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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Valley Hospital Association, Inc. v. Brauneis (08/18/2006) sp-6036

Valley Hospital Association, Inc. v. Brauneis (08/18/2006) sp-6036, 141 P3d 726

     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


VALLEY HOSPITAL )
ASSOCIATION, INC., ) Supreme Court No. S- 11902
)
Appellant, ) Superior Court No. 3AN-04-8900 CI
)
v. ) O P I N I O N
)
DEREK LEE BRAUNEIS, ) No. 6036 - August 18, 2006
)
Appellee. )
)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, William F. Morse, Judge.

          Appearances:     Peter   J.    Aschenbrenner,
          Aschenbrenner  Law Offices, Inc.,  Fairbanks,
          for Appellant.  No appearance by Appellee.

          Before:    Bryner,  Chief Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          EASTAUGH, Justice.

I.   INTRODUCTION
           Valley Hospital Association appeals some of the  terms
of  a  default  judgment it obtained against Derek Lee  Brauneis.
Although  the  superior court entered a default judgment  against
Brauneis at Valley Hospitals request, it refused to grant  Valley
Hospital the right to enforce a health care provider lien against
Brauneis, ruling that Valley Hospital failed to present  evidence
that  it had complied with a statutory requirement that the  lien
be  recorded.  The superior court also refused to award attorneys
fees  to Valley Hospital.  Valley Hospital argues that it was  an
abuse  of  discretion to enter those rulings.  We remand  because
Valley  Hospital was not given an opportunity to present evidence
that  it  had  recorded the lien.  Although  the  attorneys  fees
ruling  is  unexceptional, the remand on the lien issue  requires
that the fees ruling be vacated.
II.  FACTS AND PROCEEDINGS
          Valley  Hospital Association filed suit  against  Derek
Lee  Brauneis  in  July 2003, alleging that it  treated  him  for
injuries  he suffered in a motor vehicle accident.  Its complaint
alleged  that  the  cost of treatment was  $18,750.43,  of  which
Brauneis  paid $50. It also alleged that Valley Hospital recorded
a  health  care provider lien against Brauneis on July 25,  2003.
The  complaint  specified the instrument number assigned  to  the
lien by the recorder: 2003-020852-0.
          Valley  Hospitals complaint sought a personal  judgment
against Brauneis for $18,700.43 plus prejudgment interest  and  a
judgment foreclosing Valley Hospitals health care provider  lien.
Brauneis  did  not  appear in the lawsuit and the  clerk  entered
default against him.
          The  superior  court then entered default judgment  for
Valley  Hospital against Brauneis, but modified Valley  Hospitals
proposed judgment in two respects.  First, the court crossed  out
language  that would have awarded the hospital Alaska Civil  Rule
82  attorneys  fees of $2,038.47.  The court,  in  a  handwritten
note, explained that attorneys fees were [d]eleted because not in
compliance  with Civil Rule 82(b)(4). Second, the  court  crossed
out  a  paragraph  that would have entitled  Valley  Hospital  to
foreclose  its  lien against Brauneis.  The courts  interlineated
note  explained  that [t]here is no evidence that  the  lien  was
recorded as required by AS 34.35.460.
          Valley   Hospital   moved   for   reconsideration   and
submitted, for the first time, evidence that it had recorded  the
lien  in compliance with AS 34.35.460.  It also submitted  a  new
proposed  default  judgment that reduced the  proposed  attorneys
fees  award to $1,500 plus costs.  The superior court denied  the
motion  for  reconsideration. Valley Hospital appeals.   Brauneis
has not entered an appearance on appeal.
III. DISCUSSION

