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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Jackman v. Jewel Lake Villa One (11/02/2007) sp-6186

Jackman v. Jewel Lake Villa One (11/02/2007) sp-6186, 170 P3d 173

     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

APRIL JACKMAN, )
) Supreme Court No. S- 11715
Appellant, )
) Superior Court No. 3AN-03-4415 CI
v. )
)
JEWEL LAKE VILLA ONE, a ) O P I N I O N
Limited Partnership; )
JAMES W. WONG; ) No. 6186 November 2, 2007
RESOLUTION MANAGEMENT, )
L.L.C., an Alaska Limited Liability )
Company, )
)
Appellees. )
          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances: Benjamin I. Whipple, Palmer, for
          Appellant.   Matthew D.  Regan  and  Erin  K.
          Egan, Holmes Weddle & Barcott, PC, Anchorage,
          for Appellee.

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

          BRYNER, Chief Justice.
          CARPENETI, Justice, concurring.

I.   INTRODUCTION
          April  Jackman fell and injured herself on a  staircase
at her apartment complex, the Jewel Lake Villa Apartments.  After
Jackman  received  medical treatments for her  injuries,  one  of
Jewel  Lakes  insurers  paid  $3,474  to  cover  these  expenses.
Jackman  later  sued  Jewel  Lake for  failing  to  maintain  the
staircase.   Jewel Lake sent Jackman a $1,400 offer of  judgment,
but  she  failed to accept the offer and her case went to  trial.
The  jury found that Jackmans damages totaled $7,147.23 and  that
Jewel Lake bore fifty-one percent of the fault.  Jewel Lake moved
for enhanced attorneys fees under Civil Rule 68 claiming that its
offer  of judgment exceeded the jurys verdict.  To determine  the
value  of  the verdict in comparison to the pretrial  offer,  the
superior court first reduced the total amount awarded to  reflect
Jewel  Lakes  fifty-one percent share of  the  damages;  it  then
subtracted from this amount the advance medical expenses paid  by
Jewel  Lakes  insurer.  This yielded a net final  judgment  lower
than  the pretrial offer, so the court awarded enhanced  fees  to
Jewel  Lake.   Jackman appeals this award.   We  reverse.   Jewel
Lakes  insurer apparently paid Jackmans expenses unconditionally,
without any indication that it based the payments on Jewel  Lakes
potential  fault.   Because Jewel Lake failed  to  establish  the
payments  actual  basis, we hold that, for purposes  of  applying
Rule  68,  the payments should have been treated as reducing  the
jurys  total  award  of damages, not just the damages  reflecting
Jewel Lakes share of the fault.  Since this method results  in  a
judgment  more  favorable  than Jewel Lakes  pretrial  offer,  we
remand for entry of a modified judgment.
II.  FACTS AND PROCEEDINGS
          The  basic  facts  of this case are undisputed.   April
Jackman  injured  herself when she slipped and  fell  on  an  icy
stairway  in  the  Jewel  Lake Villa  Apartments,  the  apartment
complex  where  she resided.  Jackmans injuries required  medical
treatment; Jewel Lakes insurers paid Jackman a total of $3,474 to
reimburse her expenses.  These reimbursements appear to have been
paid  unconditionally; nothing in the record suggests  that  they
were based on Jewel Lakes potential fault for the accident.
          Jackman later sued the owners and managers of the Jewel
Lake  Villa  Apartments (collectively Jewel Lake), alleging  that
they  negligently  caused the accident by  failing  to  keep  the
stairway  free of snow and ice.  Her complaint sought to  recover
damages  exceeding $75,000 for past and future medical  expenses,
lost wages, and diminished earning capacity.
          After the parties conducted discovery, Jewel Lake  made
an  offer  of  judgment to Jackman, proposing to allow  entry  of
judgment  for plaintiff April L. Jackman in this action  for  ONE
THOUSAND   FOUR  HUNDRED  DOLLARS  AND  ZERO  CENTS  ($1,400.00),
inclusive  of  Rule 82 attorneys fees, allowable costs  and  pre-
judgment  interest.  Jackman did not accept the  offer,  and  the
case proceeded to a jury trial.
          Before  trial  Jewel Lake moved to offset  the  medical
expenses  it had already paid from any judgment amount determined
by  the  jury.  Jackman opposed this motion as premature, arguing
that  the jury should be allowed to determine the full extent  of
her damages and that the medical payments should be deducted from
the  judgment based on the jurys verdict.  To allow an offset  of
judgment  now,  Jackman  contended, would distort  in  defendants
favor  the  potential judgment amounts on which the parties  have
