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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Sayer v. Bashaw (08/28/2009) sp-6404
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
| PAUL SAYER, | ) |
| ) Supreme Court No. S- 12966 | |
| Appellant, | ) |
| ) Superior Court No. 3KN-05-138 CI | |
| v. | ) |
| ) O P I N I O N | |
| ELIZABETH BASHAW, | ) |
| ) No. 6404 August 28, 2009 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Kenai,
Harold M. Brown and Joel H. Bolger, Judges.
Appearances: Tim Dooley, Law Office of Tim
Dooley, Anchorage, for Appellant. Jeffrey A.
Friedman and Richard H. Friedman, Friedman,
Rubin & White, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, and Winfree, Justices. [Matthews,
Justice, not participating.]
EASTAUGH, Justice.
I. INTRODUCTION
This appeal turns on the validity of a defendants offer
of judgment that required dismissal of the lawsuit, but did not
provide for entry of judgment. The plaintiff did not accept the
defendants pretrial offer to pay $10,111 in exchange for
immediate dismissal with prejudice. The defendant prevailed at
trial, but the superior court denied his motion for enhanced
attorneys fees under Alaska Civil Rule 68. He argues here that
he made a valid offer of judgment. Because a valid offer of
judgment in Alaska must allow for entry of judgment, not merely
dismissal with prejudice, we affirm the order denying defendants
motion for Rule 68 attorneys fees.
II. FACTS AND PROCEEDINGS
In March 2005 Elizabeth Bashaw sued several defendants,
including Dr. Paul Sayer, alleging that she was unlawfully fired
from her position at South Peninsula Hospital.1 On June 10,
2005, Dr. Sayer served a document titled Offer of Judgment on
Bashaws attorney. The document stated that the defendant hereby
makes a Rule 68 offer of judgment by which Paul Sayer will pay
[$10,111] to plaintiff Elizabeth Bashaw and that [t]his offer
contemplates that if it is accepted, Elizabeth Bashaws lawsuit
against Paul Sayer will be immediately dismissed with prejudice.2
Bashaw did not accept the offer. The case went to trial, and the
jury found Dr. Sayer not liable. In May 2007 he filed a motion
asking the superior court to enter judgment for him and to award
him Rule 68 attorneys fees of $74,925. Superior Court Judge
Harold M. Brown denied the motion, holding that [t]he express
language of Rule 68 requires a party to offer to allow judgment
to be entered in the case, and that the offer did not meet Rule
68s requirements because it did not allow judgment to be taken
for or against either party. When final judgment was later
entered against Bashaw, Superior Court Judge Joel H. Bolger
awarded Dr. Sayer $31,498.20 in partial attorneys fees under
Alaska Civil Rule 82.3
Dr. Sayer appeals the denial of Rule 68 fees.
III. DISCUSSION
A. Standard of Review
We use our independent judgment in reviewing questions
of law, including the interpretation of Rule 68.4 We will adopt
the rule of law that is most persuasive in light of precedent,
policy, and reason.5
B. Whether the Offer Was a Valid Offer of Judgment Under
Rule 68
Rule 68(a) allows either party to serve upon the
adverse party an offer to allow judgment to be entered in
complete satisfaction of the claim.6 (Emphasis added.) If the
offeree does not accept, and the final judgment is at least five
percent (if there is a single defendant) or ten percent (if there
are multiple defendants) less favorable to the offeree than the
offer, the offeree shall pay [a specified percentage of] all
costs [and] reasonable actual attorneys fees incurred by the
offeror from the date the offer was made.7
The issue here is whether the offer was a valid offer
of judgment under Rule 68. The superior court held that it was
not, because [t]he express language of Rule 68 requires a party
to offer to allow judgment to be entered in the case and the
offer did not offer to allow judgment to be taken for or against
either party. Instead, the offer allowed only for dismissal of
the lawsuit with prejudice. The superior court therefore denied
Dr. Sayers request for Rule 68 fees, but awarded him partial
attorneys fees under Rule 82.