     A.    Valley  Hospital Should Have Been Given an Opportunity
To Present          Evidence that It Recorded the Lien.

          The  superior court, in modifying the proposed  default
judgment, apparently reasoned that Valley Hospital was obliged to
present  evidence that it had perfected its lien against Brauneis
in  the  manner  required by AS 34.35.460.1  We conclude  that  a
party  seeking  a  default judgment is under no  such  obligation
unless  the trial court notifies the party otherwise and provides
the  party  with  an  opportunity to  present  evidence  that  it
complied with the statute.
          Default judgments are governed by Alaska Civil Rule 55.
When  a  plaintiff applies for entry of a default judgment  under
Rule  55(c),  the  trial court must exercise  its  discretion  in
determining whether to enter judgment.2  Although a party has  no
absolute  right  to  a  default judgment  following  entry  of  a
technical default, the court may not arbitrarily deny entry of  a
judgment against the defaulting party.3  We review a trial courts
refusal to enter default under the abuse of discretion standard.4
          Generally  speaking,  [i]f the  court  determines  that
defendant  is  in  default,  the  factual  allegations   of   the
complaint,  except those relating to the amount of damages,  will
be taken as true.5  But Alaska Civil Rule 55(c)(1) states:
          [I]f,  in order to enable the court to  enter
          judgment  or to carry it into effect,  it  is
          necessary  to take an account or to determine
          the  amount  of  damages or to establish  the
          truth of any averment by evidence or to  make
          an  investigation  of any other  matter,  the
          court may conduct such hearings or order such
          references as it deems necessary and proper.
          
(Emphasis added.)  We have held that the quoted portion  of  Rule
55(c)(1)   allows  the  trial  court  to  question  a  defendants
liability  after  a  default  has  been  entered  against   him.6
Therefore,
          [i]f  the  court determines that in order  to
          enter  the judgment it is necessary  for  the
          plaintiff to present evidence supporting  one
          or  more of the plaintiffs allegations and if
          the   plaintiff  is  unable  to  adduce   any
          evidence  tending to support  the  questioned
          allegations,  then  a  judgment   should   be
          entered     dismissing     the     plaintiffs
          complaint.[7]
          
Plaintiffs  do  not  have to prove questioned  allegations  by  a
preponderance  of  the evidence.  Rather, they need  only  submit
enough  evidence to put the questioned allegation in controversy.
If  faced with conflicting but legitimate evidence on both sides,
the court is bound to enter judgment for the party in whose favor
the default has been entered.8
          Courts  considering the issue have held that the  trial
court  may  not  consider whether the factual  averments  in  the
complaint are supported by evidence unless the plaintiff is given
notice   and   an  opportunity  to  produce  the  evidence.    In
Quirindongo Pacheco v. Rolon Morales, the United States  District
Court  denied the plaintiffs motion for default judgment  because
the plaintiff failed to produce evidence supporting his complaint
at  a  hearing  ordered under Federal Civil Rule  55(b)(2).9   On
appeal,  the United States Court of Appeals for the First Circuit
remanded, holding that a trial court may investigate the truth of
averments  in  the  complaint only if  the  court  has  made  its
requirements  known  in advance to the plaintiff,  so  that  [he]
could understand the direction of the proceeding and marshal such
evidence  as  might  be available. 10  The  Seventh  Circuit  has
adopted this rule as well.11  We agree with these courts  that  a
trial court may not deny a motion for entry of a default judgment
for  lack of proof of an averment in the complaint without  first
providing the plaintiff with notice and an opportunity to  submit
          evidence of the averments truth.
          Valley  Hospital  alleged  in  its  complaint  that  it
recorded  the  lien on July 25, 2003.  It also alleged  that  the
lien  complies  with  AS  34.35.450482 and  is  enforceable.  The
superior court was obligated to either accept the facts contained
in  these  averments or order the plaintiff to submit  supporting
evidence.12   Valley Hospital was never given an  opportunity  to
submit  such evidence.   It was therefore an abuse of  discretion
to  limit the proposed default judgment for lack of evidence that
the lien had been recorded.
          It  could be argued that it is not necessary to require
Valley  Hospital to submit proof of the recording at  all,  given
the   specificity  and  facial  plausibility  of  the  complaints
averment  that  the lien had been recorded and the  lack  of  any
evidence  casting doubt on its veracity.13  We have held  that  a
default establishes the well pleaded allegations of the complaint
unless  they  are  incapable of proof or are  contrary  to  facts
judicially noticed or to uncontroverted evidence presented by the
parties.14   In any event, on remand, Valley Hospital  should  be
given  an  opportunity to present evidence that it complied  with
the statute.
     B.    The  Superior  Court Did Not Abuse Its  Discretion  by
Denying        Attorneys Fees to Valley Hospital.