based  offers  of  judgment.  Jewel Lake did not oppose  Jackmans
request to postpone the deduction, and the superior court adopted
this  approach, ruling that, if the jury reached  a  verdict  for
Jackman,  the  judgment amount shall be offset by the  amount  of
prior payment made to the plaintiff by the defendants insurer for
the plaintiffs medical treatment and expenses.
          After  hearing the evidence at trial, the jury returned
a   verdict  finding  that  Jewel  Lake  and  Jackman  were  both
negligent; the verdict apportioned fifty-one percent of the fault
to  Jewel  Lake and forty-nine percent to Jackman.   The  verdict
also  found that Jackman had suffered total damages of $7,147.23.
Accordingly, Jewel Lakes liability for its proportionate share of
the fault totaled $3,645.09  fifty-one percent  of  $7,147.23.
          Jewel  Lake moved for attorneys fees under Alaska Civil
Rule  68.1   Under  this rule, a party whose  pretrial  offer  of
judgment  is  rejected  becomes entitled  to  claim  a  specified
percentage of its attorneys fees,2 payable from the time  of  the
offer,  [i]f  the judgment finally rendered by the  court  is  at
least  5  percent less favorable to the offeree than the  offer.3
Jewel  Lake  argued that the $3,474 payment for medical  expenses
should  be set off from the jury verdict against it in  order  to
arrive  at  a  final  judgment  for  the  purposes  of  Rule  68.
Considering  the  $3,474  in advance  medical  payments  and  the
additional $1,400 cash offer that Jackman would have received  if
she  had accepted the offer, Jewel Lake contended that the  jurys
verdict  left her with a recovery that was at least five  percent
less favorable than the offer of judgment.
          Jackman  opposed Jewel Lakes Rule 68 motion.   Although
she did not dispute that her judgment would ultimately need to be
reduced to reflect the advance payments she had received for  her
medical  expenses,  Jackman insisted that the court  should  make
this  deduction  only after calculating the full  amount  of  her
judgment.   In  Jackmans  view, the medical  payments  could  not
properly  be considered in comparing the amount of the  offer  to
the  amount  of her award, since the offer had failed to  mention
the  medical  payments: From the plain terms  of  the  defendants
offer  it  would have been impossible for plaintiff to  ascertain
that  defendants intended the actual value of their offer  to  be
$1,400  plus  $3,474  more for purposes of a  potential  Rule  68
motion.
          The superior court resolved this dispute in Jewel Lakes
favor.  In determining that the judgment was less favorable  than
the  offer,  the  court started with the jurys finding  of  total
damages    $7,147.23.    Given  the   jurys   fifty-one   percent
allocation  of  fault to Jewel Lake, the court  calculated  Jewel
Lakes proportionate share of the damages to be $3,645.09.  Adding
projected   pretrial   interest  ($10.35)  and   attorneys   fees
($730.09),  the court estimated that Jewel Lakes total  liability
under  the  verdict would be $4,380.53.  The court next  deducted
the  full  amount of the medical expenses already paid  by  Jewel
Lakes   insurers  ($3,474);  this  resulted  in  an   outstanding
liability  of $906.53,4 which the court described as the  maximum
amount   payable  to  the  plaintiff  under  the  jurys  verdict.
Comparing  this figure to the $1,400 Jackman would have  received
under  the pretrial offer, the court found her recovery at  trial
to be lower than the threshold required to trigger attorneys fees
          under Rule 68  a judgment at least five percent less favorable
than  the  offer.5  For easy reference, we set out  the  superior
courts calculations below:
                 Order Regarding Attorney Fees
          Verdict                       =    $7147.23
          Defendants     Liability                    =
          .51
                                             $3645.09
          Interest   =          .05 x 1.21 x  [3645.09-
          3474 = 171.09]
                                                10.35
          Verdict  +  Prejudgment  Interest           =
          $3650.44
          Rule         82         Attorney         Fees
          .20
                                             $ 730.09
          Verdict,     interest,     attorney      fees
          $4380.53
          Less                 set                  off
          $3474.00
          Maximum amount of payable
          to   plaintiff   per   verdict              =
          $906.53

