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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Government Employees Insurance Co. v. Gonzalez (8/25/2017) sp-7195

Government Employees Insurance Co. v. Gonzalez (8/25/2017) sp-7195

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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@akcourts.us.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                      



GOVERNMENT  EMPLOYEES                                                )  

INSURANCE  COMPANY  and                                              )     Supreme  Court  Nos.  S-15637/15657  

MICHAEL  J.  LINA  JR.,                                              )  

                                                                     )     Superior  Court  No.  3AN-00-12188  CI  

                                Appellants  and                      )  

                                Cross-Appellees,                                                

                                                                     )     O P I N I O N  

                                                                     )  

           v.                                                                                                     

                                                                     )     No. 7195 - August 25, 2017  

                                                                     )  

                   

SANDRA GONZALEZ,                                                     )  

                                                                     )  

                                                 

                                Appellee and                         )  

                                Cross-Appellant.                     )  

                                                                     )  



                                                                                                              

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

                                                                                          

                     Judicial District, Anchorage, Sen K. Tan, Judge.  



                                                                                                       

                     Appearances:               Rebecca  J.  Hozubin,  Hozubin,  Moberly,  

                                                                                        

                     Lynch  &  Associates,  Anchorage,  for  Appellants/Cross- 

                                                                                                        

                     Appellees.            W.  Michael  Moody  and  Sarah  A.  Marsey,  

                                                                                                                  

                     Atkinson, Conway & Gagnon, Anchorage, and Dennis M.  

                                                             

                     Mestas, Law Offices of Dennis M. Mestas, PC, Anchorage,  

                            

                      for Appellee/Cross-Appellant.  



                                                                                                           

                     Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  

                                           

                      and Carney, Justices.  



                                          

                     WINFREE, Justice.  


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

I.        INTRODUCTION   



                                                                                                                              

                    An insured sued her auto insurer and one of its adjusters, alleging that the  



                                                                                                                 

insurer breached the insurance contract and committed tortious bad faith by withholding  



                                                                                                                              

underinsured motorist benefits and that the adjuster negligently handled her claim for  



                                                                                                                              

those benefits.  The insurer then paid all available underinsured motorist benefits to the  



                                                                                                                    

insured, including interest.  The insured continued her tort claims, alleging additional  



                                                                                                                     

financial and emotional harm from the delayed benefits payment. The insured proposed  



                                                                                                                       

a jury instruction addressing the effect of the insurer's belated payment, but the superior  



                                                                                                                             

court rejected that instruction.  After trial the jury determined that (1) the insurer had  



                                                                                                                     

acted in bad faith, but its conduct was not a substantial factor in causing the insured's  



                                                                                                                          

asserted  harm,  and  (2)  the  adjuster  had  not  been  negligent.                                The  superior  court  



                                                                                                                            

subsequently ordered the jury to award the insured nominal damages.  The jury then  



                                                                                                                      

awarded the insured $2 in nominal damages and later awarded $450,000 in punitive  



damages.  



                                                                                                                    

                    Thesuperiorcourtawardedtheinsured prevailing party costsandattorney's  



                                                                                                                    

fees against the insurer.  The court also awarded the adjuster prevailing party attorney's  



                                                                                                                        

fees against the insured.  The court rejected the insured's request that judgment against  



                                                                                                             

the insurer be entered nunc pro tunc to the date of the jury verdict so that post-judgment  



                                                                              

interest on the punitive damages award would start earlier.  



                                                                                                                              

                    The insurer appeals the nominal and punitive damages awards and the  



                                                                                                                             

prevailing party determination.  The insured cross-appeals the adjuster's attorney's fees  



                                                                                                                              

award, the jury's failure to award compensatory damages, the court's rejection of the  



                                                                                              

insured's proposed jury instruction, and the court's refusal to enter judgment effective  



                                                                                                                    

from the jury verdict date.  We affirm all aspects of the decision except the adjuster's  



                                                                                                       

attorney's fees award - we remand for further proceedings on that issue.  



                                                               -2-                                                        7195   


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

II.                          FACTS AND PROCEEDINGS                                           



                                                           Sandra Gonzalez was injured in a 1996 car accident. Gonzalez's sister was                                                                                                                                                                                                                                    



driving the car and pulled into the path of an oncoming vehicle; the other vehicle struck                                                                                                                                                                                                                                                                     



the car's passenger side where Gonzalez was seated.                                                                                                                                                                                               Gonzalez's mother, the car's                                                                                    



owner,   had   an   insurance   policy   with   Government   Employees   Insurance   Company  



(GEICO), and GEICO paid Gonzalez $58,593.75 -                                                                                                                                                                                      the bodily injury liability coverage                                                                          



policy limit with interest - to release all bodily injury claims against her mother and                                                                                                                                                                                                                                                                                 



 sister.  



                                                          In   the   months   following   the   accident   Gonzalez   repeatedly   requested  



payment under the policy's underinsured motorist (UIM) coverage as well, but GEICO                                                                                                                                                                                                                                                                     



did not respond to her requests.                                                                                                          Gonzalez explicitly stated that by accepting the bodily                                                                                                                                                           



injury settlement she was "not waiving any right to an underinsured motorist claim later                                                                                                                                                                                                                                                                             



on."   Gonzalez requested UIM coverage again in 1998, and GEICO responded only by                                                                                                                                                                                                                                                                                            



questioning her status as an insured.                                                                                                                                  In 2000, after Gonzalez again requested UIM                                                                                                                                                



coverage, GEICO adjuster Michael Lina reviewed Gonzalez's UIM claim and paid her                                                                                                                                                                                                                                                                                           



 $83,487.50,   including   the   UIM   coverage   policy   limits   and   interest.     But   by   then  



Gonzalez already had filed suit against GEICO and Lina.                                                                                                                                                                                                     



                                                           Gonzalez initially tried to bring two class action claims against GEICO, but                                                                                                                                                                                                                                    

                                                                                                                                                                                                                                                                        1  and she later voluntarily  

our holding in a previous appeal effectively eliminated one,                                                                                                                                                                                                                                                                            



dismissed  the  other.                                                                              That  left  two  claims  relevant  to  this  appeal:                                                                                                                                                              (1)  a  negligent  

                                                                                                                                                                                                                                                                                                                                              



adjusting claim against Lina, and (2) a claim that GEICO acted in bad faith by failing to  

                                                                                                                                                                                                                                                                                                                                                                                



timely investigate and pay her UIM coverage benefits.  

