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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Williams v. GEICO (1/25/2013) sp-6746

Williams v. GEICO (1/25/2013) sp-6746

        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, email 

        corrections@appellate.courts.state.ak.us. 



                THE SUPREME COURT OF THE STATE OF ALASKA 



CAROLINE WILLIAMS, personally                  ) 

and as Personal Representative of              ) 

the ESTATE OF ROBERT                           )       Supreme Court No. S-14089 

SHAPSNIKOFF and as assignee of                 ) 

ALYA LANDT and INNOCENT                        )       Superior Court No. 3AN-04-09429 CI 

DUSHKIN; et al.,                               ) 

                                               )       O P I N I O N 

                       Appellants,             ) 

                                               )       No. 6746 - January 25, 2013 

        v.                                     ) 

                                               ) 

GEICO CASUALTY CO., d/b/a                      ) 

GEICO,                                         ) 

                                               ) 

                       Appellee.               ) 

                                               ) 



                Appeal from the Superior Court of the State of Alaska, Third 

                Judicial District, Anchorage, Sharon Gleason, Judge. 



                Appearances:      Phillip   Paul   Weidner     and   Michael    Cohn, 

                Weidner   &   Associates,   APC,   Anchorage,   for   Appellants. 

                Rebecca J. Hozubin and Jim C. Wilkson, Wilkerson Hozubin, 

                Anchorage, for Appellee. 



                Before:     Carpeneti,     Chief    Justice,  Fabe,    Winfree,    and 

                Stowers, Justices. 



                CARPENETI, Chief Justice. 


----------------------- Page 2-----------------------

I.      INTRODUCTION
 



                This appeal arises from a declaratory action filed by an insurer to clarify the 



terms of its duties under a policy. The underlying tort action resulted from a car accident 



in which the insured, while driving a rental truck, hit a person who was lying in the 



middle of the road.      Both the driver and the person struck were intoxicated, as was a 



passenger in the truck.   The person who was struck died from his injuries.  The victim's 



estate and the survivors sued.  The insurance company several times offered to settle the 



case against both   the driver and the passenger (who may have faced liability for his 



actions after the accident) for   policy limits.        These offers were rejected.        The estate 



offered to settle for the release of the named insured only, but the insurer rejected that 



offer.  The occupants of the vehicle later settled with the estate, confessing judgment for 



about $4 million each. 



                After being unable to reach settlement, the insurer filed a declaratory action 



to clarify its duties under the policy and resolve issues of who was driving the vehicle, 



the   number   of   occurrences,   and   possible   breaches   of   the   insurance   contract   by   the 



insureds. The insureds assigned their claims against   the   insurer to the estate, which 



answered and counterclaimed for breach of contract and bad faith. The insurer prevailed 



on nearly all issues. The personal representative of the estate, for herself and as assignee 



of the insureds, appeals.   Because we find that the insurer did not breach its duties to the 



insured, we affirm the decision of the superior court. 



II.     FACTS AND PROCEEDINGS 



        A.      Facts 



                1.      Underlying facts 



                On the morning of September 3, 2000, Alya Landt and Innocent Dushkin 



were   in   a   rented   truck. Both   were   heavily   intoxicated,   Landt   with   a   blood   alcohol 



content in the range of .16 to .27 percent and Dushkin with a .17 percent blood alcohol 



                                                  -2-                                            6746
 


----------------------- Page 3-----------------------

content. Landt was driving the truck.1        Robert Shapsnikoff was also intoxicated and was 



lying in the middle of the road.       The vehicle ran him over. 



                After running Shapsnikoff over, Landt stopped the truck and Dushkin got 



out to check on him.  When Dushkin got to his side, Shapsnikoff was gasping for breath 



but did not say anything or respond to Dushkin.            According to Landt, Shapsnikoff was 



making noises "like no normal person makes."              According to Dushkin, Landt said she 



"didn't   need   to   be   in   any   trouble   with   the   cops." Landt   and   Dushkin   then   picked 



Shapsnikoff up and put him in the truck.             Dushkin stated they did that because they 



thought he was still breathing.        Dushkin attempted to find a heartbeat but could not. 



They drove Shapsnikoff to his apartment complex (the parties appear to have known 



each other socially) and then took him out of the truck and applied CPR.  Finally, Landt 



called for assistance. 



                Shapsnikoff suffered mortal injuries as a result of the accident. The autopsy 



revealed "numerous blunt force crushing injuries consistent with . . . having been run 



over by a motor vehicle."  Shapsnikoff's aorta was nearly completely separated from the 



aortic   ligament,   which   would   have   caused   massive   internal   bleeding.      The   medical 



examiner believed that, given the injuries, Shapsnikoff lived "seconds to minutes (more 



likely seconds to two to three minutes)" after the blow.               The medical examiner also 



believed that loading him into the truck did not increase his injuries or hasten his death. 