          Rule 68 Offer                 =    $1400.00
                                                  .10
                                              $140.00
          10%               less              favorable
          $1260.00
          5%               less               favorable
          $1330.00

          Based on these calculations, the superior court granted
Jewel  Lakes motion for attorneys fees and costs under  Rule  68.
The court ultimately awarded Jewel Lake $24,746 in attorneys fees
and  $1,188.97 in costs.  This yielded a final judgment for Jewel
Lake  totaling  $25,934.97 and a final judgment  for  Jackman  of
$181.44.
          Jackman appeals.
III. DISCUSSION
          On  appeal,  Jackman  challenges  the  superior  courts
ruling that Jewel Lake was entitled to attorneys fees under  Rule
68  because  its offer of judgment exceeded Jackmans judgment  at
trial.   Because Jewel Lakes offer . . . contained no mention  of
credit  for  advance  payment of her  medical  expenses,  Jackman
reasons that it was error for the trial court to have essentially
modified the terms of the offer by reducing the judgment  by  the
amount of advance payments before making the Rule 68 comparison.
          Jewel Lake responds that its pretrial offer of judgment
implicitly called for payment in addition to the medical expenses
that  had already been reimbursed:  The Offer of Judgment  itself
already  included an offset for the funds advanced.  The  parties
understood  that if Jackman accepted the offer she would  receive
$1,400  in  new money.   Even though the offer failed to  specify
          that the advance funds would be credited as an offset against any
judgment received by Jackman, Jewel Lake insists that the  offset
was  proper.   While acknowledging that this point has  not  been
squarely  addressed in Alaska, Jewel Lake points  to  cases  from
other jurisdictions that support its proposition.6
          These arguments require us to determine the meaning  of
Jewel  Lakes  offer  of  judgment  and  the  proper  method   for
calculating  the  comparative values of the  offer  and  Jackmans
judgment  for purposes of applying Rule 68.  Questions concerning
an offer of judgments meaning and whether the offer complies with
Rule 68 raise issues of law, which we review independently.7
          As  indicated above, Jackmans initial premise  is  that
Jewel  Lakes offer of judgment could not reasonably be  construed
as  a new money offer  that is, as an offer of $1,400 in addition
to any advance medical payments Jackman had already received from
Jewel Lakes insurers  because the offer failed to mention advance
payments.  But this premise fails under Rules v. Sturn.8   There,
the  defendant  made a lump-sum offer plus interest,  costs,  and
Rule  82  attorneys fees, but failed to mention advance  payments
that  had  already been made.9  After the plaintiff accepted  the
offer  and  the superior court entered a judgment reflecting  the
lump-sum offer, the defendant attempted to reduce the judgment by
subtracting the amount of the previously paid medical expenses.10
We  rejected the attempt as improper under Rule 68, holding  that
an  offer  of  judgment that remains silent as to prior  payments
will  ordinarily not be subject to an implied offset.11  In other
words, it must be deemed to be a new-money offer.
          In  light of Rules, Jewel Lakes offer of judgment  must
be  viewed  as an unambiguous proposal to pay Jackman  $1,400  in
addition  to  any medical payments she might have  received  from
Jewel  Lakes  insurers.  But while the offers silence  concerning
the medical payments creates no ambiguity as to the offers value,
it  generates  uncertainty as to the proper method for  crediting
those  payments  in applying Rule 68s directive  to  compare  the
offers  value against the value of the judgment finally  rendered
by  the court.12  As Jewel Lake acknowledges, the point has never
been directly resolved in Alaska.
          Jackman   insists  that  this  uncertainty  should   be
resolved by ignoring the advance payments completely for purposes
of  applying Rule 68.  But this approach makes little sense.   It
is  undisputed  that Jackman received the advanced payments  from
Jewel  Lakes insurer and that those payments compensated her  for
injuries  included in her pending lawsuit  injuries she  suffered
when  she slipped and fell on the Jewel Lake staircase.   Jackman
thus had no right to recover these medical expenses again as part
of  the  jurys award; nor did she have any legitimate  basis  for
including those payments in calculating her awards of prejudgment
interest, costs, and attorneys fees.  For these reasons,  it  was
proper  to deduct the advance payments from Jackmans award before
comparing  her  judgment to the pretrial offer  for  purposes  of
determining Jewel Lakes right to attorneys fees under Rule 68.
          The more difficult problem here lies in determining the
correct  method for deducting the advance payments from the  jury
award in order to compare the award to the pretrial offer.  Here,
          as illustrated by the superior courts calculations set out in our
statement  of  facts, the court initially divided the  full  jury
award,  $7,147.23, to derive Jewel Lakes fifty-one percent  share
of  the damages: $3,645.09.  After adjusting for interest, costs,