                                                                                                                                                                                                                                                



                              1                           See Gov't Emps. Ins. Co. v. Graham-Gonzalez                                                                                                                                                             , 107 P.3d 279, 287 (Alaska                                                          



2005) (holding that Alaska law did not require GEICO to list premiums for each level                                                                                                                                                                                                                                                        

of optional UIM coverage on insurance application forms).                                                                                                                                                                        



                                                                                                                                                                                       -3-                                                                                                                                                                          7195   


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

                         GEICO moved for partial summary judgment, asserting that at the time                                                           



Gonzalez's claim arose an insurer could not, as a matter of law, be liable for bad faith                                                                



failure to pay both bodily injury and UIM claims (known as "stacking").                                                                GEICO noted   



that  Progressive Insurance Co. v. Simmons                                     - holding that Alaska law required stacking                        

                                                      2   GEICO relied on an earlier unpublished memorandum  

-  had not yet been decided.                                                                                                           



decision in Peter v. Progressive Corp., upholding a decision not to hold an insurer liable  

                                                                                                                                                       

for bad faith failure to stack.3   The superior court determined that our Peter decision had  

                                                                                                                                                          

limited precedential value because it was an unpublished decision4 and because it was  

                                                                                                                                      

based partly on the insurer's alternative grounds for denying coverage.5                                                                      The court  

                                                                                                                                                       



denied  summary  judgment  because  Gonzalez  had  presented  evidence  of  GEICO's  

                                                                                                                                              



potentialbad faith, showing that "GEICOoffered someinsureds,butnotothers, standstill  

                                                                                                                                                 



agreements pending resolution of Simmons." Consequently the "insurer could honestly  

                                                                                                                                                 



believe that [Alaska law] required stacking but conceal that information from some  

                                                                                                                                                       



                                         6  

insureds in bad faith."   

                              



             2           See  953  P.2d  510  (Alaska   1998).  



             3           No.  S-11416,  2006  WL  438658,  at  *6-7  (Alaska  Feb.  22,  2006).  



            4            Id.  at  *1.  



             5           Id.   at   *6   ("Progressive  had  two  reasonable  bases   for  denying  the   claim.   



                                                                                                                                                 

   nder  the  policy  and  a  literal  interpretation  of  the  applicable  statute,  the  vehicles  

U             

                                                                           

involved were not 'underinsured motor vehicle[s].' Further, whether either driver was  

                                                                                                                                                             

at  fault,  and  if  so  the  extent  of  her  fault,  had  not  been  determined."  (alteration  in  

original)).  



            6            GEICO appeals the denial of its summary judgment motion.  But because  

                                                                                                                                                  

the case proceeded to trial on the merits of the same factual issue on which the denial was  

                                                                                                                                                          

based - whether GEICO's actions constituted bad faith - we decline to consider  

                                                                                                                                           

GEICO's summary judgment claim.  See Larson v. Benediktsson, 152 P.3d 1159, 1169  

                                                                                                                                                        

                                                                                                                                        (continued...)  



                                                                              -4-                                                                      7195   


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

                                                               A jury trial began in August 2012.  Gonzalez testified about the accident   



 and its consequences.                                                                                  Prior to the accident she had worked as a housekeeper and at an                                                                                                                                                                                                                                  



 office supply store; she briefly resumed housekeeping after the accident, but the pain and                                                                                                                                                                                                                                                                                                         



  swelling in her leg and ankle prevented her from working even part time.                                                                                                                                                                                                                                                                         In addition to                                          



 physicalchallenges, shesuffered                                                                                                                        financialhardship                                                                   and emotional distress between1996                                                                                                                



 and 2000.   Because she was unable to work, her family lived on her husband's $1,200                                                                                               



 monthly income.                                                                   During that time period she financially relied on her mother, who                                                                                                                                                                                                                                          



 loaned Gonzalez about $30,000; housed Gonzalez's family for three months; and helped                                                                                                                                                                                                                                                                                                



 pay for a crib, diapers, a baby dresser, and expensive auto repairs.                                                                                                                                                                                                                                                     Gonzalez said that  



 asking her mother for money felt "terrible" and embarrassing.                                                                                                                                                                                                                                      



                                                               After   the   close   of   evidence   the   parties   submitted   final   objections   to  



 proposed jury instructions.   Gonzalez objected to the court's rejection of her proposed                                                                                                                                                                 



 Jury Instruction 38; it stated that an insurer's belated payment of contract benefits does                                                                                                                                                                                                                                                                                                   



 not relieve the insurer                                                                                       from liability                                                      for   bad   faith.     The superior                                                                                                        court nonetheless   



 declined to give the disputed instruction.                                                                                                                                                      



                                                               The next day the jury issued a special verdict finding that (1) Lina did not                                                                                                                                                                                                                                                          



 negligently adjust Gonzalez's claim, and (2) GEICO acted in bad faith, but its conduct                                                                                                                                                                                                                                                                                       



 was not "a substantial factor in causing harm to . . . Gonzalez."                                                                                                                                                                                                                                   The bad faith finding is                                                                               



 at the heart of this dispute.                                                         



                                                               After the verdict Gonzalez asserted that, given the finding of bad faith, the                                                                                                                                                                                                                                                          



jury must award her at least nominal damages.                                                                                                                                                                               The parties and the court discussed the                                                                                                                                   



                                6                               (...continued)  



                                                                                                                                                                                                                                                                                                                                                                                            

 (Alaska 2007) (holding that when summary judgment "motions are denied on the basis  

                                                                                                                                                                                                                                                                                                                                                    

 that there are genuine issues of material fact," then "the order becomes unreviewable  

                                                                                                                                                                                                                                                                                                                                                                                                   

 after a trial on the merits" (quoting  Ondrusek v. Murphy, 120 P.3d 1053, 1055 n.2  

                                       

 (Alaska 2005))).  