          We  ordinarily review awards of attorneys fees  for  an
abuse   of   discretion,   but   we   review   underlying   legal
determinations using our independent judgment.15  We will affirm a
denial  of attorneys fees to the prevailing party as long as  the
denial  is  not  arbitrary or capricious  or  for  some  improper
motive. 16
          The  superior  court refused to grant Valley  Hospitals
request  for attorneys fees, explaining that Valley Hospital  was
not in compliance with Alaska Civil Rule 82(b)(4).  Rule 82(b)(4)
states  in  part that, [u]pon entry of judgment by  default,  the
plaintiff  may  recover  an award calculated  under  subparagraph
(b)(1)  or  its  reasonable actual fees  which  were  necessarily
incurred,  whichever is less.  Valley Hospital asked  for  a  fee
award  of $2,038.47, an amount that was apparently based  on  the
schedule  in subparagraph (b)(1) (ten percent of the judgment  of
$20,384).
          Although  the superior court did not provide a detailed
explanation  for  its  denial  of  attorneys  fees,  denial   was
warranted  by  Valley  Hospitals failure to document  its  actual
fees.   In  Moses v. McGarvey, we held that when counsel requests
attorneys  fees other than based on the schedule . . .,  accurate
records  of  the  hours expended and a brief description  of  the
services   reflected  by  those  hours  should  be   submitted.17
Furthermore, Rule 82(c) requires that a motion for attorneys fees
in  a  default  case must specify actual fees.  Documentation  of
actual  fees is necessary in a default case because Rule 82(b)(4)
requires the court to award the lesser of actual reasonable  fees
or the scheduled amount under Rule 82(b)(1).18  Particularly in a
simple  default  case such as this, in which  little  substantive
legal work was necessary, reasonable, actual fees may be far less
          than the scheduled amount under Rule 82(b)(1).  An itemization of
work  performed  and  an affidavit certifying  its  veracity  are
essential for determining whether fees based on the Rule 82(b)(1)
schedule are proper.19
          Valley  Hospital  requested fees  that  were  seemingly
based  on  the schedule in Rule 82(b)(1).  It did not specify  or
document  its  actual  fees.  From the small  number  and  simple
nature  of  the legal documents filed in this case, the  superior
court   could  have  properly  inferred  that  Valley   Hospitals
reasonable actual fees should have been far less than the  amount
called  for  by the Rule 82(b)(1) schedule.  But Valley  Hospital
provided  the  court  with no means by which it  could  determine
actual   fees.    Valley  Hospitals  motion  for  reconsideration
contained  an  unsworn  and unsubstantiated  representation  that
$1,500  reflects less than the actual work done in preparing  the
case  for  filing  and obtaining the default judgment,  but  this
representation  was insufficient to allow the superior  court  to
properly review the fee request.20
          In  addition,  once the fee award was struck  from  the
proposed default judgment order, Valley Hospital did not move for
attorneys  fees.   Rather  than move for reconsideration,  Valley
Hospital  should have followed the procedure set  out  in  Alaska
Civil  Rule 82(c) and filed a motion for an award of fees.   Rule
82(c) states that:
          A   motion  is  required  for  an  award   of
          attorneys fees under this rule or pursuant to
          contract, statute, regulation, or  law.   The
          motion must be filed within 10 days after the
          date  shown  in  the  clerks  certificate  of
          distribution  on the judgment as  defined  by
          Civil   Rule  58.1.   Failure  to  move   for
          attorneys  fees  within  10  days,  or   such
          additional time as the court may allow, shall
          be  construed as a waiver of the partys right
          to  recover  attorneys fees.   A  motion  for
          attorneys fees in a default case must specify
          actual fees.
          