and  attorneys fees, the court subtracted the full amount of  the
advance medical payments from Jewel Lakes share of the damages to
arrive  at  a maximum amount . . . payable of $906.53  under  the
verdict.   Comparing  this  estimate of  Jackmans  maximum  final
judgment  to Jewel Lakes pretrial offer of $1,400 in  new  money,
the  court  concluded that Jackman fared substantially  worse  by
going  to  trial, thus entitling Jewel Lake to enhanced attorneys
fees and costs under Rule 68.
          The  trial courts approach treated the medical  expense
payments as pure liability payments  payments meant to compensate
Jackman  only for Jewel Lakes proportionate share of  the  fault.
Yet  as we noted at the outset of this opinion, the record  fails
to  disclose the specific basis for the medical payments.   Jewel
Lakes  insurer appears to have unconditionally reimbursed Jackman
for   her  medical  expenses:  there  is  no  indication  of  any
reservations  or restrictions suggesting that the  reimbursements
were paid as compensation for Jewel Lakes potential share of  the
fault.   Absent  evidence establishing the actual basis  for  the
insurers  payments, we see no obvious grounds for  crediting  the
entire amount of the advance payments against the portion of  the
jury  verdict reflecting Jewel Lakes share of the fault.  As  the
party  asserting a claim for enhanced fees under Rule  68,  Jewel
Lake bore the burden of supporting its claim.
          Jewel  Lake contends that Jackman waived this point  by
failing  to  object  to the superior courts  specific  method  of
calculating  the offset.  We disagree.  Jackmans arguments  below
called  into  question  the  proper  method  under  Rule  68  for
crediting  old money payments when a new money offer of  judgment
fails  to  address the subject. As Jewel Lake acknowledges,  this
question  has  never been squarely raised in Alaska  and  remains
undecided.   Because the proper method of calculation under  Rule
68  presents an unresolved question of law, the parties  opposing
views  on the point do not confine our decision.  Instead,  [o]ur
duty is to adopt the rule of law that is most persuasive in light
of  precedent, reason, and policy.13  Accordingly, we reject  the
claim  of waiver and turn to the question whether the trial court
correctly  deducted  the  entire amount of  the  advance  medical
payments from the portion of damages reflecting Jewel Lakes share
of the total fault.
          Jewel Lake proposes two justifications for the superior
courts  approach.   First, Jewel Lake insists that  the  superior
court  needed  to  deduct the advance payments from  Jewel  Lakes
share of the total damages in order to protect Jewel Lake against
paying  more than its fair share of the damages as determined  by
the  jurys allocation of fault.  To be sure, Alaska law  requires
personal  injury  damages  to  be apportioned  on  the  basis  of
comparative  fault;14  but  it hardly follows  that  an  insurers
unconditional and unexplained reimbursements of medical  expenses
should routinely be treated as having been paid on account of the
defendants  fault.   Because  it is not  self-evident  that  such
          payments will invariably represent future damages awardable in an
action based on fault,15 we see no justification for assuming that
they  necessarily reflect the defendants potential share  of  the
fault.   Absent  case-specific  evidence  establishing  that  the
payment in question was actually based on potential fault,  then,
it  simply lowers the total damages still to be paid, leaving all
negligent  parties responsible for their proportionate  share  of
the harm.
          Second,  Jewel  Lake  suggests that  deducting  advance
payments from its share of the verdict was necessary to prevent a
double recovery by Jackman.  Yet deducting advance payments  from
the jurys total award poses a risk of double recovery only if  we
assume  that  those  payments were  made  on  the  basis  of  the
defendants  potential fault.  In any other  case,  the  deduction
prevents  the  plaintiff from recovering twice  by  lowering  the
defendants share of the award as well as the plaintiffs.  Barring
some   evidence  showing  that  the  advance  payments   actually
reflected the defendants potential share of the fault, then,  the
danger  of  double  recovery  does  not  justify  deducting  such
payments exclusively from the defendants share of the damages.
          In  short,  both of Jewel Lakes proposed justifications
mistakenly assume that an insurers unconditional advance payments
of  medical expenses must necessarily be payments based on fault.
Here,  the  trial court record shows only that, before litigation
commenced, one of Jewel Lakes insurers unconditionally  paid  for
medical expenses incurred by Jackson as a result of her accident.
In  this  situation, without additional information  establishing
the  actual  basis for the insurers advance payments, the  record
provides  no solid ground for assuming that the payments  covered
only those limited portions of Jackmans expenses reflecting Jewel
Lakes  potential share of fault for her accident;  nor  does  the
record provide a sound reason to fear that either double recovery
or  double payment would result if the payments were credited  as