                                                                                                                                                                                                     -5-                                                                                                                                                                                      7195   


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

 issue, and the court - to create a full record for appeal - gave the jury a supplemental                                                                                                                                                                                                                                                                                          



 instruction   on   nominal   damages.     The   instruction  directed  the   jury   to   assume   that  



 GEICO's bad faith was a substantial factor in causing Gonzalez's harm and to award                                                                                                                                                                                                                                                                                                                                         



 Gonzalez nominal damages, describing those as "a trivial sum of money awarded to a                                                                                                                                                                                                                                                                                                                                                                   



 litigant who has established a cause of action but has not established that she is entitled                                                                                                                                                                                                                                                                                                                          



 to compensatory damages."                                                                                                                       The jury asked the court whether $0 could be a trivial sum;                                                                                                                                                                                                                        



 the court responded that the jury must award at least $1.                                                                                                                                                                                                                                                 The jury returned a verdict                                                                            



 awarding   Gonzalez   $1   for   "[m]ental   suffering,   anxiety,   humiliation,   and   emotional  



 distress" and $1 for financial hardship.                                                                                                                                                                The jury then found Gonzalez also was eligible                                                                                                                                                               



  for punitive damages. After more trial testimony and a supplemental instruction, the jury                                                                                                                                                                                                                                                                                                                                              



 awarded Gonzalez $450,000 in punitive damages.                                                                                                                                                                                                                      The jury then was excused.                                                                                                                         



                                                                      The parties later disputed how to treat the jury's supplemental verdict and                                                                                                                                                                                                                                                                                         



 damages awards. In June 2013 the superior court rejected GEICO's assertion that it was                                                                                                                                                                                                                                                                                                                                            



 improper for the jury to award nominal and punitive damages after finding GEICO's                                                                                                                                                                                                                                                                                                                         



 conduct was not a substantial factor in causing Gonzalez's harm. The court reasoned the                                                                                                                                                                                                                                                                                                                                                      



jury's finding that GEICO acted in bad faith meant Gonzalez was entitled to nominal                                                                                                                                                                                                                                                                                                                               

                                                                                                                                                                                                                                                                                                                                         7   The court interpreted  

 damages under our holding in                                                                                                                             Ennen v. Integon Indemnity Corp.                                                                                                                                                                                                           



 the jury's verdict to mean "the jury found that there was harm but that [Gonzalez] had  

                                                                                                                                                                                                                                                                                                                                   



  failed to prove the amount of harm to the requisite degree of certainty," consistent with  

                                                                                                                                                                                                                                                                                                                                                                                                                                      



                                    7                                 268 P.3d 277, 291 (Alaska 2012) (holding on facts in insurance bad faith                                                                                                                                                                                                                                                                                       



 action that "[i]nterest alone does not compensate [the insured] for his financial hardship                                                                                                                                                                                                                                                                                                                      

 and   related   distress,   and   at   a   minimum he                                                                                                                                                                                  is   entitled   to   nominal   damages"   (citing  

Anchorage Chrysler Ctr., Inc. v. DaimlerChrysler Motors Corp.                                                                                                                                                                                                                                                                                         , 221 P.3d 977, 990                                                               

  (Alaska 2009))).   



                                                                                                                                                                                                                         -6-                                                                                                                                                                                                         7195   


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

 our      nominal            damages            explanation              in     Anchorage               Chrysler           Center,          Inc.       v.  



                                                        8  

DaimlerChrysler Motors Corp.                               



                        The superior court then assessed the jury's punitive damages award under  

                                                                                                                                                 



the United State Supreme Court's due process guideposts outlined in BMW of North  

                                                                                                                                                

                                         9   The court also assessed whether the jury's punitive damages  

America, Inc. v. Gore .  

                                                                                                                                           



 award impermissibly punished GEICO for its conduct toward other insureds, as well as  

                                                                                                                                                       



whether the statute allowing punitive damages was unconstitutional as applied, and  

                                                                                                                                                    



 found the punitive damages award constitutional in all respects.  

                                                                                                                    



                        In  November  2013  the  superior  court  issued  a  judgment  and  an  

                                                                                                                                                     



 accompanying order explaining that Gonzalez was entitled to 10.5% pre- and post- 

                                                                                                                                                  



judgment interest,  with  prejudgment interest accruing  from August 15, 1996.                                                                     The  

                                                                                                                                                    



judgment accordingly awarded Gonzalez prejudgment interest on her nominal damages  

                                                                                                                                            



 and  post-judgment  interest  on  her  total  judgment,  including  nominal  and  punitive  

                                                                                                                                            



 damages.  Gonzalez then moved for judgment notwithstanding the verdict and a partial  

                                                                                                                                                



new trial.   She asked the court to change the jury's answer to the question whether  

                                                                                                                                            



 GEICO's conduct was a substantial factor in causing her harm from "no" to "yes."  She  

                                                                                                                                                     



 sought a new trial on "compensatory damages because the jury's failure to award any  

                                                                                                                                                    



 compensatory damages was against the weight of the evidence." The court denied those  

                                                                                                                                                  



motions in a June 2014 order.  

                                                       



            8           221 P.3d at 990 (holding that nominal damages are available "when actual                                                 



loss or        injury  is  shown, but plaintiff has failed                                to prove the extent and amount of                            

 damages" (quoting                 Zok v. State         , 903 P.2d 574, 577-78 (Alaska 1995))).                   



            9           517 U.S. 559, 584-86 (1996) (holding that, although thereis no "bright line  

                                                                                                                                                     

marking the limits of a constitutionally acceptable punitive damages award," jury's $2  

                                                                                                                                                      

million punitive damages award for BMW's failure to disclose that some of its cars were  

                                                                                                                                                   

repainted before sale "transcends the constitutional limit").  

                                                                                             



                                                                           -7-                                                                    7195   


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

                                                       The parties also had sought attorney's fees, and in the June 2014 order the                                                                                                                                                                                                             



 court   determined   that   both   Gonzalez   and   Lina   were   prevailing   parties.    The   court  



 awarded   Gonzalez   attorney's  fees   and   costs   against   GEICO   in   the   amount   of  



 $164,019.69.   A final judgment was issued awarding Gonzalez a total of $614,025.31,                                                                                                                                                                                                                 



 including nominaland punitivedamages, attorney'sfees,costs,andprejudgmentinterest.                                                                                                                                                                                                                                                                             



                                                      In August 2014 Gonzalez moved to amend the judgment                                                                                                                                                                             nunc pro tunc                                            for  



 post-judgment interest to accrue as of August 2012, when the jury verdict was issued,                                                                                                                                                                                                                                         



 rather than as of the November 2013 judgment date.                                                                                                                                                                         The court denied that motion.                                                                                                       



 Finally, the court calculated Lina's attorney's fees.                                                                                                                                                           Because Lina was represented by                                                                                                 



 GEICO's counsel in the proceedings and did not adequately segregate fees he incurred                                                                                                                                                                                                                                     



 from fees GEICO incurred, the court chose to "apportion the fees in a reasonable manner                                                                                                                                                                                                                                      



 to assign to Lina his share," awarding him percentages of the requested fees for different                                                                                                                                                                                                                              



 litigation periods.   