Dr. Sayer argues that the superior court erred in
requiring that a Rule 68 offer of judgment must offer to have
judgment taken for or against a party. Bashaw responds that the
superior court correctly interpreted the rule as revised by us in
1987 to incorporate prior legislative amendments.8
In choosing the language an offer to allow judgment to
be entered, the legislature appears to have intended for parties
to choose between forgoing the protections of Rule 68 attorneys
fees and offering to allow judgment to be entered.9 Unlike some
other states rules that explicitly allow cost-shifting after the
offeror makes an offer of settlement or compromise,10 the rule
allows cost-shifting only after the offeror makes an offer of
judgment.11 Since Rule 68 was first adopted in 1959, it has
presupposed an offer of judgment.
Dr. Sayer advances policy arguments that favor a
broader interpretation of Alaskas rule. He correctly notes that
we have stated that Rule 68 has the purpose of encouraging
settlements and avoiding protracted litigation.12 He argues that
as a physician, his reputation, malpractice insurance rates, and
practice would be negatively impacted by having a judgment
entered against him on the record. He argues that requiring
parties in his position to offer to have judgment entered against
themselves in order to be eligible for Rule 68s enhanced cost-
shifting might deter them from offering to settle at all. And at
least one state, California, considers offers for dismissal with
prejudice in lieu of entry of judgment to be valid for the
purpose of its offer of judgment rule.13
These considerations might be relevant to the
legislature if it were considering whether to amend the statute
that presently specifies the text of our rule. But we hold that
the plain language of the existing statute and rule requires an
offeror to make an offer that allows for entry of judgment. We
also hold that a dismissal with prejudice is not a judgment for
purposes of Rule 68. We will not rewrite textually clear rules
of procedure to advance the broad, abstract goals arguably
attributed to those rules. Not all offers of settlement satisfy
Rule 68.14 Only offers to allow judgment to be entered can
satisfy Rule 68.
Because the offer did not offer to allow judgment to be
entered, it was not a valid offer under Rule 68. Dr. Sayers
offer reflected his unwillingness to have judgment entered
against him. He was entitled to make that choice, but he is not
entitled to reap the benefits of Rule 68 without subjecting
himself to its detriments.
In Haberkorn v. Chrysler Corp. (Two Cases), the
Michigan Supreme Court similarly interpreted its offer of
judgment rule, Michigan Court Rule 2.405.15 The court held that
an offer of judgment was defective because it expressed a
willingness to settle and to bring an end to the case, but not to
stipulate to the entry of judgment in a sum certain, as required
by the rule.16 The court reasoned that the plain language of Rule
2.405 required entry of judgment, not merely dismissal of the
case with prejudice, because dismissal would bring an end to the
proceedings but not an adjudication on the merits.17
Dr. Sayer makes a number of additional arguments. He
first asserts that the superior court erroneously required that a
valid offer allow for entry of judgment for or against either
party. Bashaw responds that the superior court did not require
any specific phrasing. Because we hold that a valid offer of
judgment must allow judgment to be entered, and because the offer
called only for dismissal with prejudice and not entry of
judgment, the offer was not a valid Rule 68 offer of judgment.
We therefore do not need to determine whether a valid offer of
judgment must explicitly allow for judgment to be taken for or
against a party.
Second, he argues that the superior court incorrectly
relied on Alaska case law interpreting an older version of Rule
68, which specified that the offeror must allow judgment to be
taken against him.18 Bashaw responds that the cases on which the
superior court relied interpreted the most recent version of the
rule.19 Dr. Sayers argument is not persuasive because the
superior court does not appear to have relied on any cases
interpreting an older version of Rule 68.
Third, Dr. Sayer contends that because Federal Rule of
Civil Procedure 68 materially differs from Alaskas rule,20 Bashaw
mistakenly relied below on case law and treatises construing the
federal rule.21 Bashaw responds that the federal rule is
analogous because it also requires an offer to allow judgment to
be entered. We have considered interpretations of the analogous
federal rule in interpreting Rule 68.22 But the federal rule
required that an offer of judgment offer to allow judgment to be
taken against the defending party,23 whereas our rule only
requires that an offer allow judgment to be entered.24 Federal
cases and treatises interpreting the federal rule are therefore
not dispositive here. The federal authority can nonetheless be
instructive to the extent the federal rule, like Alaskas rule,
requires that the offer offer to allow judgment to be taken.