the  record  suggests they should be  against the  total  damages
Jackson sustained.
          For  these  reasons,  we  hold that  when  a  defendant
seeking  Rule 68 fees claims an offset for medical expenses  paid
to  the plaintiff without reservation or restriction before  suit
was  filed, the advance payments must be deducted from the  total
award  of  damages  to establish the final judgments  comparative
value  unless  the  defendant shows that  the  payments  actually
compensated  the plaintiff for liability based on the  defendants
fault.16
          Applying  this  method here results in a  judgment  for
Jackman  that  exceeds  Jewel Lakes $1,400 offer  of  judgment.17
Accordingly,  we vacate the judgment, reverse its order  awarding
Rule  68 fees to Jewel Lake, and remand the case for entry  of  a
modified judgment consistent with this opinion.
IV.  CONCLUSION
          We  VACATE  the final judgment, REVERSE  the  award  of
attorneys fees and costs to Jewel Lake, and REMAND for  entry  of
judgment in Jackmans favor.
CARPENETI, Justice, concurring.
          I  agree  with  the  result of todays  opinion,  but  I
disagree with its reasoning.  For that reason, I write separately
to explain how I would resolve this case.
          Todays result  reversal of the award of attorneys  fees
and costs to Jewel Lake and entry of judgment in favor of Jackman
is  correct because Jewel Lakes offer of judgment did not clearly
specify how the previous medical payments made on behalf of Jewel
Lake  should  be  treated for Rule 68 purposes.  This  ambiguity,
under  our  law,  is  charged against Jewel  Lake,  the  offeror.
Accordingly, the medical payments should not be offset  for  Rule
68  purposes.  Without offset, Jewel Lakes offer of judgment  was
plainly inferior to the jury verdict, and thus Jewel Lake is  not
the prevailing party under Rule 68.
          The  key  point  in this analysis is that  Jewel  Lakes
failure to specify whether the earlier payments were part of  its
offer of judgment redounds to Jewel Lakes detriment.  In Rules v.
Sturn1  we  held  that an ambiguous offer is  strictly  construed
against  the  offering  party.2  In upholding  the  trial  courts
decision to disallow offset of earlier payments from the Rule  68
offer of judgment, we noted that the [offeror]s offer of judgment
mentions  nothing about advance payments made or about offsetting
them  against any part of the offer, and that the offer does  not
otherwise  indicate an intent by the offerors to offset  payments
already  made.3  Accordingly, we upheld the trial courts  refusal
to  offset.   We  have also held, in Thomann v.  Fouse,4  that  a
plaintiff  is  not  required  to gamble  on  the  meaning  of  an
ambiguous settlement offer.5  Thomann is significant for purposes
of  this  case,  for  there  the  defendants  offer  specifically
notified  the plaintiff that it consisted of new money  the  kind
of  specificity lacking in Jewel Lakes offer  but it  added  that
this  new  money was offered in addition to the medical  payments
which have been assumed by Defendant Fouses insurance carrier for
resolution  in  a  subsequent arbitration.6   We  held  that  the
underlined  language  rendered  the  offer  too  indefinite:  the
presence  of  this detail invited confusion and could  reasonably
have  led  [plaintiff]  to  wonder  what  effect  the  subsequent
arbitration  might have had on her medical claim.7   Because  the
offers  ambiguity created uncertainty for the plaintiff, we  held
that it failed to meet the requirements of Rule 68 and could  not
support  an  award of costs and attorneys fees in favor  of  [the
offeror].8
          Jewel  Lakes  offer of judgment was far more  uncertain
than  Fouses offer.  It made no mention of the earlier  payments.
It did not state that it was in addition to payments already made
on its behalf.  Jewel Lake acknowledges that no writing clarified
whether  the  earlier payments would be credited to any  judgment
obtained by Jackman.  Indeed, Jewel Lake did not claim any offset
until  it moved for offset of the judgment over five months after
making  the offer of judgment to Jackman.  Thus, Jackman  had  no
indication of Jewel Lakes intentions regarding offset at the time
of  the offer.9  It is not even clear that Jackmans attorney  was
aware  of all the payments or their total amount at the  time  of
the  making  of  the Rule 68 offer.  Because Jewel  Lake  created
          ambiguity in its offer to Jackman, we construe that ambiguity
against  Jewel Lake.  Thus, the settlement offer must be read  in
favor of Jackman for the purposes of Rule 68 calculations.
          Instead  of this straightforward approach to  resolving
this case, todays opinion is based on the questionable hypothesis
that  Jewel  Lakes  insurer  apparently  paid  Jackmans  expenses
unconditionally,  without  any  indication  that  it  based   the
payments  on  Jewel  Lakes  potential  fault.10   I  respectfully
suggest  that  this  approach defies both common  sense  and  the
common law.
          It  defies  common sense because there is no reason  to
think  that  the  defendants insurer was making payments  to  the
injured plaintiff for any reason other than to cover its insureds
potential  fault.  (The court certainly provides no hint  of  any
other  reason for such a phenomenon.)  Indeed, it admits as much,