                Landt was criminally charged for her role in the incident.               The medical 



examiner testified to the grand jury that Shapsnikoff was unlikely to have lived more 



than a few minutes after being struck.   He also testified that at or near the time of death 



a person may breathe in a unusual manner, called agonal breathing, either very deep or 



        1       Although the pleadings in the underlying tort case indicated that it was 



unclear who was driving the vehicle, both parties (and the superior court) now agree that 

Landt was driving. 



                                                  -3-                                               6746 


----------------------- Page 4-----------------------

very shallow, and that it would sound unusual to a lay person.                 In the criminal trial he 



testified that Shapsnikoff could have survived at most ten minutes. Landt was ultimately 



convicted      for  tampering     with   evidence    and   driving    while   intoxicated     but  not   for 



criminally negligent homicide or manslaughter. 



                 In   August     2002,    the  appellants,    Shapsnikoff's      estate   and   survivors 



(Shapsnikoffs),       filed    a  civil  suit  against   Landt,   Dushkin,     and   other   entities   and 



individuals. Landt and Dushkin ultimately confessed judgment for $4,678,177.42 each. 



                 2.	     Insurance policy 



                 Landt had a vehicle insurance policy with GEICO Casualty Co. The policy 



had a liability limit of $50,000 per person and $100,000 per occurrence (plus add-ons 



consisting      of   costs,   attorney's    fees,    and   interest).    The      policy   also    had   an 



uninsured/underinsured          coverage     limit   of  $50,000     per  person     and   $100,000     per 



occurrence.     The insurance covered the following for a non-owned vehicle: 



                 1. 	    [Insured] and [Insured's] relatives . . . . 

                 2.	     A   person   or   organization,   not   owning   or   hiring   the 

                         auto,   regarding   his   .   .   .   liability   because   of   acts   or 

                         omissions of an insured under 1 above. 



                 The    limits  of   liability  stated  in  the   declarations    are   our 

                 maximum obligations regardless of the number of insureds 

                 involved in the occurrence. 



                 GEICO   defended   Landt   as   the   named   insured.        GEICO   also   agreed   to 



provide Dushkin with a defense under a reservation of rights in the event that Dushkin 



was not an insured under the policy or that intentional acts led to the deceased's injury. 



The agreement to defend was based on the allegations that either Dushkin or Landt had 



been driving. 



                 After Landt and Dushkin confessed judgment, they assigned their rights 



against GEICO to the Shapsnikoffs. 



                                                    -4-	                                             6746
 


----------------------- Page 5-----------------------

                3.      Settlement offers 



                Throughout the pre-lawsuit period and the underlying tort proceedings, 



GEICO made several attempts to settle the case for the $50,000 policy limit.                 GEICO 



first learned of the incident from Landt's attorney on September 8, 2000.                At that time, 



GEICO was informed that Landt had found Shapsnikoff and driven him home.                        After 



learning that Landt had been criminally charged, GEICO claims representative Michael 



Lina sought and was granted authority to resolve any claim Shapsnikoff's estate may 



have had against Landt. He was authorized to offer $50,000 plus add-ons, the maximum 



amount per claimant per occurrence.           GEICO contacted Phillip Paul Weidner's office, 



the law firm representing the Shapsnikoffs, several times before the complaint was filed, 



in an attempt to settle the claim. 



                After the underlying complaint was filed, on May 7, 2003, the court was 



advised that GEICO was willing to settle for the policy limit of $50,000.                 In January 



2004,    Daniel    Quinn,    Dushkin's     attorney,   notified   the  Shapsnikoffs     that  he   was 



authorized by GEICO to settle the claims against Dushkin and Landt for a single $50,000 



per person limit plus add-ons. In March 2004, David Carter, Landt's attorney, reiterated 



the offer to settle for $50,000 plus add-ons in return for a release of claims against Landt 



and   Dushkin.    On   July   1,   2004,   there   was   an   unsuccessful mediation,   in   which   the 



Shapsnikoffs demanded $100,000 (in the form of two $50,000 policy limits) plus add- 



ons plus $500,000 from both Landt and Dushkin. 



                After    the  failed   mediation,    Weidner     sent  identical   but   independent 



settlement demands to Dushkin and Landt (via GEICO) for the "true full policy limit 



proceeds" and 95% of the uninsured/underinsured benefits ($1 million). GEICO rejected 



any settlement demand that exceeded the $50,000 plus add-ons offer it had previously 



made.  GEICO also filed a declaratory action (from which this appeal arises) to resolve 



its rights and duties under the policy.       In October 2004, GEICO again offered to settle 



                                                  -5-                                           6746
 


----------------------- Page 6-----------------------

for   $50,000   plus   add-ons,   while   reserving   some   of   the   claims   for   resolution   in   the 



declaratory action.     This offer was not accepted. 



