss the appeal. In a letter to
Evridge's personal attorney, Marshall Coryell, the Jacksons
contended that Evridge did not have the authority to settle or
dismiss the case. To avoid losing his personal assets, Evridge
entered into a stipulation for dismissal with prejudice with AEI
and CHI. Per the agreement, Evridge, AEI, and CHI stipulated
"that all appeals relating to their respective interests, inter
alia, in [Evridge v. AEI] may be dismissed with prejudice." We
granted AEI and Evridge's motion to dismiss their respective
cross-appeals. The order did not affect the Jacksons' appeal of
Evridge's bad faith claim against AEI brought for their benefit.1
In March 2002 AEI moved this court to dismiss the
Jacksons' appeal on the theory the Jacksons were not parties to
the proceedings in the superior court. We denied the motion, and
directed AEI to address the standing argument in its brief to
this court. We now consider the Jacksons' appeal.
III. DISCUSSION
A. The Special Jury Verdict Form Was Not Improper.
We conduct a de novo review of jury instructions and
special verdict forms to which timely objection was made.2 A
jury instruction containing an erroneous statement of law is
reversible error if it prejudices one of the parties.3 Prejudice
exists if we determine the verdict would have been different had
the erroneous instruction not been given.4
The Jacksons argue that the special verdict form was
erroneous because it "only presented half of their case to the
jury." (Emphasis omitted.) They argue that their case rested on
a two-part theory that AEI breached its duty of good faith and
fair dealing by either (1) not settling for policy limits, or (2)
not giving Evridge assurances that AEI would indemnify him for a
judgment entered against him in excess of his policy limits if
the case proceeded to trial.
The special verdict form submitted to the jury
provided:
Did American Equity Insurance Company breach
its duty of good faith and fair dealing to
James N. Evridge by its refusal to accept the
Jacksons' $1 million policy limits demand?
The Jacksons argue that it was reversible error to submit a
special verdict form that failed to ask the jury whether AEI
breached its duty of good faith and fair dealing by not providing
assurances to Evridge that it would cover an excess judgment.
Their proposed special verdict form provided in part:
1. Was American Equity's failure to accept
the Jacksons' policy limits settlement demand
unreasonable?
. . . .
2. Did American Equity breach its implied
obligation of good faith and fair dealing by
refusing to give Evridge reasonable
assurances that it would protect his
interests in the event the underlying case of
Jackson v. Evridge went to trial and a jury
returned a verdict in excess of his policy
limits?
The Jacksons assert that they were entitled to a
special verdict form consonant with their two-part theory because
their theories were supported by evidence.
Although a trial court generally must give a jury
instruction consonant with a party's theory where that theory is
supported by evidence,5 the Jacksons are not entitled to a jury
instruction consonant with their case theory if that instruction
incorrectly states the law.6 The Jacksons therefore were
entitled to a jury instruction encompassing the second prong of
their theory only if the covenant of good faith and fair dealing
imposes a legal duty on an insurer to give its insured assurances
that it will cover an excess judgment entered against its
insured. The Jacksons, however, cite no legal authority
establishing that such a duty exists.
The covenant of good faith and fair dealing is implicit
within every insurance contract; it requires "that neither party
will do anything which will injure the right of the other to
receive the benefits of the agreement."7 When a plaintiff makes
a policy limits demand, the covenant of good faith and fair
dealing places a duty on an insurer to tender maximum policy
limits to settle a plaintiff's demand when there is a substantial
likelihood of an excess verdict against the insured.8 This duty
is grounded in the insurer's legal duty to act in good faith to
protect the interests of the insured.9
When "there is a great risk of a recovery
beyond the policy limits so that the most
reasonable manner of disposing of the claim
is a settlement which can be made within
those limits, a consideration in good faith
of the insured's interest requires the
insurer to settle the claim."[10]
In such a situation, "an insurance company has the duty to
determine `the amount of a money judgment which might be rendered
against its insured,' and `to tender in settlement that portion
of the projected money judgment which [it] contractually agreed
to pay.' "11
The covenant of good faith and fair dealing also
obligates an insurer to inform the insured of all settlement
offers and to inform the insured of the possibility the injured
claimant may recover a judgment in excess of the insured's policy
limits.12 Breach of the covenant of good faith and fair dealing
exposes the insurer to a claim of bad faith and may expose it to
liability for any excess judgment against its insured.
