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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Rhodes v. Erion (08/01/2008) sp-6293

Rhodes v. Erion (08/01/2008) sp-6293, 189 P3d 1051

     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

EVIE RHODES, )
) Supreme Court No. S- 12402
Appellant, )
) Superior Court No. 3AN-03-09126 CI
v. )
) O P I N I O N
BECKY ERION, )
) No. 6293 August 1, 2008
Appellee. )
)

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances: Jeffrey J. Barber,  Law  Offices
          of  Steve  Sims,  Anchorage,  for  Appellant.
          Gregory   R.  Henrikson,  Walker   &   Eakes,
          Anchorage, for Appellee.

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

          FABE, Chief Justice.

I.   INTRODUCTION
          Evie  Rhodes was involved in a car accident with  Becky
Erion,  and  Rhodes  sued  Erion.  Erion  made  three  offers  of
judgment to Rhodes under Alaska Civil Rule 68, but Rhodes  failed
to  accept  these offers.  The case proceeded to trial,  and  the
jury  awarded Rhodes $18,281.85 in damages.  This verdict was  at
least five percent less favorable to Rhodes than an offer made by
Erion,  and  Rhodes  was therefore liable for  fifty  percent  of
Erions reasonable actual attorneys fees under Rule 68.  The trial
court  awarded  fees  of  $42,263.50, which  offset  the  damages
awarded  to  Rhodes and left Rhodes with a balance of  $17,411.45
payable to Erion.  Rhodes asked the trial court to reconsider its
award  of  attorneys fees, requesting that it  apply  the  Alaska
Civil Rule 82(b)(3) factors to reduce the award.  The trial court
declined to do so.
          Rhodes  appeals the award of attorneys fees, contending
that the trial courts refusal to reduce the award was an abuse of
discretion  and that Rule 68 violates the due process  and  equal
protection  clauses  of  the  Alaska  Constitution.   Because  we
conclude  that  the trial court did not abuse its  discretion  in
declining  to reduce Erions award of attorneys fees, and  because
Rhodes waived her constitutional arguments, we affirm.
II.  FACTS AND PROCEEDINGS
          On  February  15,  2003, a car driven  by  Becky  Erion
collided with a car in which Evie Rhodes was a passenger  at  the
intersection  of A Street and 38th Avenue in Anchorage.   Rhodess
car  was  stopped  when  Erions car hit it and  Rhodes  sustained
injuries.  Rhodes sued Erion in superior court in June 2003.
          Between 2004 and 2005,  Erion made three Rule 68 offers
of  judgment to Rhodes, ranging from $20,000 to $30,000,  two  of
which  were  inclusive of interest, Rule 82 attorneys  fees,  and
allowable  costs.  These offers were not accepted.1   In  October
2004, and again in October 2005, Rhodes requested and was granted
continuances.  The case proceeded to a jury trial in June 2006.
          The  trial  lasted  eight days,  and  the  trial  court
characterized  Rhodess  prosecution  of  the  case  as  vigorous.
Rhodes  called  eleven  witnesses; Erion  called  two.   Although
Rhodes  sought a million dollar plus verdict, the jury ultimately
awarded Rhodes $18,281.85 in past damages and nothing for  future
losses.   With prejudgment interest, Rule 82 attorneys fees,  and
Alaska  Civil Rule 79 costs, Rhodess verdict totaled  $27,016.12.
Erion  calculated  this amount to be at least five  percent  less
favorable  to Rhodes than Erions June 2004 offer of $30,000,  and
moved  for  attorneys  fees  under Rule  68.2   Rhodes  requested
enhanced attorneys fees under Rule 82, pointing to the complexity
and  length  of the trial, the reasonableness of the  claims  and
defenses presented by each side, and other equitable factors.
          Rhodes  argued that Erions June 2004 offer of  judgment
was  invalid,  that  Rhodess judgment  actually  exceeded  Erions
offers, and that Rule 82(b)(3)(I), (J), or (K) required the trial
court  to  deny  Erion  attorneys  fees.   The  trial  court  was
unconvinced by Rhodess arguments and granted Erion fifty  percent
of   her   attorneys  fees  under  Rule  68,  an  award  totaling
$42,263.50.  This award completely offset Rhodess judgment, which
with prejudgment interest totaled $24,852.05, and left her with a
balance of $17,411.45 payable to Erion.
          Rhodes  filed a motion for reconsideration,  requesting
an itemization of Erions legal bills to assess the reasonableness
of  the  fees.  She also argued that the trial court should  have
reduced the award under Rule 82(b)(3)(I), (J), or (K).  The trial
court  directed Erion to respond to Rhodess request for  itemized
bills  but  confirmed that Erion need not address Rhodess  second
argument  because  the court found no basis  to  apply  the  Rule
82(b)(3) factors.  Erion complied with the trial courts order and
submitted  itemized bills to Rhodes and the trial court.   Rhodes
          then submitted supplemental briefing, contending that Erions fees
were  unreasonable  and that the trial court  should  reduce  the
award  under the Rule 82(b)(3) factors.  On October 4, 2006,  the
trial  court  denied Rhodess motion for reconsideration,  finding
that  its award was reasonable given the vigorous prosecution  of
the case and the exposure to the [defendant].
          The parties agree that Rhodess verdict is at least five
percent  less  favorable to her than Erions June  2004  offer  of
$30,000  and  that  Rhodes is therefore liable  to  Erion  for  a
portion  of Erions attorneys fees under Rule 68.  Rhodes contends
that  the  trial court erred in its refusal to reduce  the  award
under  the  Rule  82(b)(3) factors and argues alternatively  that
Rule 68 is unconstitutional.
III. STANDARD OF REVIEW
          We  review  awards  of  attorneys  fees  for  abuse  of
discretion.3   Such  abuse  exists if  the  award  is  arbitrary,
capricious,  manifestly  unreasonable, or improperly  motivated.4
We  interpret  our  civil rules and address constitutionality  de
novo,  adopting  the  rule of law most  persuasive  in  light  of
precedent, policy, and reason.5
IV.  DISCUSSION
     A.   The  Trial  Court  Did  Not  Abuse  Its  Discretion  by
          Declining  To Reduce Erions Rule 68 Award of  Attorneys
          Fees Under Rule 82(b)(3).
          