                On December 13, 2004, Weidner sent independent and identical settlement 



demands to Landt and Dushkin expressing a willingness to settle for the full policy 



limits, $50,000 plus applicable add-ons to be determined by the declaratory judgment. 



GEICO requested clarification of the total amount required to settle all claims against 



Landt and Dushkin.        GEICO also reiterated its standing offer of $50,000 plus add-ons. 



Weidner once again sent independent but identical letters to Dushkin and Landt, this time 



stating that GEICO's response was a bad faith rejection of a settlement offer as to both 



Dushkin      and   Landt.   In   the   letters  he  renewed     the  offer  from   December      13   or 



alternatively offered to accept $112,500 total for the release of all claims against Dushkin 



and Landt; he also requested an acknowledgment from GEICO that payment would 



"trigger any UIM [Uninsured motorist] coverage." GEICO renewed its offer of $50,000 



plus add-ons in exchange for the release of Landt and Dushkin. 



                On December 24, 2004, Weidner sent letters to Sam Fortier and Marc June 



(Landt's and Dushkin's personal attorneys) with the proposal that Landt and Dushkin 



confess judgment of around $10 million each.             On December 31, 2004, Weidner sent a 



similar   letter   to   David   Carter   and   Daniel   Quinn. In   response   GEICO   amended   its 



complaint   in   the   declaratory   action   to  request   a   ruling   that   if   Landt   and   Dushkin 



confessed judgment it would constitute a breach of the insurance contract and there 



would be no insurance coverage. 



                In October 2006, Weidner, Carter, and Quinn filed a stipulation for entry 



of judgment.     Landt and Dushkin each confessed judgment for              $4,678,177.42. 



        B.      Proceedings 



                GEICO filed a declaratory action in July 2004, seeking a declaration of its 



rights and duties.     GEICO also filed several amended complaints corresponding to the 



                                                  -6-                                            6746
 


----------------------- Page 7-----------------------

Shapsnikoffs' evolving theories in the underlying case.             GEICO sought the following 



rulings:  (1) if Landt or Dushkin entered into a confession of judgment they would be in 



breach of the insurance contract and there would be no coverage; (2) entry of an order 



as to who was driving the car at the time of the accident; (3) if Dushkin was driving the 



car there was no available coverage; (4) there was no second liability limit available to 



settle the claims (i.e., no second occurrence); (5) there was no underinsured coverage 



available; (6) the amount owed, if any; and (7) attorney's fees.  The Shapsnikoffs filed 



an answer and a counterclaim alleging that GEICO had breached the insurance contract 



and was acting in bad faith both by refusing to offer a settlement at policy limits to both 



Landt and Dushkin and by filing the declaratory action. 



                The   superior   court   resolved   most   of   GEICO's   requests   in   its   favor   on 



summary judgment, "leaving the question of whether there was a second occurrence that 



could have been covered under the terms of the policy" unresolved.                    After trial, the 



superior court concluded that there was not a second occurrence, that GEICO had a 



reasonable basis to believe that there was not a second occurrence and so did not act in 



bad faith in seeking the declaratory action, and that GEICO did not breach the insurance 



contract when it failed to offer a second $50,000 policy limit settlement for pain and 



suffering incurred by Shapsnikoff when being loaded into the truck.  Therefore, it found 



that Landt and Dushkin were in unexcused breach of the insurance contract when they 



confessed judgment.       GEICO, as the prevailing party, was awarded attorney's fees. 



                The Shapsnikoffs appeal, arguing that the superior court erroneously (1) 



concluded that GEICO did not breach its duty to Landt and Dushkin; (2) concluded that 



there was no second occurrence; (3) concluded that there was not a substantial likelihood 



of a verdict in excess of policy limits; (4) found Landt and Dushkin to be in material 



breach when they confessed to judgment; (5) adopted GEICO's proposed findings of fact 



and conclusions of law; and (6) awarded attorney's fees to GEICO. 



                                                  -7-                                            6746
 


----------------------- Page 8-----------------------

III.	   STANDARD OF REVIEW 

                We review a trial court's factual findings for clear error.2     We reverse only 



when left with a "definite and firm conviction . . . that a mistake has been made."3            We 



apply our independent judgment to questions of law and interpretation of contracts.4  We 



review the decision to award attorney's fees for abuse of discretion and overturn it only 

where the award is manifestly unreasonable.5 



IV.	    DISCUSSION 



        A.	    The     Superior    Court    Correctly    Concluded      That    GEICO      Did   Not 

               Breach Its Duties When It Offered To Settle For One Policy Limit 

                ($50,000) And The Release Of Both Landt And Dushkin. 