                                                       GEICO appeals the nominal and punitive damages awards, pre-                                                                                                                                                                                                   and post-  



judgment interest determination, and prevailing party determination.                                                                                                                                                                                                                    Gonzalez cross-  



 appeals the denial of her proposed jury instruction, related denials of her post-trial                                                                                                                                                                                                                              



 motions, and Lina's attorney's fees award.                                                                                                                                   



 III.                       STANDARD OF REVIEW                                                        



                                                       "Jury   instructions   involve   questions   of   law   to   which   we   apply   our  

                                                                                                  10        "[W]e review de novo whether a punitive damages award is  

 independent judgment."                                                                                                                                                                                                                                                                                                                              

 grossly excessive under the due process clause of the Fourteenth Amendment."11                                                                                                                                                                                                                                                         "The  

                                                                                                                                                                                                                                                                                                                                      



 determination of when prejudgment interest begins to accrue presents a legal question  

                                                                                                                                                                                                                                                        



                            10                         City of Hooper Bay v. Bunyan                                                                                            , 359 P.3d 972, 978 (Alaska 2015) (quoting                                                                                                



  Thompson v. Cooper                                                                  , 290 P.3d 393, 398 (Alaska 2012)).                                                                               



                            11                         Casciola v. F.S. Air Serv., Inc., 120 P.3d 1059, 1062 (Alaska 2005) (citing  

                                                                                                                                                                                                                                                                                                                                  

 Cent. Bering Sea Fishermen's Ass'n v. Anderson, 54 P.3d 271, 277 (Alaska 2002)).  

                                                                                                                                                                                                                                                                                                                   



                                                                                                                                                                         -8-                                                                                                                                                            7195   


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

                                                    12  

that we review de novo."                                 "When applying the de novo standard of review, we apply                                                        



our 'independent judgment to questions of law, adopting the rule of law most persuasive                                                                       

in light of precedent, reason, and policy.' "                                           13  



                                                                                                                                                                                14  

                                                                                                                                                                                     

                                                                                                                                                                       

                            We review for an abuse of discretion the denial of a motion for a new trial. 



 But "[m]otions for judgment notwithstanding the verdict present questions of law that  

                                                                                                                                                                            

are reviewed on appeal de novo rather than deferentially."15  The parties agree that we  

                                                                                  



should review for abuse of discretion the trial court's denial of Gonzalez's motion to  

                                                                                                                                                                               



                                                                          16  

amend the judgment nunc pro tunc.  

                                                                               



                            "We  review  for  abuse  of  discretion  a  trial  court's  prevailing  party  

                                                                                                                                                                       



determination.                    Prevailing  party  determinations will be overturned  only  if they  are  

                                                                                                                                                                            

manifestly  unreasonable."17                                   We  also  review  attorney's  fees  awards  for  abuse  of  

                                                                                                                                                                              



              12            Pederson v. Barnes                       , 139 P.3d 552, 563 (Alaska 2006) (citing                                               Lloyd's &   



Inst. of London Underwriting Cos. v. Fulton                                                 , 2 P.3d 1199, 1210 (Alaska 2000)).                         



              13            ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc., 322 P.3d  

                                                                                                                                                                          

 114, 122 (Alaska 2014) (quoting Russell ex rel. J.N. v. Virg-In, 258 P.3d 795, 802  

                                                                                                                                                                           

(Alaska 2011)).  

                  



              14            Hunter  v.  Philip  Morris  USA  Inc.,  364  P.3d  439,  447  (Alaska  2015)  

                                                                                                                                                                      

(quoting Kava v. Am. Honda Motor Co., 48 P.3d 1170, 1173 (Alaska 2002)).  

                                                                                                                                                 



              15            Borgen v. A & M Motors, Inc., 273 P.3d 575, 584 (Alaska 2012) (citing  

                                                                                                                                                                      

 Cameron v. Chang-Craft, 251 P.3d 1008, 1016-18 (Alaska 2011)).  

                                                                                                                            



              16            See Snook v. Bowers, 12 P.3d 771, 775-76 (Alaska 2000) (citing Johnson  

                                                                                                                                                                  

v. Doris, 933 P.2d 1139, 1142 (Alaska 1997)) (applying abuse of discretion standard to  

                                                                                                                                                                                

nunc pro tunc motion treated as Alaska Civil Rule 60(b) motion).  

                                                                                                                       



              17            Progressive Corp. v. Peter ex rel. Peter, 195 P.3d 1083, 1092 (Alaska  

                                                                                                                                                                   

2008) (footnote omitted) (first citing Interior Cabaret, Hotel, Rest. & Retailers Ass'n v.  

                                                                                                                                                                                

Fairbanks N. Star Borough, 135 P.3d 1000, 1002 (Alaska 2006); then citing Curran v.  

                                                                                                                                                                                

Hastreiter, 579 P.2d 524, 531 (Alaska 1978)).  

                                                                                 



                                                                                       -9-                                                                               7195   


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

 discretion and "will not find an abuse of discretion absent a showing that the award was                                                                              



                                                                                                                                                                        18  

 arbitrary, capricious, manifestly unreasonable, or stemmed from improper motive."                                                                                            



 IV.          DISCUSSION  



                                                                                                                                                      

                           The parties' points on appeal fall into four categories:  jury instructions,  



                                                                                         

 damages, post-trial motions, and attorney's fees.  



                                                                                     

              A.           Gonzalez's Proposed Jury Instruction  



                                                                                                                                                                       

                           Gonzalez  contends  that  the  superior  court  erred  when  it  rejected  her  



                                                                                                                                                                          

proposed Jury Instruction 38 and failed to instruct the jury about "the legal effect of  



                                                                                                                                                        19  

                                                                                                                                                             

 GEICO's belated payment."  The proposed instruction, based on our Ennen                                                                                    decision,  



                                                                                                                                                                        

 stated: "The fact that an insurer ultimately pays benefits due under the contract does not  



                                                                                                                                                                           

relieve it from liability for negligence or bad faith if, in its handling of the claim, it  



                                                                                                                                                                           

unreasonably delayed payment of those benefits or otherwise breached its obligation of  



                                                                                                                                                                          

 good faith and fair dealing."   Gonzalez argues that the instruction was necessary to  



                                                                                                                                                                    

 ensure that the jury did not believe the belated UIM benefits payment with interest cured  



                                                                                                                                                                            

 GEICO's bad faith.  In support she notes GEICO's closing argument statement that it  



                                                                                                                   

 "corrected" its error and "fully compensated" Gonzalez.  