when  it  states:  It  is undisputed that  Jackman  received  the
advanced  payments  from  Jewel  Lakes  insurer  and  that  those
payments  compensated her for injuries included  in  her  pending
lawsuit  injuries she suffered when she slipped and fell  on  the
Jewel Lake staircase.11
          And  the  opinion is a stark departure from the  common
law   which  credits  defendants  fully  for  payments  made   by
themselves or their insurance companies regardless of whether the
payments  were  medical payments or payments based  on  predicted
liability.   Todays opinion distinguishes between pure  liability
payments  and  unconditional[] reimburse[ment] for . . .  medical
expenses made by Jewel Lakes insurer.12  The court suggests  that
absent  evidence establishing the actual basis for  the  insurers
payments  there are no obvious grounds for crediting  the  entire
amount  of the advance payments against Jewel Lakes share of  the
fault.  This approach is at odds with the common law.
          The  Commentary  to the Restatement (Second)  of  Torts
explains:
          Payments  by  or  for defendant.  If  a  tort
          defendant  makes  a payment toward  his  tort
          liability,  it  of course has the  effect  of
          reducing that liability. This is also true of
          payments made under an insurance policy  that
          is  maintained by the defendant, whether made
          under a liability provision or without regard
          to  liability,  as  under a  medical-payments
          clause.  This  is true also of a  payment  by
          another tortfeasor of an amount for which  he
          is  liable jointly with the defendant or even
          by  one  who  is not actually liable  to  the
          plaintiff  if he is seeking to extinguish  or
          reduce the obligation. (See  885).[13]
While  the Restatement does not mention payments by the defendant
(or  by another on his or her behalf) in the specific context  of
comparative liability, there is no reason that offset should  not
apply   in   a  comparative  negligence  situation,   given   the
Restatements  equal treatment of payments whether  made  under  a
liability  policy or under a medical-payments clause.  Therefore,
just  as payments made under a liability policy would be credited
fully  to  a defendant, payments under a medical-payments  clause
should be as well.
          The  two  cases  relied  on by  the  court,  Norman  v.
Farrow14  and  Hickenbottom v. Schmidt,15 are  inapposite.   They
involved personal injury protection (PIP) benefits which were not
paid  from  the  pockets  of  (or on  behalf  of)  the  defendant
tortfeasors.16   They were therefore collateral  source  payments
rather  than  prior payments by (or on behalf of) the  defendant.
Furthermore,  statutes  in  both Florida  (Farrow)  and  Colorado
(Hickenbottom)  established  that  the  payments  could  not   be
recovered by plaintiffs in litigation, and thus must be offset.17
There is no similar statute here.
          Finally,  the  courts  approach  creates  the  risk  of
consequences that would ill serve the administration  of  justice
in  Alaska.  We have long held that the purpose of Civil Rule  68
is  to  encourage early settlement of disputes.18  Early  medical
payments  for  injured  plaintiffs would certainly  assist  early
settlement  of  disputes.   But  even  a  hypothetically   purely
generous insurer of a potential defendant may become involved  in
litigation,  and  will want to receive full credit  for  payments
made in respect of its insureds potential liability.  Giving  the
payor  less than full credit for unconditional payments,  as  the
court  does  today,  may put such a burden  on  the  insurer   to
specify that each payment is in respect of its insureds potential
liability  as to discourage early payment.
          In  the  final  analysis, perhaps  the  only  practical
difference between the courts approach and mine is in the  number
of  clarifying qualifications the defendant, its insurer, or  its
counsel,  must  make.   Under  the  courts  approach,  each  pre-
settlement or pretrial payment must be accompanied by notice that
it  was based on [defendant]s potential fault for the accident,19
or   some  such  qualification.   Under  my  approach,  only  one
notification  in the Rule 68 offer  would be necessary.   Perhaps
this  difference is insignificant.  But given Alaskas  preference
for  early  payment and early settlement, it seems preferable  to
keep  the  burden on the maker of a Rule 68 settlement  offer  to
speak  clearly  rather than placing it on the maker  of  multiple
ameliorative payments.
          Jewel  Lake had the obligation to say exactly what  its
Rule 68 offer included.  It did not do so.  Because its offer was
ambiguous,  and because Jewel Lake under our case law  must  bear
the  burden of its offers ambiguity, I believe that the  superior
courts  order on attorneys fees should be reversed.  I  therefore
concur  in  todays result.  But I would not reach that result  on
the  legal  fiction that the payments to Jackman  were  made  for
anything other than to cover Jewel Lakes potential fault.
          Thus,  I  concur with the holding but not the reasoning
of todays opinion.
_______________________________
     1    Alaska Rule of Civil Procedure 68 provides in part:

          (b)   If the judgment finally rendered by the
          court is at least 5 percent less favorable to
          the  offeree than the offer, or, if there are
          multiple defendants, at least 10 percent less
          favorable to the offeree than the offer,  the
          offeree,  whether the party making the  claim
          or defending against the claim, shall pay all
          costs  as  allowed under the Civil Rules  and
          shall  pay  reasonable actual attorneys  fees
          incurred  by  the offeror from the  date  the
          offer was made . . . .
          
     2     Under Alaska Rule of Civil Procedure 68(b)(1)-(3), the
amount  of allowable fees varies depending on the timing  of  the
offer.  The variations are irrelevant here.

     3     When  a case involves multiple defendants, Rule  68(b)
requires the rejecting offeree to fare worse than the offer by at
least  ten  percent.   Alaska R. Civ. P. 68(b).   Here,  although
Jackmans  action named multiple individuals and business entities
as  defendants, the parties agreed to treat all the defendants as
a single entity, so the rules five percent threshold applies.

     4     This  amount  appears in the original  superior  court
order and reflects a five-dollar mistake: the correct sum of  the
projected  pretrial interest and Jewel Lakes share of damages  is
$3,655.44.   Because this mistake had no effect on  the  superior
courts  decision and is immaterial here as well,  we  retain  the
uncorrected sum in this illustration.

     5    Alaska R. Civ. P. 68(b).

     6     Specifically, Jewel Lake cites Russell v.  Ashe  Brick
Co.,  230  S.E.2d  814, 815 (S.C. 1976) for the proposition  that
[t]he nonexistence of a receipt delineating the obvious desire to
credit  the payment against any future liability secured  on  the
same claim is without legal significance.

     7    Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska 1996).

     8    Rules v. Sturn, 661 P.2d 615 (Alaska 1983).

     9    Id. at 616.

     10    Id.

     11    Id. at 617-18.

     12    See Alaska R. Civ. P. 68(b).

     13    Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).

     14     AS 09.17.060 (In an action based on fault seeking  to
recover  damages  for  injury or death to a  person  or  harm  to
property,   contributory  fault  chargeable   to   the   claimant
diminishes  proportionately the amount  awarded  as  compensatory
damages for the injury attributable to the claimants contributory
fault, but does not bar recovery.).