Fourth, he argues that requiring an offer of judgment
to allow judgment to be taken against a party would lead to silly
results and would serve no useful purpose. For example, a
plaintiff or defendant might offer[] to have judgment entered
against plaintiff, if defendant will pay $10,000 to plaintiff.
(Emphasis added.) Bashaw responds that [t]he fact that creative
attorneys could propose offers that are difficult, if not
impossible, to understand does not suggest that the plain meaning
of Rule 68 should be ignored. We are unpersuaded that
interpreting Rule 68s requirement of an offer of judgment to
actually require an offer for entry of a judgment would
necessarily lead to silly results.25 And we have detailed the
useful purposes of such a requirement above.
Fifth, he argues that seeking dismissal with prejudice
did not render the offer invalid under Rule 68. Bashaw responds
that to be valid the offer must also contain a provision offering
judgment. Although the inclusion of nonmonetary terms does not
necessarily invalidate an otherwise valid offer of judgment,26 a
valid offer must also include an offer to allow judgment to be
entered.
Sixth, he argues that because an offer of judgment may
have to be enforced by the offeree if the offeror does not pay,
an offer for dismissal with prejudice is more favorable to the
offeree. Bashaw responds that because a judgment can be directly
enforced without filing a new proceeding, a judgment is more
favorable to the offeree than an accepted offer followed by a
dismissal with prejudice. She also argues that this was not a
basis for the superior courts ruling, and that there is risk of
noncompliance and cumbersome post-agreement litigation with both
methods. Dr. Sayers argument is unpersuasive because ease of
enforcement is irrelevant to determining an offers legal validity
under Rule 68, although we note that a judgment may be preferable
as a policy matter because it is more easily enforced.
Seventh, he argues that because the offer he made would
have extinguished all of Bashaws claims, it was an offer of
judgment.27 Bashaw responds that even though Dr. Sayers offer
would have extinguished all of her claims had she accepted it, it
was still not an offer of judgment for purposes of Rule 68. We
hold that although extinguishment of all claims is a necessary
component of a valid offer of judgment,28 it is insufficient to
render valid an otherwise invalid offer.
Eighth, he argues that [a] provision that the
plaintiffs case will be dismissed with prejudice is routinely
found in offers of judgment. Bashaw argues that the cases cited
by Dr. Sayer do not support his proposition. The offers in the
two cases appear to have contained provisions offering to allow
judgment to be entered in addition to the provisions allowing for
dismissal with prejudice.29 They therefore do not support the
proposition for which he cites them.
Ninth, he argues that a dismissal with prejudice is a
type of judgment.30 Bashaw responds that although a dismissal
with prejudice may be considered a judgment in other contexts, it
is not necessarily a judgment for the purpose of Rule 68. As
discussed above, dismissal with prejudice is not a judgment for
the purpose of Rule 68; the cases Dr. Sayer cites are not to the
contrary.
Finally, he argues that although [t]here is very little
in the legislative record, the legislative history supports a
broader interpretation of the rule because legislators referred
to the rule as both an Offer of Settlement and an Offer of
Judgment rule. Bashaw responds that [t]he available legislative
history sheds little light on legislative intent. The
legislative history is not sufficiently clear or on-point to
contradict the plain meaning of the 1980 statute that was the
source of the relevant words in Rule 68.31
Bashaw contingently argues that if we hold that the
offer was a valid offer of judgment, we should consider her
arguments that the offer was unreasonable or made in bad faith.
Because we conclude that the offer was not a valid offer of
judgment, we do not need to address these contentions.
IV. CONCLUSION
The superior courts order denying Rule 68 attorneys
fees is AFFIRMED.