                                                                                                                                                                        

                           GEICO responds that Gonzalez mischaracterizes its closing argument and  



                                                                                                                                                                         

that no prejudice resulted because Jury Instructions 26 and 30 adequately informed the  



                                                                                                                                                                      

jury of the law regarding bad faith damages.  Jury Instruction 26 described the bad faith  



                                                                                                                                                                     

 cause of action, including the requirement that Gonzalez prove "[GEICO]'s bad faith  



                                                                                                                                                                         

 actions were the legal cause of . . . Gonzalez's damages, if any."  Jury Instruction 30  



              18           Alaskasland.com, LLCv. Cross                                  , 357 P.3d 805, 825 (Alaska 2015) (quoting                           



Bush v. Elkins               , 342 P.3d 1245, 1251 (Alaska 2015)) (citing                                              Baker v. Ryan Air, Inc.                      , 345   

P.3d 101, 106 (Alaska 2015);                                M-B Contracting Co. v. Davis                               , 399 P.2d 433, 437 (Alaska             

 1965);  Tobeluk v. Lind                       , 589 P.2d 873, 878 (Alaska 1979)).                       



              19           268 P.3d 277, 291 (Alaska 2012).  

                                                                                   



                                                                                   -10-                                                                             7195   


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

described Gonzalez's burden to prove damages. It stated that the jury "must decide how                                                                                                                                                                                   



much money, if any, will reasonably compensate . . . Gonzalez for the harm."                                                                                                                                                                                   And it  



stated that "[t]he amount of damages must include an award for all harm that was caused                                                                                                                                                                          



by [GEICO], even if the particular harm could not have been anticipated."                                                                                                                                                                     It placed the                  



burden on Gonzalez to "prove the amount of her damages, if any, by a preponderance                                                                                                                                                     



of the evidence."                                          Neither instruction mentioned the effect of GEICO's post-lawsuit                                                                                                                   



payment of UIM benefits with interest.                                                                                           



                                           We see no reason the superior court should not have issued the proposed     



instruction.   It was a correct statement of the law and was consistent with Gonzalez's                                                                                                                                                           

                                                                                                                                                                                                                                  20   No other jury  

theory that GEICO's delayed payment did not absolve it of bad faith.                                                                                                                                                                                                      

instruction  expressly  addressed  the  effect  of  GEICO's  post-lawsuit  payment,21   and  

                                                                                                                                                                                                                                                                          



GEICO may have caused some confusion by stating at closing that "[Gonzalez] received  

                                                                                                                                                                                                                                                            



all of the coverages in the file.   She received every last penny from that policy of  

                                                                                                                                                                                                                                                                               



insurance.  The $144,000 fully compensated her. . . . GEICO did not act in bad faith."  

                                                                                                                                                                                                                                                                 



                                           But we note that neither party discusses Jury Instruction 27 in this context.  

                                                                                                                                                                                                                                                                                          



That instruction set out what Gonzales was required to prove for her bad faith delayed  

                                                                                                                                                                                                                                                              



payment claim:  

                              



                                            1) . . . Gonzalez suffered a loss covered under an insurance
  

                                                                                                                                                                                                             

                                           policy with [GEICO];
  

                                                                                  



                                           2) [GEICO] was notified of the loss;
  

                                                                                                                                                  



                      20                   See Parnell v. Peak Oilfield Serv. Co.                                                                                     , 174 P.3d 757, 764 (Alaska 2007)                                                             



("We have previously recognized that a plaintiff is generally entitled to a jury instruction                                                                                                                                                         

 'consonant with the theory of her case' if the evidence supports the plaintiff's theory."                                                                                                                                                                   

(quoting  Clary Ins. Agency v. Doyle                                                                                 , 620 P.2d 194, 201 (Alaska 1980))).                                                        



                      21                   See id. at 765 (noting that "[t]he trial court's instructions did not otherwise  

                                                                                                                                                                                                                                                        

make this point"); see also Thompson v. Cooper, 290 P.3d 393, 401 (Alaska 2012)  

                                                                                                                                                                                                                                                                   

(holding failure to instruct jury on issue central to theory of case was erroneous).  

                                                                                                                                                                                                                                



                                                                                                                                     -11-                                                                                                                              7195   


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

                                           3) [GEICO] unreasonably, or without proper cause, denied or                                                                                                                           

                                           delayed payment of policy benefits;                                                   



                                           4) . . . Gonzalez was harmed; and                                                             



                                           5) [GEICO's] denial or delay in payment of policy benefits                                                                                   

                                           was a substantial factor in causing . . . Gonzalez's harm.                                                                                                                         



                                           By stating that mere delay can lead to bad faith liability, Instruction 27                                                                                                                                                    



 presumes that late payment of benefits is no defense to a bad faith claim, perhaps filling                                                                                                                                                                   



 much of the gap left by proposed Jury Instruction 38's absence.                                                                                                                                           



                                           And even assuming the court's failure to issue                                                                                               the proposed instruction was                                                 

                                                                                                                                22      Notwithstanding the proposed instruction's  

 error, we cannot say it caused prejudice.                                                                                                                                                                                                

 absence, the jury actually found that GEICO acted in bad faith.23   And the jury's finding  

                                                                                                                                                                                                                                                          



 that GEICO's bad faith was not a substantial factor in causing Gonzalez's harm does not  

                                                                                                                                                                                                                                                                       



 necessarily reflect a misunderstanding of the law. The harm alleged at trial - additional  

                                                                                                                                                                                                                                                  



 damages resulting from financial and emotional distress - was separate from the direct  

                                                                                                                                                                                                                                                               



 financial harm earlier remedied by GEICO's post-lawsuit contractual payment.  In light  

                                                                                                                                                                                                                                                                   



 of Instruction 27's language expressing that Gonzalez was entitled to recover for bad  

                                                                                                                                                                                                                                                                     



 faith if GEICO had unreasonably delayed payment, we believe the jury's substantial  

                                                                                                                                                                                                                                               



 factor finding reflects only its assessment of these additional damages.  And even if the  

                                                                                                                                                                                                                                                                       



jury would have answered the substantial factor question differently had it received the  

                                                                                                                                                                                                                                                                       



 disputed instruction, the superior court subsequently ordered the jury to assume the  

                                                                                                                                                                                                                                                                       



                      22                   "When   reviewing   a   trial   court's   denial   of   a   proposed   instruction,  our  



 inquiry focuses upon whether the instructions given, when read as a whole, adequately                                                                                                                                                         

 inform the jury of the relevant law."                                                                              City of Hooper Bay v. Bunyan                                                                    , 359 P.3d 972, 978                              

 (Alaska 2015) (quoting Thompson, 290 P.3d at 398).  "An error in jury instructions is  

                                                                                                                                                                                                                                                                           

 grounds for reversal only if it caused prejudice."  Id. (quoting Thompson, 290 P.3d at  

 398-99).  