By failing to file a properly supported motion for attorneys fees
after  the  default judgment was entered, Valley Hospital  waived
its right to recover attorneys fees.
          Valley  Hospital  argues that Rule  82(b)(4)  does  not
apply to cases involving lien foreclosures.  It argues that  full
reasonable attorneys fees should always be awarded in such cases,
even  if  Rule 82(b)(1) dictates a smaller award.   It  cites  AS
34.35.005(b), which provides that the court should  allow  for  a
reasonable  attorney fee in lien enforcement actions generally,21
and  AS  34.35.480, which provides that the court shall  allow  a
reasonable attorney fee upon entering a decree for the  plaintiff
in health care provider lien enforcement actions.22
          Valley  Hospital  is correct that AS 34.35.480  governs
the award of attorneys fees in cases involving the enforcement of
liens.  Alaska Civil Rule 82(a) provides that attorneys fees  are
calculated under Rule 82 [e]xcept as otherwise provided by law or
agreed  to by the parties.  In Boyd v. Rosson we held that  under
AS  34.35.005(b)  full  [attorneys] fees  should  be  awarded  to
successful  lien claimants so long as the fees are  reasonable.23
We assume for the sake of discussion that the same interpretation
applies to AS 34.35.480.
          But  in  this case, the superior court did not enter  a
decree  for the plaintiff on the lien issue.24  It was not error,
therefore, for the court to analyze Valley Hospitals request  for
attorneys  fees under Rule 82.25  More importantly,  even  if  AS
34.35.480  had  applied here, the superior court would have  been
justified  in denying the request because Valley Hospital  failed
to file a properly supported Rule 82(c) motion.26
            Because  we  are remanding on the lien issue,  Valley
Hospital  will likely have a second chance to file a  Rule  82(c)
motion  for  attorneys  fees under either  Rule  82(b)(4)  or  AS
34.35.480.   In  order  to  prevail on  any  new  motion,  Valley
Hospital must adequately document its actual fees.  Failure to do
so may again result in the denial of any fee award.
IV.  CONCLUSION
          It  was  error  to  fail  to give  Valley  Hospital  an
opportunity to submit evidence that it recorded the lien  as  the
complaint  alleged.  We therefore REMAND for further  proceedings
in accordance with this opinion. Although under the circumstances
it  was not error to deny attorneys fees to Valley Hospital,  the
          remand on the lien claim requires us to VACATE the fees award.
_______________________________
     1     AS  34.35.460  provides that, in order  to  perfect  a
health care provider lien, the health care provider

          shall, not later than 90 days after the  date
          of  injury, or in no event later than 90 days
          after  the  discharge of the  injured  person
          from  the  hospital or the provision  of  the
          physicians  services, file a notice  of  lien
          substantially  in the form prescribed  in  AS
          34.35.465,  containing a general  description
          of  the services rendered and a statement  of
          the amount claimed,  with a recorders office,
          and  shall,  after the 90-day period,  before
          the   date   of   judgment,   settlement   or
          compromise,  serve a copy of  the  notice  of
          lien  by  registered mail, at the last  known
          address,  upon  the  person  alleged  to   be
          responsible for causing the injury  and  from
          whom  damages  are  claimed,  and  upon   the
          insurance  carrier that has  insured  against
          the  liability, if the insurance  carrier  is
          known.
          
Valley  Hospitals notice, submitted to the court with its  motion
for  reconsideration, does not include all the language specified
in  AS  34.35.465.  The notice omits the words  .  .  .  and  the
__________ (claimant) hereby claims a lien upon any money due  or
owing  or any claim for . . . .  This omission renders the  first
sentence of the notice nonsensical and appears to be a scriveners
error.   But the superior court gave no indication that it denied
the  motion for reconsideration on the basis of this omission and
we  express  no  opinion whether the notice as written  therefore
failed to satisfy AS 34.35.460.

     2     Peter  Pan Seafoods, Inc. v. Stepanoff, 650 P.2d  375,
378 (Alaska 1982).

     3    Id.

     4    Id.

     5     10A  Charles Alan Wright et al., Federal Practice  and
Procedure   2688  (3d  ed. 1998) (citing numerous  federal  cases
interpreting nearly identical federal rule); see also Danning  v.
Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (interpreting federal
rule); Syndoulos Lutheran Church v. A.R.C. Indus., Inc., 662 P.2d
109, 112(Alaska 1983) (interpreting Alaska rule).