But the covenant of good faith does not broadly require
an insurer to give its insured pre-trial assurances that it will
cover an excess judgment against the insured if the insurer fails
to accept a plaintiff's policy limits demand. The Jacksons'
proposed theory would translate into a general duty to issue a
pre-trial waiver of policy limits, and there is no such broad
duty.
In its order denying the Jacksons' new trial motion,
the trial court noted that if a duty to provide assurances
existed, that duty would only arise if there was a "reasonable
likelihood" of recovery of an excess judgment against the
insured.13 We agree with the trial court's reasoning. If there
were a duty to provide assurances that an insurer would cover an
excess judgment, it would coincide with an insurer's duties to
settle for policy limits. It would therefore arise only if an
insurer's failure to settle were unreasonable, or in other words,
if there were a reasonable likelihood the injured claimant would
recover against the insured an amount exceeding the insured's
policy limits.
Even if there was any error in failing to submit the
Jacksons' alternate theory to the jury, it did not prejudice the
Jacksons. AEI argued to the superior court that because the
jury found that it was reasonable for AEI to reject the Jacksons'
policy limits demand, the jury implicitly found "that there was
not a reasonable likelihood of an excess judgment." The superior
court agreed, stating that: "Instruction # 23 explained that the
implied obligation of good faith imposes a duty on an insurer to
`accept a reasonable offer to settle . . . if there is a
reasonable likelihood of recovery.' "
The Jacksons argue, however, that the jury did not
implicitly find that there was not a reasonable likelihood of an
excess verdict. In support, the Jacksons cite Instruction No.
20, which listed four elements the Jacksons had to prove to
establish that AEI breached its duty of good faith. Two of these
elements are relevant here. The first required the Jacksons to
prove that there was a reasonable likelihood of an excess
judgment against Evridge. The second required the Jacksons to
prove that AEI's failure to accept the Jacksons' policy limits
demand was unreasonable. The Jacksons argue that "[t]he only
reason for having these two separate elements was if each element
could exist (or not exist) independent of the other." The
Jacksons claim that the jury could have found - as it did - that
AEI's refusal to settle was reasonable without implicitly finding
that there was no reasonable likelihood of excess recovery
against Evridge, if the jury determined that AEI exercised bad
judgment or negligence "in failing to recognize that likelihood."
The Jacksons also point to Instruction No. 22, which
explained that bad faith does not mean "bad judgment or
negligence," and Instruction No. 24, which explained that AEI
would not be liable for its failure to settle if that failure was
based on an "honest mistake." The Jacksons argue that "the jury
could have concluded that there was a reasonable likelihood of an
excess verdict but that AEI simply made an `honest mistake.' "
The Jacksons' arguments are unpersuasive. The special
verdict form required the jury to determine whether AEI's refusal
to settle with the Jacksons was a breach of its duty of good
faith and fair dealing. The accompanying jury instructions
submitted by the court adequately informed the jury that, in
order to determine whether AEI breached the duty of good faith
and fair dealing, the jury would implicitly need to decide
whether there was a reasonable likelihood of an excess judgment
against Evridge. Instruction No. 23 correctly told the jury:
The implied obligation of good faith and
fair dealing in an insurance policy imposes a
duty on an insurance company to accept a
reasonable offer to settle a claim against
the person insured if the offer is within the
limits of the insurance coverage and if there
is a reasonable likelihood of recovery
against the person insured for an amount in
excess of the insurance coverage.
(Emphasis added.)
Because the jury found that AEI's refusal to settle did
not breach its duty of good faith and fair dealing, the jury
implicitly concluded that there was no reasonable likelihood
Evridge was exposed to a judgment exceeding his policy limits.
Therefore, even if a liability insurer has a duty to provide
assurances to its insured that it would cover an excess judgment,
that duty would not arise under the circumstances of this case.
B. The Superior Court Did Not Commit Plain Error by
Giving Instruction No. 22
The Jacksons argue that the second paragraph of
Instruction No. 22 incorrectly describes an insurer's duty of
good faith in considering settlement offers. The second
paragraph of Instruction No. 22 provided in part:
Bad faith does not mean bad judgment or
negligence, but means having a dishonest
purpose through some motive of self-interest
or ill will, or having maliciousness or
hostile feelings towards its insured, or
acting with reckless indifference to the
interests or rights of its insured.
The Jacksons argue, instead, that "an insurance company
is liable for an excess judgment if there is a substantial
likelihood of an excess judgment - regardless of whether the
insurance company acted maliciously or negligently in failing to
recognize that fact." They also argue that the instruction was
plainly erroneous because at the very least a negligent failure
to accept a reasonable policy limits demand would be an
actionable breach of the obligation of fair dealing. To support
this argument, the Jacksons cite Continental Insurance Co. v.
