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Maloney v. Progressive Specialty Insurance Co. (10/08/2004) sp-5836
Maloney v. Progressive Specialty Insurance Co. (10/08/2004) sp-5836
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
DENISE C. MALONEY and )
KENNETH MALONEY, ) Supreme Court No. S-10950
)
Appellants, ) Superior Court No. 3AN-00-
8017 CI
)
v. )
)
PROGRESSIVE SPECIALTY ) O P I N I O N
INSURANCE COMPANY, an )
Ohio Corporation, ) [No. 5836 - October 8,
2004]
)
Appellee. )
)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District at
Anchorage, Mark Rindner, Judge.
Appearances: Michael J. Schneider, Law
Offices of Michael J. Schneider, P.C.,
Anchorage, for Appellants. Gary A. Zipkin
and Jonathan A. Woodman, Guess & Rudd, P.C.,
Anchorage, for Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
BRYNER, Chief Justice.
I. INTRODUCTION
Denise Maloney was seriously injured in an auto
accident caused by a driver insured by Progressive Specialty
Insurance Company. Progressives policy provided for a maximum
payment of $50,000, plus attorneys fees assessed under Alaska
Civil Rule 82. Progressive acknowledged liability and damages
exceeding the policys limit circumstances that obliged
Progressive to give Maloney a policy-limits settlement offer.
Progressive offered Maloney the policys nominal limit but, since
Maloney was not represented by counsel, did not offer any
additional payment for attorneys fees. The question we face here
is whether Progressives offer qualified as a policy-limits offer
despite failing to include any added payment for Rule 82 fees.
We hold that an insurer offering to pay policy limits to an
unrepresented claimant under the terms of a policy like
Progressives has no duty to include attorneys fees as part of its
offer. We thus affirm the superior courts declaratory judgment
for Progressive.
II. FACTS AND PROCEEDINGS
The salient facts are undisputed. Jerry Hansen struck
Denise Maloney with his car, seriously injuring Maloney. Hansen
was insured by Progressive. His Progressive liability policy
provided coverage of up to $50,000 per person for bodily injury,
plus prejudgment interest and limited attorney fees assessed
against the insured person not exceeding the amount allowed for a
contested case in the schedule of attorney fees contained in
Alaska Civil Rule 82.
Maloney wrote to Progressive, demanding to know the
limits of Hansens coverage and indicating that she might be
willing to settle immediately for the policy limits. Progressive
recognized that Hansen was potentially liable for the accident
and that Maloneys damages easily exceeded the limits of Hansens
coverage. In these circumstances, Alaska case law makes it clear
that Progressive owed Hansen a duty to extend Maloney a policy-
limits settlement offer.1 In response to Maloneys demand letter,
Progressive offered to settle for the policys $50,000 face limit
plus prejudgment interest. But since Maloney did not appear to
be represented by counsel, Progressives offer did not include any
additional amount for attorneys fees under Rule 82.
Soon after sending Maloney its offer, Progressive
received a letter from an attorney retained by Maloney, who
informed Progressive that Maloney was about to file a civil
action against Hansen and attached a courtesy copy of the
proposed complaint.2 Several days later, Progressive responded
with an amended settlement offer, which duplicated its original
offer but included an additional sum for Rule 82 fees. In its
letter extending this offer to Maloneys counsel, Progressive
explained that its original offer was made with the understanding
that the Maloneys were not represented. . . . Now that the
Maloneys[] are represented by coun[s]el, Progressive is prepared
to extend a policy limits offer of $50,000 plus interest and Rule
82 attorney fees.
Maloney filed her complaint and did not accept the new
offer. She later amended her complaint to name Progressive as a
defendant and to add a cause of action for a judgment declaring
that Progressives initial settlement offer was not a policy-
limits offer. In support of this claim, Maloney asserted that
Progressives duty to extend a policy-limits offer to Maloney
required it to include a payment of Maloneys projected Rule 82
attorneys fees, regardless of whether she was then represented by
counsel.