                      23                   Cf. Parnell, 174 P.3d at 765 (finding prejudice where "the jury may have  

                                                                                                                                                                                                                                                                  

 returned a different verdict").  

                                                               



                                                                                                                                   -12-                                                                                                                           7195   


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

answer   to   that   question   was   "yes,"   correcting   any   prejudicial   error  relating   to   the  



                                           24  

substantial factor question.                   



                     Although the court probably should have issued the proposed instruction,  

                                                                                                                         



no prejudice resulted from that decision and reversal of the compensatory damages  

                                                                                                                            



award is not warranted.  

                     



           B.        Damages  



                     GEICO disputes the awards of nominal and punitive damages, as well as  

                                                                                             



the superior court's determination of the pre- and post-judgment interest rate for those  

                                                                                                                                  



damages.  



                     1.         Gonzalez was entitled to nominal damages.  

                                                                                          



                     The jury initially found that GEICO acted in bad faith but that its bad faith  

                                                                                                                                   



was not a substantial factor in causing Gonzalez the asserted additional harm beyond the  

                                                                                                                                      



delayed payment. The superior court then instructed the jury "to assume that the answer  

                                                                                                                               



to [the substantial factor question] is 'YES' " and then "award a nominal amount of  

                                                                                                                         



damages."  GEICO contends that the superior court erred by ordering the jury to award  

                                                                                                                                 



nominal  damages  and  that  doing  so  relieved  Gonzalez  of  the  burden  of  proving  

                                                                                                                             



causation.  

                  



                     In its order addressing GEICO's arguments the superior court determined  

                                                                                                                         



that "[g]iven the jury's finding that [GEICO] acted in bad faith, under Ennen, Gonzalez  

                                                                                                                            



is entitled to an award of nominal damages, regardless of the jury's finding on causation  

                                                                                                                            



and harm." The court reasoned that "there could be multiple explanations" for the jury's  

                                                                                                                                 



finding that GEICO's bad faith was not a substantial factor in causing Gonzalez's harm:  

                                                                                                                                            



           24        Cf. Kodiak Island Borough v. Roe                         , 63 P.3d 1009, 1017 (Alaska 2003)                 



(holding   erroneous   instruction   was   not   prejudicial  in  part   because   error   was   not  

exploited).  



                                                                  -13-                                                            7195   


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

  "For example, it could be that the jury found that there was harm but that plaintiff had                                                                                                     



  failed to prove the amount of harm to the requisite degree of certainty."                                                                                                               



                                  We agree with the superior court that the jury's finding of bad faith compels                                                                                           



a nominal damages award on the facts of this delayed-payment case.                                                                                                              In  Ennen  we held   



that the insured was entitled to nominal damages when he received the insuranceproceeds                                                                                                                 

                                                                                                                                                          25   We were concerned that  

he was entitled to, plus interest, but only after years of delay.                                                                                                                                                    



allowing an insurance company to "arbitrarily deny coverage and delay payment of a  

                                                                                                                                                                                                                           



claim with no more penalty than interest on the amount owed" would undermine the  

                                                                                                                                                                                                                      

purpose of the bad faith cause of action.26   We concluded that the insured "was deprived  

                                                                                                                                                                                                        



of the UIM benefits to which he was entitled under the policy," and the insurer's eventual  

                                                                                                                                                                                                         

payment of those benefits did not cure its initial bad faith.27  

                                                                                                                                      



                                  As in Ennen, Gonzalez was deprived of the benefits to which she was  

                                                                                                                                                                                                                    



entitled, and her harm was not necessarily fully remedied by GEICO's 2000 post-lawsuit  

                                                                                                                                                                                                

                        28      GEICO's post-lawsuit payment of all the monies due Gonzalez under the  

payment.                                                                                                                                                                                                              



policy  resolved  Gonzalez's  breach  of  contract  claim.                                                                                         But  the  undisputed  delay  in  

                                                                                                                                                                                                                        



payment and the jury's related bad faith finding demonstrate that GEICO's delay in  

                                                                                                                                                                                                        



paying the policy benefits caused a harm that, for bad faith tort claim purposes, cannot be  

                                                                                                                                                                                                                         



vitiated.  As we similarly discuss below in connection with the punitive damages award,  

                                                                                                                                                                                                             



an insurance company should not be allowed to buy immunity from a bad faith tort claim  

                                                                                                                                                                                                                 



                   25               Ennen v. Integon Indem. Corp.                                                  , 268 P.3d 277, 291 (Alaska 2012).                                       



                   26               Id.  (quoting  State Farm Fire &Cas. Co. v. Nicholson                                                                               , 777 P.2d 1152, 1156                     



  (Alaska 1989)).   



                   27               Id.
  



                   28               See id.  

                                               



                                                                                                           -14-                                                                                                   7195   


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

                                                                                                                                                                                                         29  

merely by belatedly paying all sums due under the contract.                                                                                                                                                    Therefore the superior                             



court correctly mandated that the jury award Gonzalez at least nominal damages for                                                                                                                                                                 



GEICO's bad faith, post-lawsuit UIM benefits payment.                                                                                                     



                                            We further note that the jury instructions and the jury's verdict reflect that                                                                                                                                                        



the jury found the original payment delay harmed Gonzalez.                                                                                                                                                     Again we look to Jury                                           



Instruction 27, which set out what Gonzalez had to prove for her bad faith claims:                                                                                                                                                                   



                                            Gonzalez must prove that it is more likely true than not true
                                                                                                                           

                                            that:
  



                                             1) . . . Gonzalez suffered a loss covered under an insurance
                                                                                                        

                                            policy with [GEICO];
                  



                                            2) [GEICO] was notified of the loss;
                                                                   



                                                                                                                                                                                                                                            

                                            3) [GEICO] unreasonably, or without proper cause, denied or
  

                                                                                                                                     

                                            delayed payment of policy benefits;
  



                                                                                                                                             

                                            4) . . . Gonzalez was harmed; and
  



                                                                                                                                                                                                                        

                                            5) [GEICO]'s denial or delay in payment of policy benefits  

                                                                                                                                                                                                                                      

                                            was a substantial factor in causing . . . Gonzalez's harm.  



                                                                                                                                                                                                                                                                                    

By  answering  "yes"  to  the  question  "Did  [GEICO]  act  in  bad  faith?"  the  jury  by  



                                                                                                                                                                                                                                                                               

implication seems to have found that each of the first four elements was satisfied with  



                                                                                                                                                                                                                                                                               

respect  to  the  undisputed  original  delay  in  payment,  including  that  "Gonzalez  was  



                                                                                                                                                                                                                                                                                   

harmed."   As we noted earlier, this  jury instruction and the related jury verdict are  



                                                                                                                                                                                                                                                                                  

precisely the reason there was no prejudicewhen Gonzalez's proposed Instruction 38 was  



             

not given.  