Bayless & Roberts, Inc., in which we held that "an insurer []
defending an action against the insured, is bound to exercise
that degree of care which a man of ordinary prudence would
exercise in the management of his own affairs . . . irrespective
of fraud or bad faith."14
Because the Jacksons did not object to Instruction No.
22 at trial, they must demonstrate that it was plain error to
give that instruction.15 Plain error is present when an "obvious
mistake exists such that the jury instruction creates a `high
likelihood that the jury will follow an erroneous theory
resulting in a miscarriage of justice.' "16 To find plain error,
we look to see if a correct jury instruction would have likely
altered the result.17 We place a heavy burden on the appellant to
prove that the error was "highly likely determinative."18
The Jacksons are not entitled to a plain error
analysis, however, if their failure to object to Instruction No.
22 indicates a tactical choice.19 During AEI's closing argument,
AEI's trial counsel, William Wuestenfeld referred to the second
paragraph of Instruction No. 22. He told the jury that
[T]here is no evidence to suggest that
American Equity acted in bad faith, that it
was acting in some motive of self-interest or
ill will. Rather, the evidence supports the
instruction number 24, that American Equity
had a bona fide . . . good faith belief that
the insurer had a good possibility of winning
the suit.
Instead of objecting to AEI's definition of bad faith, the
Jacksons' trial counsel also referred to Instruction No. 22 in
his rebuttal argument, arguing to the jury that the instruction
explained that "bad faith can be measured by the reckless
indifference to the interests or the rights of the insured." The
Jacksons' failure to object and their subsequent reliance on
Instruction No. 22 in their rebuttal argument suggests that the
Jacksons were fully aware of the language of Instruction No. 22,
and that their failure to object was the result of sound tactical
choice, thereby precluding a claim of plain error on appeal. If
the Jacksons' counsel did not see fit to object under these
circumstances, we hesitate to consider whether it was plain error
for the trial court to give the instruction. AEI asserts on
appeal that this language originated in an instruction Evridge
proposed. It does appear that Evridge proposed the instruction
and that AEI objected to it on the ground it was a first-party
insurance instruction.
Because the second paragraph of Instruction No. 22
incorrectly states the standard for finding bad faith in third-
party insurance disputes, this paragraph should not have been
submitted to the jury. The disputed language appears in a jury
instruction discussed in State Farm Fire & Casualty Co. v.
Nicholson, in which we held that an insured's cause of action
against an insurer for breach of the duty of good faith and fair
dealing sounded in tort in first-party insurance disputes.20 The
disputed paragraph may also have originated in a punitive damages
claim. In any event, it erroneously described the standard for
finding bad faith in this case. We disapprove of the submission
of this language on the issue of bad faith in a third-party
insurance dispute, the type of dispute we have here. But the
error in giving Instruction No. 22 was not plain. Instruction
No. 23 correctly states the law, and mitigates the presence of
the second paragraph of Instruction No. 22.
C. The Trial Court Did Not Err in Admitting Testimony
of AEI's Expert, Ronald Mallen.
The Jacksons argue that the trial court also erred in
allowing AEI to present expert testimony that was not disclosed
in an expert report, per the requirements of Alaska Civil Rule
26(a)(2)(B). That rule provides in part that during discovery a
disclosure of the identity of an expert witness must "be
accompanied by a written report prepared and signed by the
witness. The report shall contain a complete statement of all
opinions to be expressed and the basis and reasons therefor . . .
." The Jacksons contend that the trial court allowed Ronald
Mallen, over their objection, to testify about things not
revealed in his expert report.
We review the trial court's admission of expert
testimony under an abuse of discretion standard.21 We will
reverse the trial court's decision to admit evidence "only when
left with the definite and firm conviction that the trial court
erred in its decision."22
The Jacksons take issue with the portion of Mallen's
expert disclosure report which states that AEI "was not obligated
. . . to inform Mr. Evridge that, as a guarantee, it would be so
liable [for any excess judgment]." At trial, Mallen testified
that AEI could not provide the assurance Evridge requested
because giving such an assurance would breach AEI's reinsurance
agreements. The Jacksons contend that, had Mallen properly
disclosed before trial that AEI could not provide Evridge written
assurances because it was in danger of breaching its reinsurance
agreements, they could have conducted appropriate discovery on
the issue to rebut Mallen's testimony at trial.