               The Shapsnikoffs make several arguments relating to GEICO's failure to 



offer   or   accept   the   appropriate   settlement. They   suggest   that   GEICO     had   a   duty 



alternatively to offer a $50,000 plus add-on settlement for the release of Landt only or 



to offer two $50,000 settlements for the release of Landt and Dushkin, and that failure 



to do so was a breach of the insurance contract and was in bad faith. 



               It is well settled that an insurer has a duty to offer a full policy settlement 

where there is a substantial likelihood of an adverse verdict in excess of policy limits.6 



        2	     Stewart v. Elliott, 239 P.3d 1236, 1239-40 (Alaska 2010). 



        3      In re Protective Proceedings of W.A. , 193 P.3d 743, 748 (Alaska 2008) 



(quoting Casey v. Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004)). 



        4       Chambers v. Scofield, 247 P.3d 982, 987 (Alaska 2011); State v. Jeffery, 



170 P.3d 226, 229 (Alaska 2007). 



        5      DeNardo v. Cutler , 167 P.3d 674, 677-78 (Alaska 2007) (quoting Marron 



v. Stromstad, 123 P.3d 992, 998 (Alaska 2005)). 



        6      Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin , 828 P.2d 745, 768
 



(Alaska 1992), superseded by statute on other grounds as recognized in Petrolane Inc.
 

                                                                                     (continued...)
 



                                                 -8-	                                         6746
 


----------------------- Page 9-----------------------

Neither party disputes that such a likelihood existed here.             Rather, the issue is how the 



amount and terms of such a settlement relate to GEICO's duty to defend Landt and 



Dushkin. 



                First, the Shapsnikoffs argue that GEICO had no duty to defend Dushkin 



because   he   was   not   an   insured   as   to   the   first   occurrence,   that   is,   the   initial   impact. 



Second, they argue that even if Dushkin were an insured under the policy, GEICO still 



ought to have offered or accepted a settlement that would release Landt even if Dushkin 



was still subject to liability.   GEICO responds that it had a duty to defend Dushkin based 



on the legal theories pled by the Shapsnikoffs.   GEICO maintains that once it agreed to 



defend Dushkin, even if Dushkin were defended under a reservation of rights, it had a 



duty to fully protect Dushkin and could not settle while releasing only Landt. 



                The Shapsnikoffs' first argument is not persuasive.              It is clear from their 



pleadings and over the course of the litigation   that their legal theory was that either 



Dushkin or Landt was driving or that the two acted in concert.                Generally, an insurer's 



duty is determined by the policy, which is interpreted according to the parties' reasonable 



expectations   in   light   of   the   language   of   the   policy   as   a   whole,   as   well   as   extrinsic 

evidence and applicable case law.7         An insurer's duty to defend exists where " 'vagaries 



of law and fact' are sufficient to create the potential that an insured will incur covered 

liability."8  "The potential for coverage may be shown either on the face of the complaint 



        6       (...continued) 



v. Robles , 154 P.3d 1014, 1019-20 (Alaska 2007); Schultz v. Travelers Indem. Co., 754 

P.2d 265, 266-67 (Alaska 1988). 



        7        West v. Umialik Ins. Co., 8 P.3d 1135, 1138 (Alaska 2000). 



        8       Makarka ex rel. Makarka v. Great Am. Ins. Co. , 14 P.3d 964, 969 (Alaska 



2000). 



                                                   -9-                                             6746
 


----------------------- Page 10-----------------------

or through facts the insurer knew or could have reasonably ascertained that would bring 

an otherwise uncovered complaint within the policy's coverage."9 



                The Shapsnikoffs presented a theory under which Dushkin may have been 

an insured - either as a driver or by acting in concert with Landt.10          Given that, GEICO 



acted properly in agreeing to defend Dushkin under a reservation of rights.11  Later, after 



settlement was not forthcoming and the legal theories became more clear, including 



GEICO's duty to defend Dushkin, GEICO properly decided to file a declaratory action 

to resolve the issue of coverage.12 



                Once GEICO agreed to defend Dushkin and Landt, it had a legal duty of 

good faith and fair dealing toward both.13       GEICO made proper settlement offers seeking 



the release of both Landt and Dushkin. 



                The   Shapsnikoffs'   second   argument   -   that   even   if   Dushkin   were   an 



insured under the policy, GEICO had a duty to offer or accept a settlement releasing 



        9       Id. 



        10      The   Shapsnikoffs   also   argue   that   GEICO   could   not   have   believed   that 



Dushkin was insured for the first occurrence because a summary judgment stated that 

Dushkin would not be covered regardless of whether Dushkin was driving.  However, 

this judgment was in the declaratory action where GEICO's duty to defend Dushkin and 

Landt was the exact question put to the court.  The court there decided that Dushkin was 

not covered as to the first occurrence. This has no bearing on GEICO's earlier actions 

in defending Dushkin.   Further, there was still a question of whether Dushkin was liable 

for the alleged second occurrence. 