          The  heart of Rhodess argument on appeal is that  Erion
spent more on her defense than the amount in controversy.  Rhodes
contends  that  doing so made no economic sense and  demonstrated
Erions  intent  to  deter future claimants from  suing  insurers.
Consequently, Rhodes argues, the trial court should have  reduced
the   attorneys  fees  award  assessed  against  her  under  Rule
82(b)(3)(I) or (J).6
          We  note at the outset that whether Erion spent more on
her  defense  than the amount in controversy is not  dispositive.
In  Magill v. Nelbro Packing Co., we initially expressed surprise
that  an attorneys fees award of $172,970.50 to defend a $200,000
controversy  could  be reasonable.7  But we explained  that  [w]e
will  not  overturn  an attorneys fees award solely  because  the
amount of actual fees upon which the award is based exceeds or is
close to the amount in controversy.8  We ultimately affirmed  the
award  in Magill, determining that the circumstances of the  case
justified  it and noting that some responsibility for  the  large
amount  of  fees lies with the plaintiffs, who vigorously  pushed
the case.9
          As  in  Magill, a number of factors support  the  trial
courts  conclusion in this case that the award  was  appropriate.
The  case  took  three years to get to trial  and  was  continued
twice,   both  times  at  Rhodess  request.   Substantial  motion
practice  took  place,  including  a  Daubert10  hearing  on  the
admissibility of expert testimony.  The trial lasted  eight  days
and  featured the testimony of thirteen witnesses, eight of  whom
were experts.
          Rhodes  contends that the most she could have recovered
from  Erion was $112,500  $100,000 from the liability policy plus
          $12,500 in Rule 82 attorneys fees.  But as the trial court
recognized, Rhodes was seeking a million dollar plus verdict from
the jury,  and that was the amount in controversy, not the policy
limit.   Rhodes claims that she planned to seek any  amount  over
$112,500  from  her  own  underinsured  motorist  coverage,  thus
rendering  Erions  defense against any excess award  unnecessary.
Yet Rhodes concedes that Erion could have been found liable for a
large  verdict  in  excess  of her policy  limit,  regardless  of
Rhodess  hypothetical collection strategy:  In  the  event  of  a
$900,000  judgment, Mrs. Rhodes gets $100,000  under  Ms.  Erions
State  Farm  insurance policy, $12,500 in Rule 82 attorney  fees,
prejudgment  interest, and a piece of paper indicating  that  Ms.
Erion  .  . . owes her the balance.  Rhodess assumption that  any
amount over $112,500 would have been uncollectible from Erion  is
flawed  because  nothing in the record suggests  that  Erion  had
insufficient assets to satisfy a verdict in excess of her  policy
limit.   And Erions insurer had a duty to defend her against  the
million dollar plus verdict sought by Rhodes.11
          Rhodes  also  contends  that  Erions  award  should  be
reduced  under Rule 82(b)(3)(K).  Rule 82(b)(3)(K) is a catch-all
clause  that  permits  courts  to  vary  fees  considering  other
equitable  factors  deemed relevant.   Rhodes  argues  that  this
factor  favors reduction because Erions award was simply  unfair,
because  the amount Erion spent on her defense was shameful,  and
because  the  trial courts decision not to apply Rule 82(b)(3)(K)
was  manifestly  unjust.  These contentions fail because,  as  we
concluded above, the award was not unjustified.  The trial  court
explicitly  rejected  reducing the award on  the  basis  of  Rule
82(b)(3)(K), and that rejection was not unreasonable.
          But  this  conclusion does not end our  inquiry.   Rule
82(b)(3)(I) and (J) call upon the court to examine more than just
whether  the  award was reasonable under the circumstances;  they
invite  the court to consider what effect this award may have  on
future  litigants.  Is the Rule 68 award assessed against  Rhodes
so  onerous that it will deter similarly situated litigants  from
the voluntary use of the courts?  Will it mean, as Rhodes argues,