We hold that there was sufficient disclosure of
Mallen's expert opinion before he testified at trial. Although
Mallen did not disclose a basis for his ultimate conclusion in
his expert report, if there was any dissatisfaction with the
report, the Jacksons should have filed a motion to compel further
disclosures, or should have taken Mallen's deposition to discover
how he arrived at his ultimate opinion. Moreover, Mallen's
opinion was only part of AEI's evidence on this point. The
report and subsequent trial testimony of another AEI expert
witness, Robert Wainscott, echoed Mallen's conclusion that AEI's
refusal to settle was reasonable, and that AEI was not obligated
to give Evridge written assurances. Wainscott also testified
that AEI had no duty to give assurances and that doing so would
have threatened its relationship with its reinsurers. His expert
report did not mention reinsurance either. The Jacksons,
however, do not object to the trial court's admission of
Wainscott's testimony. The admission of Wainscott's report and
testimony into evidence without objection renders harmless any
possible error in admitting Mallen's disputed testimony.
D. The Trial Court's Ruling on the Offset Issue Did
Not Prejudice the Jacksons.
Finally, the Jacksons argue that the trial court erred
in ruling that Evridge would have been entitled to an offset of
any settlement proceeds paid to the Jacksons to the extent that
their total recovery exceeded their total damages. Evridge asked
the trial court to take judicial notice under Alaska Evidence
Rule 202, and instruct the jury, that at the time of the
Jacksons' July 25, 1997 accident Alaska followed Restatement
(Third) of Torts 16 cmt. e (2000), which provides that an
injured person can recover more than 100 percent of his or her
damages by separately suing two severally liable defendants.
Acknowledging that this court generally disfavors double
recovery, the trial court denied Evridge's motion for judicial
notice, and held that an offset was permissible for the
settlement proceeds from Great Alaska because the proceeds were
from a non-collateral source and paid by a joint tortfeasor.23
The Jacksons argue that the trial court's ruling
thwarted their attempt to argue at trial that AEI had erroneously
undervalued their claims against Evridge. The Jacksons assert
that they had planned to present evidence that AEI believed it
was entitled to a first-dollar offset for the $1.2 million Great
Alaska previously paid, and the $185,000 the Jacksons received
under their underinsured motorist coverage. The Jacksons argue
on appeal that "the ruling caused [them] to restrict and curtail
their arguments that AEI had misapplied the law in evaluating the
likely amount of the judgment against Evridge."
The real purpose of the request was to establish as a
matter of law that AEI breached its duty to Evridge to accurately
assess his exposure by assuming his exposure would be reduced by
anything paid to the Jacksons on behalf of Great Alaska, the
other tortfeasor. But the trial court's ruling did not prevent
the Jacksons from offering evidence that AEI improperly evaluated
Evridge's exposure. They introduced evidence about how AEI
evaluated that exposure, and introduced expert testimony that AEI
breached its duty when it allegedly assumed payments on behalf of
Great Alaska would reduce Evridge's damages exposure. They have
not explained on appeal what evidence the court's ruling
prevented them from offering, and have not demonstrated how the
ruling kept them from trying to convince the jury that AEI
breached its duty to Evridge.24 The Jacksons also claim
that AEI was able to unfairly "whipsaw" one of their experts,
Bruce Gagnon, on cross-examination by asking him whether the
trial court "disagreed" with the expert's opinion that a
plaintiff can "double recover for the same things . . . ." But
the Jacksons did not object to this brief exchange and requested
no curative instruction. Moreover, their expert's admission that
this was a "debatable issue" is at odds with a contention that as
a matter of law AEI must have breached its duty by allegedly
thinking the Jacksons could not recover twice for the same
things. Finally, the expert's subsequent testimony on cross-
examination continued to express his opinions that AEI should not
have assumed an offset.
We hold that the Jacksons have not demonstrated that
the trial court's ruling actually impaired their ability to argue
that AEI undervalued their claims against Evridge. We therefore
need not reach the substance of the underlying several liability
issue.
IV. CONCLUSION
We therefore AFFIRM the judgment.25
_______________________________
1 Following the dismissal, the Jacksons are the only remaining
appellants. We therefore refer to the appellants as "the
Jacksons."
2 Reich v. Cominco Alaska, Inc., 56 P.3d 18, 25 (Alaska 2002).
3 Id.
4 Id.
5 See Chenega Corp. v. Exxon Corp., 991 P.2d 769, 780 (Alaska
1999); Clary Ins. Agency v. Doyle, 620 P.2d 194, 201 (Alaska
1980).