Progressive and Maloney filed cross-motions for summary
judgment on Maloneys claim for declaratory judgment.3 Superior
Court Judge Mark Rindner issued a written decision granting
summary judgment to Progressive. The superior court recognized
that Progressive had a duty to extend Maloney a policy-limits
settlement offer and that this duty obliged Progressive to pay an
amount equivalent to its maximum potential liability under the
policy. But the court reasoned that, as with its liability for
prejudgment interest, Progressives liability for attorneys fees
would have to be calculated on the date of the offer, so
[a]ttorneys fees would be paid only if an attorney was
representing the claimant at the time the policy limits offer was
extended. Finding it undisputed that Maloney was not represented
at the time of the initial offer, the court concluded that
Progressive rightfully did not include attorneys fees in [this]
offer since [Maloney], at that time, would not have been entitled
to Rule 82 attorneys fees.
Maloney appeals.
III. DISCUSSION
On appeal, Maloney renews the arguments she presented
to the superior court.4 Starting from the undisputed premise
that Progressive had a duty to give her a policy-limits offer,
Maloney cites language from our cases defining this duty to
require that an insurer tender the maximum limits of insurance
coverage5 that the insurer might be required to pay under a money
judgment which might be rendered against its insured.6 Maloney
also points to cases holding that when, as here, a policy
provides for payment of attorneys fees in addition to the policys
face value, the insurer must add those fees to its policy-limits
offer.7 Maloney asserts that these cases adopt a forward-looking
approach one that requires the court to determine policy limits
by asking what could happen in the future instead of what has
happened, or is happening? In Maloneys view, then, Progressive
should have recognized that Maloney would likely retain an
attorney if her case proceeded to trial: A seriously injured
unrepresented claimant today can become, and likely will become,
a claimant with an attorney tomorrow. So regardless of whether
she happened to have retained counsel at the time of [her]
settlement demand, Maloney contends, our cases required
Progressive to add attorneys fees to its initial policy-limits
offer.
But Maloneys arguments are unpersuasive. As the
superior court correctly recognized, and as Maloney acknowledges,
to determine the maximum limits of Progressives coverage, we must
look first to the policy language itself.8 Here, as already
noted, Hansens policy expressly committed Progressive to pay
limited attorney fees assessed against the insured person, up to
that portion of the attorney fees awarded as costs under Alaska
Civil Rule 82 which does not exceed the amount allowed for a
contested case in the schedule of attorney fees contained in
Alaska Civil Rule 82. (Emphasis added.) On its face, then, the
policys language limits Progressives potential liability for fees
to situations in which an award could properly be assessed
against its insured under Rule 82 and to amounts not exceeding
the fees fixed by Rule 82s schedule for contested cases.9
Our cases uniformly hold that unrepresented litigants
have no right to recover attorneys fees under Rule 82 (unless
they are attorneys themselves).10 It follows that Maloney could
not have received an award of fees under that rule at the time
Progressive extended its original settlement offer.
Maloney argues, though, that our cases required
Progressive to determine her eligibility for fees based on what
probably would have happened if her case eventually proceeded to
trial. But we do not read our cases as requiring insurers to
calculate their maximum liability for fees by speculating about
the course of future litigation. Instead, as the superior court
correctly saw, our cases required Progressive to base its offer
on a present-tense albeit hypothetical evaluation of the
current situation. Under this approach, Progressive needed to
calculate its maximum potential liability by simply assuming that
[the case] went to trial and received an adverse verdict11 as of
the date of its offer. Here, because Maloney was apparently not
represented on the date of the original offer, she had no right
to expect, and Progressive had no duty to offer, a payment of
Rule 82 fees in addition to the nominal policy limit.
Maloney nevertheless insists that public policy weighs
against this reading of our cases and favors her own proposed
approach, instead. Maloney asserts that her forward-looking
approach would promote judicial consistency by upholding existing
authority. Yet this argument assumes that Maloney has correctly
interpreted our cases an assumption that we have rejected.
Maloney further asserts that her proposal would foster finality
and certainty by avoiding the need for insurers to speculate
about whether a particular claimant is represented. But this
argument disregards the countervailing disadvantages of Maloneys
proposed rule a rule based on speculation about the likelihood
of future representation that would routinely pay unrepresented
claimants for attorneys fees they have not actually incurred.
