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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. 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).