        11      See CHI of Alaska, Inc. v. Emp'rs Reinsurance Corp., 844 P.2d 1113, 1115- 



16 (Alaska 1993) ("The insurer can preserve its coverage defense and fulfill its duty to 

defend by defending under a reservation of rights to later disclaim coverage if liability 

is attributable to the excluded theory."). 



        12      See Bohna, 828 P.2d at 768 n.58. 



        13      See Jackson v. Am. Equity Ins. Co., 90 P.3d 136, 142 (Alaska 2004). 



                                                 -10-                                           6746
 


----------------------- Page 11-----------------------

Landt even if doing so left Dushkin liable - concerns an unsettled area of law. We have 



not    directly  addressed     how   an   insurer   should   handle    multiple    insureds.   Other 



jurisdictions have utilized two different approaches.  The first is that the insurer should 



seek to release all insureds, but if it cannot, then it ought to seek to settle on behalf of 

one.14   In these cases, the insurer's obligations to other insureds are extinguished by 



reaching policy limits, even if the other insureds are exposed to personal liability.15           The 



second approach requires an insurer to seek release of all insureds; where a settlement 



cannot be reached the insurer must file a declaratory action to determine what coverage 

is owed.16 



                We are persuaded that the latter approach is the better one.  An insurer has 



a duty to defend its insureds; seeking a settlement to the benefit of one insured while 



leaving others open to liability could cause unfairness.             Further, the latter approach 



avoids a potential bad faith claim by an insured who was unprotected and efficiently 



adjudicates the rights and duties of the insurer and the insured. 



                Under this rule, GEICO did not have a duty to settle for Landt's release 



while leaving Dushkin open to liability and therefore it was not in breach of contract nor 



did it commit the tort of bad faith.       We affirm the superior court's holding that GEICO 



did not breach its duties when it offered to settle for only one policy limit for the release 



of both Landt and Dushkin. 



        14      See, e.g., Travelers Indem. Co. v. Citgo Petroleum Corp., 166 F.3d 761, 



764-69 (5th Cir. 1999). 



        15      Id. 



        16      See, e.g., Lehto v. Allstate Ins. Co. , 36 Cal. Rptr. 2d 814, 820-23 (Cal. App. 



 1994) ("[A]n insurer can breach its duty to its insureds by disbursing the policy proceeds 

to [a] claimant without first obtaining a release of the insureds."). 



                                                 -11-                                           6746
 


----------------------- Page 12-----------------------

        B.	     The Superior Court Did Not Err When It Found That There Was Not 

                A Second Occurrence. 



                The Shapsnikoffs argue that when Shapsnikoff was loaded into the truck 



and moved from the scene there was a second occurrence that triggered GEICO's duty 

to offer a second $50,000 policy limit settlement.17         After trial, the superior court found 



that Shapsnikoff was mortally wounded when run over by the truck, that he was likely 



dead within seconds, and that he was not loaded into the truck within seconds.  The 



superior court further found that even if Shapsnikoff was alive at the time he was loaded 



into   the   truck,   he   was   not   conscious   and   therefore   was   not   harmed   by   the   actions. 



Accordingly, it concluded that there was no second occurrence. 



                The superior court's final findings of facts and conclusions of law resolved 



the genuine dispute of material fact that precluded summary judgment.                   The findings 



were not clearly erroneous.  They were based on ample evidence presented at trial, such 



as the fact that Shapsnikoff was heavily intoxicated when he was hit and was passed out 



in the middle of the road, testimony regarding the limited amount of time he would have 



lived, and testimony that he did not respond after Dushkin arrived at his side. 



                Because the superior court properly concluded that there was no second 



occurrence, we affirm the superior court. 



        17      The Shapsnikoffs argue that the superior court's findings were erroneous 



because they were in conflict with the earlier summary judgment ruling.  This argument 

is without merit.  Simply because there exists a genuine dispute of material fact does not 

guarantee the prevailing party on summary judgment will ultimately prove the disputed 

fact.  See Indus. Commercial Elec., Inc. v. McLees, 101 P.3d 593, 597 (Alaska 2004) 

(citing Alaska Rent-A-Car, Inc. v. Ford Motor Co. , 526 P.2d 1136, 1139 (Alaska 1974)) 

("A party opposing summary judgment need not prove that it will prevail at trial, but 

only that there is a triable issue of fact."). 



                                                 -12-	                                           6746
 


----------------------- Page 13-----------------------

        C.	      The Superior Court Did Not Err In Finding That There Was Not A 

                 Substantial Likelihood Of An Excess Verdict For The Alleged Second 

                 Occurrence. 