_______________________________
1 Bashaws complaint alleged that she was fired from her
position as a surgical services manager at South Peninsula
Hospital in violation of the Alaska Whistleblower Act. AS
39.90.100 et seq. Bashaw later filed amended complaints
containing additional allegations, including an allegation that
Dr. Sayer intentionally interfered with her contract with the
hospital.
2 The text of the offer stated:
OFFER OF JUDGMENT
1. Defendant Dr. Paul Sayer through
his lawyer Tim Dooley of the Law Office of
Tim Dooley hereby makes a Rule 68 offer of
judgment by which Paul Sayer will pay to
plaintiff Elizabeth Bashaw the amount of
$10,111.00 inclusive of costs, interest, and
attorney fees.
2. This offer contemplates that if it
is accepted, Elizabeth Bashaws lawsuit
against Paul Sayer will be immediately
dismissed with prejudice.
3. If this offer of judgment is not
beaten by Elizabeth Bashaw, Paul Sayer will
request that Ms. Bashaw pay the statutory 75%
of reasonable actual attorney fees and 100%
of his costs under AS 09.30.065(a)(1).
3 Dr. Sayer had also requested $20,115 in Alaska Civil
Rule 79 costs and was awarded costs of $16,670.50.
4 Mackie v. Chizmar, 965 P.2d 1202, 1204 (Alaska 1998)
(The interpretation of Rule 68 is a question of law that we
review de novo . . . .); see also Lowell v. Hayes, 117 P.3d 745,
750 (Alaska 2005) (Whether Rule 68 is applicable to a given case
is a question of law. (citing Van Deusen v. Seavey, 53 P.3d 596,
603-04 (Alaska 2002))).
5 Mackie, 965 P.2d at 1204 (internal quotation marks
omitted) (quoting Jaso v. McCarthy, 923 P.2d 795, 801 (Alaska
1996)).
6 Rule 68(a), as applied to cases filed on or after
August 7, 1997, reads in pertinent part:
(a) At any time more than 10 days
before the trial begins, either the party
making a claim or the party defending against
a claim may serve upon the adverse party an
offer to allow judgment to be entered in
complete satisfaction of the claim for the
money or property or to the effect specified
in the offer, with costs then accrued.
. . . .
7 Alaska R. Civ. P. 68(b). Rule 68(b) allows the offeror
to recover seventy-five, fifty, or thirty percent of the offerors
reasonable actual post-offer attorneys fees, depending on when
the offeror made the offer. The parties appear to agree that the
offer was made no later than 60 days after the date established
in the pretrial order for initial disclosures required by Civil
Rule 26, so if the offer was a valid offer of judgment, Bashaw
would be required by Rule 68(b)(1) to pay Dr. Sayer seventy-five
percent of his reasonable actual attorneys fees incurred after he
made the offer. Alaska R. Civ. P. 68(b)(1).
8 As adopted in 1959, former Rule 68 stated in pertinent
part a party defending against a claim may serve upon the adverse
party an offer to allow judgment to be taken against him. Alaska
Supreme Court Order No. 5 (October 9, 1959) (emphasis added). In
1980 the legislature added a new subsection to AS 45.45.010 (a
statute relating to offers of judgment) that read in pertinent
part either the party making a claim or the party defending
against a claim may serve upon the adverse party an offer to
allow judgment to be entered. Ch. 107, 3, SLA 1980 (emphasis
added). This appears to be the first time the to be entered
language appears in the statutes or rules pertaining to offers of
judgment. The 1980 act stated that it was not amending Rule 68.
Ch. 107, 5, SLA 1980. In 1981 the legislature moved the
subsection of AS 45.45.010 quoted above from Title 45 to Title 9.
Ch. 48, 1, SLA 1981. In 1986 the legislature amended the
language of AS 09.30.065 in a way not relevant to the issues in
this case. See ch. 139, 2, SLA 1986. In 1987 we amended Rule
68 to incorporate the to be entered language from AS 09.30.065.