                         29                   See In re Exxon Valdez                                                          , 490 F.3d 1066, 1091 (9th Cir. 2007),                                                                                             vacated,  



   Exxon   Shipping Co.                                                  v. Baker                      ,   554   U.S.   471   (2008) ("A defendant cannot buy                                                                                                                    full  

   immunity frompunitive damages by paying the likely amount of compensatory damages                                                                                                                                                                              

   before judgment.");                                               Ennen, 268 P.3d at 291 (without bad faith liability "insurers can                                                                                                                                            

   arbitrarily deny coverage and delay payment of a claim with no more penalty than                                                                                                                                                                                           

   interest on the amount owed" (quoting                                                                                          Nicholson, 777 P.2d at 1156)).                                                



                                                                                                                                          -15-                                                                                                                                7195   


----------------------- Page 16-----------------------

                                                The special verdict form contains other questions that appear to be drawn   



from the elements listed in Instruction 27, such as "Was [GEICO]'s denial and/or delay                                                                                                                                                                                                                 



in   payment   of   policy   benefits   unreasonable   or   without  proper   cause?"   and   "Was  



 [GEICO]'s bad faith a substantial factor in causing harm to . . . Gonzalez?"                                                                                                                                                                                                   The jury in                        



its verdict found both unreasonable payment delay and bad faith.                                                                                                                                                                                     Given Gonzalez's   



request only for damages over and above the post-lawsuit payment, the jury's answer of                                                                                                                                                                                                                             



"no" to the causation question cannot be interpreted to mean that GEICO did not actually                                                                                                                                                                                                      

                                                          30         It is clear from the facts and the verdict that GEICO caused direct  

harm Gonzalez.                                                                                                                                                                                                                                                                                       



pecuniary harm by its bad faith delay in paying policy benefits.  But the real question,  

                                                                                                                                                                                                                                                                                         



again, is whether the post-lawsuit payment of the policy benefits can foreclose an award  

                                                                                                                                                                                                                                                                                                    



of at least nominal damages based on the tortious conduct.  

                                                                                                                                                                                    



                                                The superior  court suggested that the jury's disputed  substantial factor  

                                                                                                                                                                                                                                                                                                    



finding might mean that Gonzalez "failed to prove the amount of harm to the requisite  

                                                                                                                                                                                                                                                                                           



degree of certainty."  We interpret the superior court's statement to mean that Gonzalez  

                                                                                                                                                                                                                                                                                        



failed to prove additional damages, such as those resulting from financial and emotional  

                                                                                                                                                                                                                                                                                      

distress, with sufficient certainty;31 under that interpretation nominal damages would still  

                                                                                                                                                                                                                                                                                                             



                           30                       Cf. Alaska Interstate Constr., LLC v. Pac. Diversified Invs., Inc.                                                                                                                                                                 , 279 P.3d         



    1156,   1174   (Alaska   2012)   (holding   superior   court   erred   by   not   granting   judgment  

   notwithstandingtheverdictwhenjurydeterminedoneparty committed fraud, compelling                                                                                                                                                                                                

   conclusion that agreement was breached "as a matter of law");                                                                                                                                                                             ASRC Energy Servs.                                    

   Power &Commc'ns, LLC v. Golden Valley Elec. Ass'n                                                                                                                                                , 267 P.3d 1151, 1166-67 (Alaska                                                           

   2011) (ordering new trial where jury found breach of contract and although "the jury                                                                                                                                                                                                                    

   could reasonably have disputed the amount of damage caused by the breaches, there can                                                                                                                                                                                                                      

   be no dispute that the breaches caused . . . some damage");                                                                                                                                                    Grant v. Stoyer                                         , 10 P.3d 594,                   

    596-97, 600 (Alaska 2000) (ordering new trial after jury found no compensable personal                                                                                                                                                                                                  

   injury because "there was no genuine dispute that the collision had caused [plaintiff] to                                                                                                                                                                                                                       

    suffer some pain").                        



                           31                      We recently noted the distinction between a finding of harm and a finding  

                                                                                                                                                                                                                                                                                            

                                                                                                                                                                                                                                                                           (continued...)  



                                                                                                                                                        -16-                                                                                                                                             7195   


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

be available to Gonzalez.                       In  Anchorage Chrysler                      we held "that nominal damages are                          



typically   awarded   in   two  situations";   first   as   a   result   of   "a   technical   invasion   of   a  



plaintiff's rights" such as a false arrest, or second "when actual loss or injury is shown,                                                     

                                                                                                                       32   We stated that "an  

but plaintiff has failed to prove the extent and amount of damages."                                                                                   



award  of  nominal  damages  is  appropriate  where  a  party  incurs  a  pecuniary  loss  of  

                                                                                                                                                         

undetermined  amount."33                           Therefore,  even  if  Gonzalez  failed  to  adequately  prove  

                                                                                                                                                  



additional damages beyond the post-lawsuit payment, she still was entitled to nominal  

                                                                                                                                              



damages for the harm caused by GEICO's bad faith payment delay.  

                                                                                                               



                        In sum, the jury found that GEICO acted unreasonably and in bad faith by  

                                                                                                                                                         



delaying payment of Gonzalez's UIM benefits.  That bad faith payment delay caused  

                                                                                                                                                 



Gonzalez pecuniary harm.                            We  bear  in mind:   (1) our Ennen  holding that eventual  

                                                                                                                                             



payment cannot cure prior bad faith; (2) our previous distinction between "harm" and  

                                                                                                                                                      

"damages";34  and (3) the actual jury instructions and special verdict in this case.  Given  

                                                                                                                                                  



thesethreeconsiderations, Gonzalezwasentitledtonominal damagesdespitenot proving,  

                                                                                                                                              



            31          (...continued)  



                                                                                                                                              

  of damages resulting from that harm.  See Recreational Data Servs., Inc. v. Trimble  

                                                                                                                                                      

 Navigation Ltd., __ P.3d __, Op. No. 7162, 2017 WL 2951450, at *3, *14-15, *17  

                                                                                                                                                      

  (Alaska Mar. 24, 2017, as amended Aug. 3, 2017) (observing that "fact of harm" and  

                                                                                                                                                     

  "amount of damages" were separate issues and ordering award of nominal damages after  

                                                                                              

  plaintiff sufficiently proved harm but not damages amount).  