                 The Shapsnikoffs argue that GEICO was under a duty to offer a policy 

limits   settlement   as   to   the   second   occurrence.18   There   is   no   dispute   that   where   "a 



plaintiff makes a policy limits demand, the covenant of good faith and fair dealing places 



a duty on an insurer to tender maximum policy limits to settle a plaintiff's demand when 

there is a substantial likelihood of an excess verdict against the insured."19             However, the 



parties dispute the legal standard of substantial likelihood.  The Shapsnikoffs appear to 



argue that a substantial likelihood is a very low standard, "a real or fair likelihood . . . 



and not a frivolous or insubstantial likelihood." GEICO argues that the standard equates 



to probable success on the merits.          The superior court ruled that it meant more than a 



preponderance of the evidence but less than a certainty and found that there was not a 



substantial likelihood of an excess verdict. 

                 In Jackson v. American Equity Insurance Co.20 we explained that the duty 



to offer a full policy limits settlement where there is a substantial likelihood of an excess 



verdict is: 



                 grounded in the insurer's legal duty to act in good faith [and] 

                 . . . .[w]hen there is a great risk  of a recovery beyond the 

                policy limits so that the most reasonable manner of disposing 

                 of the claim is a settlement which can be made within those 



        18       The Shapsnikoffs argue that even the substantial likelihood of a verdict of 



one   dollar   would   trigger   GEICO's   duty   to   offer   a   policy   limits   settlement.  This   is 

incorrect.    An insurer's duty to offer a policy limits settlement occurs when there is a 

substantial likelihood of a verdict in excess of policy limits.  Jackson v. Am. Equity Ins. 

Co., 90 P.3d 136, 142 (Alaska 2004). 



        19	     Id. 



        20       90 P.3d at 142. 



                                                   -13-	                                             6746
 


----------------------- Page 14-----------------------

                limits, a consideration in good faith of the insured's interest 

                requires the insurer to settle the claim.[21] 



                In this case, there was not a great risk that Dushkin and Landt would be 



liable   for  a  verdict   in  excess  of  policy   limits  with   respect   to  the  alleged   second 



occurrence, because it was unlikely that a court would find a second occurrence at all. 



There     was   ample    evidence    to  support   the   conclusion    that  there   was   no   second 



occurrence, including evidence that Shapsnikoff was heavily intoxicated at the time of 



impact and that he died within seconds of being struck.   The possibility that a fact finder 



could find liability in excess of the policy limits does not establish that there was a great 



likelihood not only of the claim's success but also of an award in excess of the policy 



limits.  On the facts of this case, it was reasonable for GEICO to offer the single policy 



limits settlement and to reject any offer not within the single policy limits settlement. 



        D.	     The Superior Court Properly Found Landt And Dushkin In Material 

                Breach When They Confessed Judgment. 



                The next issue raised is whether Landt and Dushkin breached the insurance 



contract by confessing judgment.  It is clear that confessing judgment can be a breach of 

the insurance contract.22     However, the Shapsnikoffs claim that the breach was excused 



because GEICO acted in bad faith. 



        21      Id. (emphasis added) (footnotes and internal quotation marks omitted). 



        22      The GEICO policy requires that "the insured will cooperate and assist us" 



in the investigation, litigation, and settlement of a suit. 



                                                 -14-                                              6746 


----------------------- Page 15-----------------------

                 This issue depends on GEICO's duty to settle.23              If GEICO breached the 



insurance contract by failing to settle when there was a duty to do so, then Landt and 

Dushkin were free to confess  judgment due to GEICO's material breach. 24                     An insurer 



does not breach its duty to settle when it rejects offers that are based on unreasonable 

policy   interpretations.25     GEICO   refused   to   settle   for   more   than   the   policy   limits   it 



deemed were required under the contract of insurance.                In this case, that meant settling 



for $50,000 plus add-ons for the release of both insureds.               GEICO did not have a duty 



to accept any other settlement.         If an insurer is unclear as to its policy requirements it 

should file a declaratory action to resolve the issue - as GEICO did.26                Because GEICO 



        23	      Every     insurance    contract    contains    within   it  the  implied 



                 covenant of good faith and fair dealing, which requires the 

                 contracting parties to avoid behavior that will injure the right 

                 of the other to receive the benefits of the agreement.   As part 

                 of its duty to act in good faith, an insurer has a duty to settle 

                -     that   is,  an  obligation[]    under    a  contract    of  liability 

                 insurance . . . to settle a claim that has been brought against 

                 the insured when it is appropriate to do so. 



Whitney      v.  State  Farm    Mut.    Auto.   Ins.  Co.,  258   P.3d   113,   116-17    (Alaska    2011) 

(footnotes and internal quotation marks omitted). 