Maloney next asserts that if third-party claimants were
required to reveal the status of their representation, they would
be saddled with unprecedented contractual duties toward another
partys insurer an anomalous and unfair result, according to
Maloney, because we have consistently recognized that an injured
third-party claimant owes no contractual duties to the insured
partys insurer. Yet, requiring a third-party claimant to
disclose the fact of legal representation before being reimbursed
for attorneys fees hardly implies a contractual duty toward the
insurer; it simply reflects the claimants usual responsibility to
inform the insurer of the damages being claimed.
Last, Maloney insists that Progressives proposed rule
invites massive inequity because it is destined to reward those
who are litigation-minded enough to immediately retain counsel
and will penalize the less litigious those who prefer to stand
on their own. But Maloneys policy argument inaccurately
characterizes the effects of the approach she opposes, for we
fail to see how the denial of fees to an unrepresented litigant
who has not actually incurred any fees can be fairly described as
penalizing the claimant. In any event, we see no sound reason to
expect that claimants who would otherwise remain unrepresented
would secure legal representation just to recover the partial
reimbursement of fees allowed under Rule 82.
We thus reject Maloneys policy arguments and follow the
course prescribed by our cases.
IV. CONCLUSION
In summary, then, our cases support the conclusion
that, by undertaking to pay coverage up to $50,000 plus limited
attorneys fees as assessed under Civil Rule 82, Progressive did
not obligate itself to extend an offer to pay attorneys fees to a
claimant like Maloney, who appeared to be unrepresented at the
time of Progressives initial offer. Because Maloneys policy
arguments do not compel a different conclusion, we AFFIRM the
superior courts judgment declaring Progressives initial
settlement proposal to be a policy-limits offer.
_______________________________
1 See Bohna v. Hughes, Thorsness, Gantz, Powell &
Brundin, 828 P.2d 745, 768 (Alaska 1992); Schultz v. Travelers
Indem. Co., 754 P.2d 265, 266-67 (Alaska 1988); see also
Providence Washington Ins. Co. v. Firemans Fund Ins. Cos., 778
P.2d 200 (Alaska 1989).
2 The complaint actually named Denise Maloney and her
husband, Kenneth Maloney, as plaintiffs. For simplicity,
however, our opinion refers only to Denise Maloney and does not
discuss her husbands claim, which is not relevant to this appeal.
3 Progressive initially moved to dismiss Maloneys
declaratory judgment action against it, asserting that she was
not insured by Progressive and so had no standing to seek a
declaration of Progressives policy limits. The superior court
denied this motion, finding that Maloneys amended complaint met
the requirements for standing to bring a declaratory judgment
action. Because neither party discusses or challenges this
ruling, we do not consider it in deciding this appeal.
4 The parties agree that the issue presented involves a
pure question of law and is amenable to decision on summary
judgment. In considering an order granting summary judgment, we
review independently, without deferring to the trial courts
ruling. Providence Washington Ins. Co., 778 P.2d at 203 (citing
Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska
1985)).
5 Schultz, 754 P.2d at 266-67.
6 Bohna, 828 P.2d at 768; Schultz, 754 P.2d at 267.
7 See, e.g., Farquhar v. Alaska Natl Ins. Co., 20 P.3d
577, 580 (Alaska 2001); State Farm Mut. Auto. Ins. Co. v.
Harrington, 918 P.2d 1022, 1026 (Alaska 1996); Schultz, 754 P.2d
at 267.
8 See Schultz, 754 P.2d at 267.
9 Alaska R. Civ. P. 82(a), (b) (allowing courts to award
fees to prevailing parties in civil cases and fixing fees for
money judgments in cases contested through trial at 20% for the
first $25,000 awarded in the judgment and 10% for all additional
amounts).
10 Shearer v. Mundt, 36 P.3d 1196, 1198 (Alaska 2001);
J.L.P. v. V.L.A., 30 P.3d 590, 599 (Alaska 2001); Pratt &
Whitney Canada, Inc. v. Sheehan, 852 P.2d 1173, 1181 & n.12
(Alaska 1993); Gates v. City of Tenakee Springs, 822 P.2d 455,
463 (Alaska 1992).
11 Farquhar, 20 P.3d at 580; Tucker v. United Servs. Auto.
Assn, 827 P.2d 440, 441 n.3 (Alaska 1992).