Alaska Supreme Court Order No. 818 (April 22, 1987). Later
amendments to the statute and rule in 1997 and to the rule in
2005 are not relevant to the issues in this case. See ch. 26,
16-17, 52, SLA 1997; Alaska Supreme Court Order No. 1281 (August
7, 1997); Alaska Supreme Court Order No. 1565 (February 1, 2005).
9 AS 09.30.065; Alaska R. Civ. P. 68.
10 See, e.g., Colo. Rev. Stat. Ann. 13-17-202 (2008) (an
offer of settlement); Conn. Gen. Stat. Ann. 52-192a (2008) (a
written offer of compromise . . . offering to settle the claim
underlying the action); Fla. R. Civ. P. 1.442 (a proposal for
settlement); N.D. R. Civ. P. 68(a) (an offer. . . to enter into a
stipulation dismissing the claim); Tex. R. Civ. P 167.1-7
(settlement offer); Utah R. Civ. P. 68 (an offer); Wyo. R. Civ.
P. 68 (an offer . . . to settle a claim).
11 AS 09.30.065; Alaska R. Civ. P. 68.
12 Cook Schuhmann & Groseclose, Inc. v. Brown & Root,
Inc., 116 P.3d 592, 598 (Alaska 2005); see also Fernandes v.
Portwine, 56 P.3d 1, 9 (Alaska 2002).
13 Californias offer of judgment rule was amended in 1997.
The pre-amendment rule was similar to ours, stating that any
party may serve an offer in writing upon any other party to the
action to allow judgment to be taken. Cal. Code Civ. P. 998
(amended 1997). The current version allows offers to allow
judgment to be taken or an award to be entered. Cal. Code Civ.
P. 998. California courts have held that an offer of judgment
is valid under either the pre- or post-amendment version of the
rule if it calls for dismissal with prejudice in lieu of entry of
judgment. Peterson v. John Crane, Inc., 65 Cal. Rptr. 3d 185,
189 (Cal. App. 2007) (holding, under post-amendment version of
rule, that [a]lthough section 998 refers to entry of a judgment
or award, an offer that provides for the plaintiffs dismissal of
the action with prejudice is a valid form of offer under section
998); American Airlines, Inc. v. Sheppard, Mullin, Richter &
Hampton, 117 Cal. Rptr. 2d 685, 713-14 (Cal. App. 2002) (holding
that offer calling for dismissal with prejudice in lieu of entry
of judgment was valid under pre-amendment offer of judgment
rule); Goodstein v. Bank of San Pedro, 32 Cal. Rptr. 2d 740, 743-
44 (Cal. App. 1994) (defining judgment for purposes of pre-
amendment rule as any final disposition of lawsuit).
14 Myers v. Snow White Cleaners & Linen Supply, Inc., 770
P.2d 750, 752-53 (Alaska 1989) (holding that only settlement
offers that are sufficiently definite, irrevocable for ten days,
and made more than ten days before trial offer protections
required to earn fee award under Rule 68).
15 Haberkorn v. Chrysler Corp. (Two Cases), 533 N.W.2d
373, 378 (Mich. 1995). Four states currently have offer of
judgment rules similar to ours. Ariz. R. Civ. P. 68 (stating any
party may serve upon any other party an offer to allow judgment
to be entered in the action); Mich. R. Civ. P. 2.405(B) (stating
a party may serve on the adverse party a written offer to
stipulate to the entry of a judgment); Minn. R. Civ. P. 68.01(a)
(stating any party may serve upon an adverse party
a[n] . . . offer to allow judgment to be entered); N.M. R. Civ.
P. 1-068(A) (stating any party may serve upon any adverse party
an offer to allow an appropriate judgment to be entered). But
only Michigan has addressed the issue whether a valid offer of
judgment must allow judgment to be entered.
16 Haberkorn, 533 N.W.2d at 386.
17 Id. at 385-86.
18 Former Alaska R. Civ. P. 68(a), amended by Alaska
Supreme Court Order No. 818 (April 22, 1987).