that  future  personal injury claimants are  no  longer  able  to
retain lawyers on contingency fee bases?
          The  result  in  this  case was less  than  ideal  from
Rhodess  perspective.  A jury found that Rhodes was  injured  and
awarded  her  over $18,000 in damages, but her judgment  was  not
only  offset by the fee award, she was also left with  a  $17,411
bill.   We  have expressed concern in the past about  financially
ruinous  fee awards12 and their impact on access to the courts.13
Indeed,  we  considered  a case not unlike  the  one  at  bar  in
Bozarth.14   Bozarth,  a dismissed employee,  brought  an  action
against  his  former  employer claiming that  his  dismissal  was
improper  retaliation  for whistleblowing.15   He  lost  and  was
charged $76,000 in Rule 82 attorneys fees, an award we affirmed.16
In his dissent, Justice Matthews cautioned that [i]f the superior
court is to serve its constitutional purpose as a forum available
to all the people, superior court judges must consider whether an
award  of attorneys fees will impair the constitutional right  of
access to the courts.  In the present case it is evident that  no
          such consideration was given.17  This concern about access to the
courts played a role in the addition of Rule 82(b)(3)(I) in 1993.18
          But  unlike the lower court in Bozarth, the trial court
in  this case did consider whether the award was so onerous as to
impair access to the courts.  It explicitly ruled on the issue on
two  separate occasions  in its order directing Erion to  file  a
response  to  Rhodess motion to reconsider attorneys fees,19  and
again in its order denying Rhodess motion to reconsider attorneys
fees.20   On  both occasions the trial court concluded  that  the
circumstances  of the case justified the award.   Application  of
Rule  82(b)(3)  factors is discretionary, not  mandatory.21   The
trial court received substantial briefing on this issue and twice
concluded  that Rule 82(b)(3) factors did not apply.   The  trial
courts  decision declining to reduce the Rule 68 award under  the
Rule 82(b)(3) factors was not an abuse of discretion.
     B.   Rhodes Waived Her Constitutional Arguments.
          Rhodes  argues that the due process guarantee of access
to  the courts required the trial court to reduce Erions Rule  68
award  under  the Rule 82(b)(3) factors and that [t]he  disparate
treatment  for plaintiffs and defendants under Rule  68  violates
equal  protection and due process.  Although she failed to  brief
these  constitutional arguments before the  trial  court,  Rhodes
contends  that her Rule 82(b)(3)(I) arguments in the trial  court
were sufficient to preserve the constitutional issues for appeal.
Alternatively,  she argues that the trial court  committed  plain
error  by  declining to reduce the award under Rule  82(b)(3)  on
constitutional grounds.
          But  an  argument that the Rule 82(b)(3) factors should
be  applied  to  reduce  an award is not enough  to  preserve  an
appellate  claim that Rule 68 is unconstitutional.22  Rhodes  did
not raise a constitutional argument at the trial court level, and
she failed to include any constitutional arguments in her amended
points   on   appeal.   Rhodes  thus  waived  her  constitutional
arguments.23  And Rhodess plain error argument is unavailing given
that  in  deciding a facial challenge to the statutory  provision
governing  offers of judgment, we decline[d] to expand the  right
of access to prohibit an offer of judgment scheme.24
V.   CONCLUSION
          Because the trial court did not abuse its discretion in
declining  to  reduce Erions award of attorneys fees  under  Rule
82(b)(3),  and because Rhodes waived her constitutional arguments
regarding the award, we AFFIRM the decision of the trial court in
all respects.
_______________________________
     1     Rhodes also made two offers of judgment to Erion   one
for  $100,000, exclusive of interest, Rule 82 attorneys fees, and
allowable  costs,  and another for $100,000, inclusive  of  these
costs.  Erion did not accept these offers.