        24       "Ordinarily,     an   insured's    breach   of  [a]  cooperation     clause    relieves   a 



prejudiced insurer of liability under the policy."           Grace v. Ins. Co. of N. Am., 944 P.2d 

460, 464 (Alaska 1997) (citing Ariz. Prop. & Cas. Ins. Guar. v. Helme , 735 P.2d 451, 

458-59   (Ariz.   1987)).   Where   an   insurer   has   breached   its   obligations,   however,   the 

insured is entitled to take reasonable steps to protect his or her interests.  See  id. at 464- 

65. 



        25       See Whitney, 258 P.3d at 117-18 (holding that an insurer did not breach its 



duty to settle when it refused claimant's offer which was based on mistaken belief that 

multiple policies meant that coverage could be stacked). 



        26       See Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 



                                                                                           (continued...) 



                                                   -15-	                                             6746
 


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acted properly throughout this case, Landt and Dushkin were in material breach when 



they confessed judgment.          Accordingly, we affirm the superior court.  GEICO was not 



in breach, but Landt and Dushkin, by confessing judgment, breached the cooperation 



clause and thus there is no coverage. 



        E.	     The   Superior   Court   Did   Not   Err   In   Adopting   GEICO's   Proposed 

                Findings Of Fact And Conclusions Of Law. 



                The   Shapsnikoffs   argue   that   the   superior   court   improperly   adopted   the 



finding of facts and conclusions of law that GEICO submitted and that the findings 

themselves were erroneous.27         We disagree with both arguments. 



                The Shapsnikoffs' first argument - that a trial court is precluded from 



adopting proposed findings of fact and conclusions of law - is without merit.  "A trial 



court is . . . entitled to adopt findings and conclusions prepared by counsel, so long as 

they reflect the court's independent view of the weight of the evidence."28               The superior 



court explained its reasoning in adopting GEICO's proposed order: 



        26      (...continued) 



768   n.58   (Alaska   1992),  superseded   by   statute   on   other   grounds   as   recognized   in 

Petrolane Inc. v. Robles , 154 P.3d 1014 (Alaska 2007) (noting that "[i]f [the insurer] was 

genuinely confused as to the [obligations], it should have filed a declaratory action rather 

than exposing [the insured] to personal liability"). The Shapsnikoffs suggest that GEICO 

improperly filed the declaratory action.          This is without merit.      GEICO's actions were 

not in bad faith. 



        27      The Shapsnikoffs also argue that adoption of the proposed findings of fact 



is   a  violation   of   the  U.S.   and   Alaska    Constitutions.      This    argument     is  wholly 

undeveloped and is therefore waived for inadequate briefing.                See Adamson v. Univ. of 

Alaska , 819 P.2d 886, 889 n.3 (Alaska 1991) ("[W]here a point is given only cursory 

statement   in   the   argument   portion   of   a   brief,   the   point   will   not   be   considered   on 

appeal."). 



        28      Harris v. Ahtna, Inc. , 193 P.3d 300, 306 (Alaska 2008) (quoting Indus. 



Indem. Co. v. Wick , 680 P.2d 1100, 1108 (Alaska 1984)). 



                                                  -16-	                                            6746
 


----------------------- Page 17-----------------------

                It   will   be   evident   that   many   of   the   Court's   findings   and 

                conclusions      are  derived    from   the   proposed    findings    and 

                conclusions submitted by the plaintiff.           This is because the 

                Court has determined, after an independent consideration of 

                the evidence and the law, that many of the proposed findings 

                and conclusions of law submitted by the plaintiff are accurate 

                and supported by a preponderance of the evidence. 



The superior court did not abdicate its duty to independently weigh the evidence by 



adopting the order. The Shapsnikoffs may be displeased with the findings, but all were 



properly made.   We affirm the superior court's adoption of GEICO's proposed findings 



of fact. 



                The   Shapsnikoffs'   second   argument   -          that   the   facts   adopted   by   the 



superior   court   are   erroneous   -   is   not   persuasive.   Upon   review   of   the   record,   we 



conclude that the superior court's findings, far from being clearly erroneous, were amply 



supported by the evidence.         The main factual finding that the Shapsnikoffs dispute is 



whether there was a second occurrence.              The superior court found that there was not, 



based on evidence that Shapsnikoff was heavily intoxicated and passed out in the middle 



of the road when he was hit, testimony regarding the limited amount of time he would 



have lived, and testimony that he did not respond after Dushkin arrived at his side. 