6 See 75A Am. Jur. 2d Trial 1142 (2002) (noting that "an
instruction which correctly states the law and is based on
competent evidence is not erroneous merely because not in
consonance with the theories of either party").
7 Guin v. Ha, 591 P.2d 1281, 1291 (Alaska 1979).
8 Schultz v. Travelers Indem. Co., 754 P.2d 265, 266-67
(Alaska 1988).
9 Id. at 267.
10 Crisci v. Sec. Ins. Co., 426 P.2d 173, 176 (Cal. 1967)
(quoting Comunale v. Traders & Gen. Ins. Co., 328 P.2d 198, 201
(Cal. 1958)).
11 Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828
P.2d 745, 768 (Alaska 1992) (quoting Schultz, 754 P.2d at 267).
12 O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d
523, 525 (Alaska 1988).
13 The trial court stated that the standard for deciding the
reasonableness of AEI's refusal to settle with the Jacksons was
whether there was a "reasonable likelihood," rather than a
"substantial likelihood," of an excess judgment against Evridge.
The Jacksons do not object to the trial court's substitution. We
will therefore rely in this case on the reasonable likelihood
standard. Cf. Schultz, 74 P.2d at 266-67 (applying "substantial
likelihood" standard).
14 608 P.2d 281, 293 (Alaska 1980) (emphasis omitted) (quoting
J. Appleman, Insurance Law and Practice 4687, at 1780 (Berdal
ed. 1979)).
15 Barrett v. Era Aviation, Inc., 996 P.2d 101, 105 (Alaska
2000).
16 Id. (quoting Conam Alaska v. Bell Lavalin, Inc., 842 P.2d
148, 153 (Alaska 1992)).
17 Conam Alaska v. Bell Lavalin, Inc., 842 P.2d 148, 153
(Alaska 1992).
18 Id. (emphasis omitted).
19 Henry v. State, 861 P.2d 582, 589 (Alaska App. 1993) ("[W]e
will not find plain error when there appears to have been a
tactical reason to withhold objection."); see also Massey v.
State, 771 P.2d 448, 453 (Alaska App. 1989).
20 777 P.2d 1152, 1154-57 (Alaska 1989).
21 L.C.H. v. T.S., 28 P.3d 915, 919 (Alaska 2001).
22 Id. (quoting Belluomini v. Fred Meyer, Inc., 993 P.2d 1009,
1016 (Alaska 1999)).
23 The Jacksons were injured on July 25, 1997. As of that
date, AS 09.17.080 provided:
Apportionment of damages. (a) In all actions
involving fault of more than one party to the
action, including third-party defendants and
persons who have been released under AS
09.16.040, the court, unless otherwise agreed
by all parties, shall instruct the jury to
answer special interrogatories or, if there
is no jury, shall make findings, indicating
(1) the amount of damages each claimant
would be entitled to recover if contributory
fault is disregarded; and
(2) the percentage of the total fault
of all of the parties to each claim that is
allocated to each claimant, defendant, third-
party defendant, and person who has been
released from liability under AS 09.16.040.
(b) In determining the percentages of fault,
the trier of fact shall consider both the
nature of the conduct of each party at fault,
and the extent of the causal relation between
the conduct and the damages claimed. The
trier of fact may determine that two or more
persons are to be treated as a single party
if their conduct was a cause of the damages
claimed and the separate act or omission of
each person cannot be distinguished.
(c) The court shall determine the award of
damages to each claimant in accordance with
the findings, subject to a reduction under AS
09.16.040, and enter judgment against each
party liable. The court also shall determine
and state in the judgment each party's
equitable share of the obligation to each
claimant in accordance with the respective
percentages of fault.
(d) The court shall enter judgment against
each party liable on the basis of several
liability in accordance with that party's
percentage of fault.
AS 09.17.080 was amended in 1997, but that amendment only
affected causes of action accruing on or after August 7, 1997.
Ch. 26, 55, SLA 1997.
24 Cf. Alaska R. Evid. 103(a)(2) (precluding parties from
challenging trial court rulings that have the effect of excluding
evidence unless "the substance of the evidence was made known to
the court by offer or was apparent from the context within which
questions were asked").
25 Because we uphold the jury verdict, we do not need to
consider AEI's alternative argument that the Jacksons, as unnamed
parties to the suit below, do not have standing to bring this
appeal. We also do not need to address AEI's argument that
because the duty to pay an excess judgment would only arise after
a judgment was entered, and the Jacksons' underlying case never
proceeded to trial, Evridge's bad faith claim was not mature.