     15    See id.

     16     We  note by analogy that this approach is similar  to
methods adopted in other jurisdictions for offsetting funds  paid
under  statutorily  required no-fault medical payments  policies.
See  Norman  v.  Farrow,  880  So. 2d  557,  559-61  (Fla.  2004)
(requiring offset for no-fault benefits before reduction  by  the
percentage  of the plaintiffs fault because plaintiff  barred  by
statute  from recovering damages in personal injury accident  for
expenses payable under no-fault policy); Hickenbottom v. Schmidt,
626  P.2d  726, 727 (Colo. App. 1981) (deducting payable personal
injury  protection  benefits  from  total  damages  award  before
reducing   judgment  by  percentage  of  plaintiffs   comparative
negligence).

     17     A  rough estimate of the comparative values  (without
allowing  for pretrial interest, attorneys fees or costs  on  the
judgment finally rendered for Jackman) is as follows:


Corrected Calculation

Total Damages Found by Jury
  $7147.23

Reduction by Amount of Advance Medical Payments
$3474.00

Subtotal
  $3673.23

Reduction of Total Unpaid Damages To Reflect Jewel Lakes 51% of
Fault
        x .51

Estimated Value of Total Judgment for Jackman (not including her
prejudgment interest or costs & fees
$1873.34

Subtract Value of Jewel Lakes Offer of Judgment
 $1400

Comparative Value of Judgment Over Offer
 + $473.34

1    661 P.2d 615 (Alaska 1983).

     2    Id. at 617.

     3    Id.

     4    93 P.3d 1048 (Alaska 2004).

     5     Id.  at  1051  ([W]e do not think it  fair  to  expect
[offeree]  to gamble on this assumption [that pending arbitration
was irrelevant to the claim].).

     6    Id. at 1049 (emphasis in original).

     7    Id. at 1051.

     8    Id. at 1052.

     9    Indeed, this is the precise objection that Jackman made
before  the  superior court to Jewel Lakes motion  for  attorneys
fees under Rule 68:

     [Defendants]  offer  made no  mention  that  from  this
     stated  amount  of  $1,400 the  value  of  their  prior
     medical payments should be added for purposes of a Rule
     68  calculation.   From the plain terms  of  defendants
     offer  it  would have been impossible for plaintiff  to
     ascertain that defendants intended the actual value  of
     their  offer  to  be  $1,400 plus  $3,474.00  more  for
     purposes of a potential Rule 68 motion.
     
10     Opinion  2  (These  reimbursements  appear  to  have  been
paid  unconditionally; nothing in the record suggests  that  they
were based on Jewel Lakes potential fault for the accident.); see
also  id. at 10 (the record fails to disclose the specific  basis
for the medical payments).

     11   Opinion 9.

     12   Opinion 10.

     13    Restatement  (Second) of Torts   920A  cmt.  a  (1979)
(emphasis  added).   Note that while AS 09.17.070  abrogated  the
common  law rule with respect to offsets from collateral  sources
which  are discussed in this section of the Restatement,  nothing
in  the Alaska statutes appears to have upset the common law rule
regarding  payments from non-collateral sources such  as  are  at
issue here.

     14   880 So. 2d 557 (Fla. 2004).

     15   626 P.2d 726 (Colo. App. 1981).

     16   The language of both Farrow and Hickenbottom makes this
clear.   In  Farrow  the  court cited the statute  directing  how
recovery  for  tort  claims is impacted by an insured  plaintiffs
receipt  of PIP benefits and stated, [the statute] dictates  that
an  insured  plaintiff has no right to recover  damages  paid  or
payable  by  PIP benefits. 880 So. 2d at 559-60.  In Hickenbottom
the court similarly noted that the Colorado statute provides that
an  injured  party is precluded from recovering  damages  from  a
tortfeasor  which are recoverable as direct benefits  under  [the
PIP  statute].  626 P.2d at 727.  Furthermore,  the  use  of  the
descriptors  insured plaintiff in Farrow and direct  benefits  in
Hickenbottom  is  additional evidence that the  courts  in  those
cases  were  considering  payments from  a  source  tied  to  the
plaintiff and wholly collateral to the defendant tortfeasor.

     17    Farrow, 880 So. 2d at 558; Hickenbottom, 626  P.2d  at
727.

     18    See  Miklautsch v. Dominick, 452 P.2d 438, 441 (Alaska
1969); accord Continental Ins. Co. v. U.S. Fid. & Guar. Co.,  552
P.2d 1122, 1125-26 (Alaska 1976).

     19   Opinion 2.

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