19 The superior court cited Smith v. CSK Auto, Inc., 132
P.3d 818, 820 (Alaska 2006), and Lowell v. Hayes, 117 P.3d 745,
760 (Alaska 2005), both of which were decided under the new rule.
20 Fed. R. Civ. P. 68 (amended 2007). As of December 1,
2007, the federal rule no longer requires that judgment be taken
against the defending party. Fed. R. Civ. P. 68 & advisory
committees notes.
21 See, e.g., Marek v. Chesny, 473 U.S. 1, 6 (1985); 12
Charles Alan Wright, Arthur R. Miller & Richard L. Marcus,
Federal Practice and Procedure 3002 (2d ed. 1997).
22 See, e.g., Lowell, 117 P.3d at 760 n.75 (citing federal
cases and treatise to support statement that the general rule is
that a Rule 68 settlement offer may include language that the
offer is not an admission of liability); Mackie v. Chizmar, 965
P.2d 1202, 1204-05 (Alaska 1998) (noting that our rule is based
on federal rule, consider[ing] . . . the scope of Federal Rule
68, and quoting from sources discussing federal rule); Rules v.
Sturn, 661 P.2d 615, 618 (Alaska 1983) (quoting from sources
discussing federal rule).
23 Fed. R. Civ. P. 68 (amended 2007).
24 Alaska R. Civ. P. 68(a).
25 For example, we have approved the use of a Rule 68
offer of judgment form containing the following sample language:
Defendant, pursuant to Civil Rule 68, hereby offers to allow
entry of judgment for plaintiff . . . . Farnsworth v. Steiner,
601 P.2d 266, 269 & n.3 (Alaska 1979).
26 Cook Schuhmann & Groseclose v. Brown & Root, 116 P.3d
592, 599 (Alaska 2005) (holding valid offer of judgment
containing unambiguous and unconditional nonmonetary provisions);
see also Lowell, 117 P.3d at 760 (holding that valid offer of
judgment may include language that offer is not admission of
liability); Jaso v. McCarthy, 923 P.2d 795, 801-02 (Alaska 1996)
(holding that valid offer of judgment may require party to
satisfy liens); Grow v. Ruggles, 860 P.2d 1225, 1227-28 (Alaska
1993) (holding that valid offer of judgment may state that party
is responsible for liens).
27 Dr. Sayer cites Fernandes v. Portwine, 56 P.3d 1, 9
(Alaska 2002), for the proposition that a valid offer of judgment
must be comprehensive and must settle all claims.
28 See Alaska R. Civ. P. 68(a) (requiring that valid offer
complete[ly] satisf[y] claim).
29 See Fernandes, 56 P.3d at 8 (offering to have judgment
entered in favor of plaintiffs, but also providing for dismissal
of counterclaims); Gossett v. Era Meyeres Real Estate, 787 P.2d
1025, 1025 (Alaska 1990) (noting that [t]he offer and acceptance
were filed and a final judgment was entered as follows: judgment
is hereby entered in favor of plaintiffs Perry Gossett and
Marilyn M. Gossett in the amount of $100,000 ).
30 Dr. Sayer cites in support Smith v. CSK Auto, Inc., 132
P.3d 818, 820 (Alaska 2006) (holding that dismissal with
prejudice is judgment for purposes of res judicata), and
Albritton v. Larsons Estate, 428 P.2d 379, 382 (Alaska 1967)
(holding that dismissal with prejudice is judgment under old
definition from former Rule 54(d)).
31 Alaska Natl Ins. Co. v. Northwest Cedar Structures,
Inc., 153 P.3d 336, 339 (Alaska 2007) (stating that we consider
language, purpose, and legislative history in interpreting
statute, and that [i]n order to interpret a statute contrary to
its plain meaning, the plainer the language, the more convincing
contrary legislative history must be (internal quotation marks
omitted) (citing In re Estate of Maldonado, 117 P.3d 720, 725
(Alaska 2005); Alderman v. Iditarod Props., Inc., 32 P.3d 373,
393 (Alaska 2001))).
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