        F.      The Superior Court Properly Awarded Attorney's Fees To GEICO. 



                The superior court awarded GEICO $112,390 in attorney's fees and costs 



as the prevailing party.       The Shapsnikoffs argue that this was inappropriate for two 



reasons.  First, they argue it is unfair as a matter of public policy to award attorney's fees 



to an insurer that commences an action against its insured.                 Second, they argue that 



                                                  -17-                                             6746
 


----------------------- Page 18-----------------------

AS 09.17.080(d)29         precludes a joint and several award of attorney's fees.30               GEICO 



responds that in this case it is not against public policy because the Shapsnikoffs are not 



the insured and they enticed Landt and Dushkin into confessing judgment and assigning 

their claims against GEICO.31          It dismisses the Shapsnikoffs' argument regarding joint 



and several liability for the attorney's fees as contrary to law. 



                 The superior court's decision to award attorney's fees is reviewed for abuse 

of discretion   and   is   overturned only where the award is manifestly unreasonable.32 



Although there may be cases in   which   the award of attorney's fees to an insurance 



company that filed a declaratory action against its insured would be unreasonable, this 



is   not   such  a   case.  In   this   case,  the  actions   of   the   insureds   (or   their   assignees) 



precipitated   this   protracted   and   complex   litigation.       GEICO   consistently   offered   a 



settlement at the policy limits as it understood them to be and its offers were consistently 



rejected, even   though these offers were proper under the policy.                    In the face of the 



plaintiffs' changing legal theories and the uncertainty about coverage, GEICO sought 



        29       "The court shall enter judgment against each party liable on the basis of 



several liability in accordance with that party's percentage of fault." 



        30       The Shapsnikoffs also argue that they were actually the prevailing party as 



to   central   issues   regarding   the   second   occurrence.     This   argument   is   without   merit. 

Although   the   Shapsnikoffs   survived   summary   judgment   on   the   issue   of   the   second 

occurrence,   the   superior   court   ultimately   found,   without   error,   that   there   was   not   a 

second occurrence. 



        31       GEICO's   argument   that   there   is   no   public   policy   concern   because   the 



Shapsnikoffs were not the insured is without merit.               Although the Shapsnikoffs are not 

the original insureds, they are the assignees of the original insureds' claims.                   A claim 

against an insurer is assignable. See O.K. Lumber Co. v. Providence Wash. Ins. Co., 759 

P.2d 523, 525 (Alaska 1988). 



        32       DeNardo v. Cutler , 167 P.3d 674, 677-78 (Alaska 2007) (citing Marron v. 



Stromstad, 123 P.3d 992, 998 (Alaska 2005)). 



                                                    -18-                                              6746
 


----------------------- Page 19-----------------------

clarification via a declaratory action.  The Shapsnikoffs continued to demand two policy 



limits and counterclaimed against GEICO, alleging bad faith in an effort to collect from 



GEICO an amount in excess of policy limits achieved by negotiating a confession of 



judgment for over $8 million.  On these facts, it was not an abuse of discretion to award 



attorney's fees to GEICO. 



                The Shapsnikoffs' argument that joint and several liability for attorney's 



fees is contrary to law is equally unavailing.  Alaska Statute 09.17.080(d) does not apply 



to this dispute.   That statute provides that "[t]he court shall enter judgment against each 



party liable on the basis of several liability in accordance with that party's percentage of 



fault."    The Shapsnikoffs argue that this statute requires the court to "pro rata" assign 



attorney's fees "based on a percentage of the share . . . each [plaintiff] could potentially 



recover."     Not     only   is  this  nonsensical    in  an  action   in  which    there  is  no  fault 



apportionment, we have already interpreted this statute on this exact issue: 



                The statute applies to findings of fault, whereas awards of 

                attorney's fees and costs pursuant to Civil Rule 82 are not 

                indicative of or dependent upon findings of fault.  Civil Rule 

                82(e) states, "In a case in which damages are apportioned 

                among the parties under AS 09.17.080, the fees awarded to 

                the plaintiff under (b)(1) of this rule must also be apportioned 

                among the parties according to their respective percentages 

                of fault."    The clear implication is that, in types of litigation 

                where AS 09.17.080 is not invoked, attorney's fees need not 

                be    apportioned     by  fault.  Here     there   were   no  damages 

                awarded pursuant to 09.17.080, and it follows that the statute 

                is inapplicable to the award of attorney's fees and costs in 

                this case.[33] 



This   was   not   a   case   in   which   AS   09.17.080   applied. The   superior   court   properly 



awarded attorney's fees to GEICO as the prevailing party. 



        33      Hughes v. Foster Wheeler Co. , 932 P.2d 784, 792 (Alaska 1997). 



                                                  -19-                                              6746 


----------------------- Page 20-----------------------

              Because the superior properly exercised its discretion, we affirm the award 



of attorney's fees to GEICO. 



V.     CONCLUSION 



              We AFFIRM the decision of the superior court in all respects. 



                                          -20-                                     6746
 

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