     6    Syndoulos Lutheran Church, 662 P.2d at 112.

     7     Id.;  see also Wright et al., supra note 5,  at   2688
([T]he  court, in its discretion, may require some proof  of  the
facts that must be established in order to determine liability.).

     8     Syndoulos Lutheran Church, 662 P.2d at 112 (quoting In
re West Sec. Litig., 436 F. Supp. 1281, 1286 (N.D. Cal. 1977)).

     9     Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15,  16
(1st  Cir. 1992). Like Alaska Civil Rule 55(c)(1), Federal  Civil
Rule  55(b)(2) allows the court to conduct such hearings or order
such references as it deems necessary and proper to establish the
truth  of  any  averment by evidence if necessary to  enable  the
court to enter judgment or carry it into effect.

     10     Quirindongo  Pacheco, 953 F.2d at 16  (alteration  in
original) (quoting McGinty v. Berenger Volkswagen, Inc., 633 F.2d
226, 229 (1st Cir. 1980)).

     11     Black  v.  Lane, 22 F.3d 1395, 1398 (7th  Cir.  1994)
(citing Quirindongo Pacheco).

     12     The  superior court was not obligated to  accept  the
conclusions  of  law underlying Valley Hospitals allegation  that
the  lien was enforceable.  [A]  party in default does not  admit
mere  conclusions of law. Wright et al., supra note 5, at   2688;
see  also Harrison v. Bailey, 107 F.3d 870, 870 (6th Cir.  1997).
Had  Valley  Hospital failed to state a valid  legal  claim,  the
superior court would have been obligated to dismiss the complaint
even though the defendant was in default.  But in this case,  the
order  makes it clear that the court was concerned with the  lack
of  evidence  supporting the complaints factual allegations,  not
its legal conclusions.

     13    See Alaska R. Civ. P. 55(c)(1).

     14    Syndoulos Lutheran Church, 662 P.2d at 112.

     15    Dawson v. Temanson, 107 P.3d 892, 894 (Alaska 2005).

     16    Bowers Office Prods., Inc. v. Fairbanks N. Star Borough
Sch. Dist., 918 P.2d 1012, 1016 (Alaska 1996) (quoting Cooper  v.
Carlson, 511 P.2d 1305, 1310 (Alaska 1973)).

     17     Moses  v. McGarvey, 614 P.2d 1363, 1374 n.32  (Alaska
1980);  see  also Alaska R. Civ. P. 77(i) (permitting  courts  to
hear motions based on facts not appearing of record on affidavits
or other documentary evidence).

     18    See Alaska R. Civ. P. 82(b)(4).

     19     See Moses, 614 P.2d  at 1374 n.32; see also Matanuska
Elec.  Assn  v.  Rewire the Bd., 36 P.3d 685, 698  (Alaska  2001)
(holding  that  itemization  of  work  performed  accompanied  by
counsels  affidavit  adequately documented partys  attorneys  fee
request).

     20    See Alaska R. Civ. P. 77(i).

     21    AS 34.35.005(b) states that [i]n an action to enforce a
lien,  the court shall allow as part of the costs all money  paid
for drawing the lien and for filing and recording the lien claim,
and a reasonable attorney fee for the foreclosure of the lien.

     22     AS 34.35.480(b) states that [i]n [an action under  AS
34.35.450.480]  upon  entering a decree for  the  plaintiff,  the
court  shall allow as part of the costs, all money paid  for  the
filing  and  recording  of  the  lien  notice,  together  with  a
reasonable attorney fee.

     23     Boyd  v.  Rosson,  713 P.2d 800, 801  (Alaska  1986),
modified on rehg, 727 P.2d 765 (Alaska 1986).

     24    See AS 34.35.480(b).

     25     We  also  note  that  Valley Hospital  did  not  seek
attorneys  fees under AS 34.35.480 from the superior court  until
its  request  for  Rule 82 attorneys fees  was  rejected  by  the
superior court.

     26     Alaska  Civil Rule 82(c) on its face applies  to  fee
awards pursuant to contract, statute, regulation, or law as  well
as to fee awards under Rule 82(b).

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