     2    Rule 68(b) provides, in relevant part, that

               [i]f  the  judgment finally rendered  by
               the  court  is  at least 5 percent  less
               favorable to the offeree than the  offer
               [of  judgment], . . . the offeree . .  .
               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
               as  follows: . . . (2) if the offer  was
               served more than 60 days after the  date
               established  in the pretrial  order  for
               initial disclosures . . . but more  than
               90  days  before  the trial  began,  the
               offeree  shall  pay 50  percent  of  the
               offerors   reasonable  actual  attorneys
               fees.
               
     3    Kellis v. Crites, 20 P.3d 1112, 1113 (Alaska 2001).

     4    Id.

     5     Id. at 1113-14; Sands ex rel. Sands v. Green, 156 P.3d
1130, 1132 (Alaska 2007).

     6     Rule  82(b)(3)(I) permits courts to vary an  award  of
attorneys fees considering the extent to which [the award] may be
so  onerous  to  the  non-prevailing party that  it  would  deter
similarly  situated  litigants from  the  voluntary  use  of  the
courts.   Rule  82(b)(3)(J)  allows  courts  to  vary  an   award
considering  the  extent  to  which  the  fees  incurred  by  the
prevailing  party  suggest  that  they  had  been  influenced  by
considerations apart from the case at bar, such as  a  desire  to
discourage claims by others against the prevailing party  or  its
insurer.

     7    43 P.3d 140, 144 (Alaska 2001).

     8    Id.

     9    Id. at 145.

     10     Daubert  v. Merrell Dow Pharm., Inc.,  509  U.S.  579
(1993);  State v. Coon, 974 P.2d 386 (Alaska 1999) (adopting  the
federal  Daubert  standard for evaluating  the  admissibility  of
scientific evidence and expert testimony).

     11     See,  e.g., Tush v. Pharr, 68 P.3d 1239, 1249 (Alaska
2003)  (The  duty to defend is broader than the duty  to  provide
coverage.).

     12     Reid  v.  Williams, 964 P.2d 453, 462  (Alaska  1998)
(internal quotations omitted).

     13     See, e.g., id.; State v. Native Vill. of Nunapitchuk,
156 P.3d 389, 405-06 (Alaska 2007); Bozarth v. Atl. Richfield Oil
Co.,  833 P.2d 2, 4 n.3 (Alaska 1992); Malvo v. J.C. Penney  Co.,
512 P.2d 575, 587-88 (Alaska 1973).

     14    833 P.2d 2.

     15    Id. at 2-3.

     16    Id. at 3-5.

     17    Id. at 6-7 (Matthews, J., dissenting).

     18     Susanne  DiPietro & Teresa W. Carns, Alaskas  English
Rule:  Attorneys Fee Shifting in Civil Cases, 13 Alaska  L.  Rev.
33, 45 (1996).

     19    The trial court stated that it found no basis to apply
the factors set forth in Civil Rule 82(b)(3)(I)[,] (J) or (K).

     20     In that order, the trial court noted again that there
was  no  basis  to  apply the factors set  forth  in  Civil  Rule
82(b)(3)(I)[,] (J) or (K).

     21     Rule  82(b)(3) (The court may vary an  attorneys  fee
award  . . . if, upon consideration of the factors listed  below,
the court determines a variation is warranted.).

     22    See, e.g., Kellis v. Crites, 20 P.3d at 1114-15.

     23    Fernandes v. Portwine, 56 P.3d 1, 9 n.27 (Alaska 2002);
Wells v. State, 46 P.3d 967, 970 n.7 (Alaska 2002).

     24     Evans  ex  rel. Kutch v. State, 56  P.3d  1046,  1064
(Alaska 2002).

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