              32         221 P.3d 977, 990 (Alaska 2009) (quoting Zok v. State, 903 P.2d 574, 577- 

                                                                                                                                                     

  78 (Alaska 1995)).  

                       



              33         Id. at 991.  

                                     



              34         See Recreational Data Servs., 2017 WL 2951450, at *14 (distinguishing  

                                  

  "the fact  of damages (i.e., the fact that the plaintiff suffered harm)" from "the amount of  

                                                                                                                                                         

  damages" (emphases in original)).  

                                              



                                                                           -17-                                                                     7195   


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

to the requisite degree of certainty, additional damages for pre-payment emotional and                                                                                                                                                           



                                                   35  

 financial distress.                                                                                                                                                                                                       

                                                           We therefore affirm the superior court's rulings on this issue.  



                                                                                                                                                                                                                

                                       2.                 The punitive damages award did not violate due process.  



                                                                                                                                                                                                                                   

                                       GEICO argues that the $450,000 punitive damages award was "grossly  



                                                                                                                                                                                                                            

 excessive" in violation of its constitutional due process rights.  GEICO also claims that  



                                                                                                                                                                                                                                                          

the award unconstitutionally "punishes hypothetical injuries inflicted on non-parties."  



                                                                                                                                                                                                                                     

                                       GEICO's first argument is based on the United States Supreme Court's  



                                                                                                                                                                                                                                           

interpretation of Fourteenth Amendment due process.   The Court held in State Farm  



                                                                                                                                                                                                                                                  

Mutual Automobile Insurance Co. v. Campbell  that "[t]he Due Process Clause of the  



                                                                                                                                                                                                                                 

Fourteenth  Amendment  prohibits  the  imposition  of  grossly  excessive  or  arbitrary  



                                                                                        36  

                                                                                                                                                                                                                             

                                                                                                 The Court reiterated three guideposts for measuring  

punishments on a tortfeasor." 



                                                                                                                                                                                                                        

punitive damages: "(1) the degree of reprehensibility of the defendant's misconduct;  



                                                                                                                                                                                                                                                  

 (2) the disparity between the actual or potential harm suffered by the plaintiff and the  



                                                                                                                                                                                                                                   

punitive damages award; and (3) the difference between the punitive damages awarded  



                                                                                                                                                                                                                                    37  

                                                                                                                                                                                                                

by the jury and the civil penalties authorized or imposed in comparable cases." 



                      35                 The jury's second special verdict form awarded Gonzalez $1 for emotional                                                                                                               



   distress and $1 for financial hardship.                                                                      But in light of our conclusion that Gonzalez was                                                                                 

   entitled to nominal damages as a result of GEICO's bad faith, post-lawsuit payment, we                                                                                                                                                           

   do not need to parse whether Gonzalez was entitled to nominal damages for her alleged                                                                                                                                               

   additional financial and emotional harm or instead for the harm resulting directly from                                                                                                                                                    

   the delayed payment of policy benefits.                                                                             Cf. Ennen v. Integon Indem. Corp.                                                                      , 268 P.3d       

   277, 291 (Alaska 2012) (discussing additional financial and emotional distress, but                                                                                                                                 

   noting Ennen was entitled to at least nominal damages because "[i]nterest alone" did not                                                                                                                                                        

   cure prior bad faith).                    



                      36                 538 U.S. 408, 416 (2003) (citing Cooper Indus., Inc. v. Leatherman Tool  

                                                                                                                                                                                                                                              

   Grp., Inc., 532 U.S. 424, 433 (2001)).  

                                                                                         



                      37                 Id. at 418 (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996)).  

                                                                                                                                                                                                                                    



                                                                                                                         -18-                                                                                                                 7195   


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

                            Thefirst andmost                      importantguidepost,reprehensibility, consists                                                  ofmultiple   



subfactors, including:   



                            whether[]   the   harm   caused   was   physical   as   opposed   to  

                            economic; the tortious conduct evinced an indifference to or   

                            a reckless disregard of the health or safety of others; the target                                                   

                            of    the    conduct    had    financial    vulnerability;    the    conduct  

                            involved repeated actions or was an isolated incident; and the                                                            

                            harm was the result of intentional malice, trickery, or deceit,
   

                            or mere accident.                    [38]
  



                            Although Gonzalez was financially vulnerable, the harm was not physical
  

                                                                                                                                                                       



and did not implicate health or safety. There was no evidence of malice, although GEICO  

                                                                                                                                                                         



repeatedly failed to investigate her UIM claim.  Perhaps most favorable to Gonzalez was  

                                                                                                                                                                                



the evidence that GEICO failed to disclose potentially available UIM coverage to at least  

                                                                                                                                                                               



 15 other insureds around the time that Gonzalez's claim was pending.  Based on that  

                                                                                                                                                                                



evidence  GEICO's  conduct  was  repeated,  rather  than  isolated,  indicating  some  

                                                                                                                                                                           



reprehensibility.  



                            Under the second guidepost - the disparity between actual and punitive  

                                                                                                                                                                       



damages - we have "not prescribe[d] a fixed ratio, or range of ratios, between punitive  

                                                                                                                                                                       

and  compensatory  damages,"39                                        although  we  have  recognized  the  Supreme  Court's  

                                                                                                                                                                       

preference for single-digit ratios.40                                       GEICO urges us to consider this a 225,000:1 ratio,  

                                                                                                                                                                             



based on the $2 compensatory damages award and the $450,000 punitive damages award.  

                                                                                                                                                                                          



                            But  the  actual  harm  Gonzalez  suffered  was  greater  than  $2.                                                                         We  are  

                                                                                                                                                                                 



persuaded by the Ninth Circuit Court of Appeals' reasoning in In re Exxon Valdez that  

                                                                                                                                                                



                38            Id.  at 419 (citing                 Gore, 517 U.S. at 576-77).             



                39            Casciola v. F.S. Air Serv., Inc., 120 P.3d 1059, 1064 (Alaska 2005) (citing  

                                                                                                                                                                           

  Fyffe v. Wright, 93 P.3d 444, 457 (Alaska 2004)).  

                                                                                            



                40            See id. at 1064, 1067 (citing Campbell, 538 U.S. at 408, 424-25).  

                                                                                                                                                      



                                                                                         -19-                                                                                 7195   


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

Gonzalez's earlier post-lawsuit recovery of $83,487.50 in UIM benefits and interest                                                     

should be included in calculating the ratio of actual to punitive damages.                                                  41        

                                                                                                                                 In that case  



                                                                                                                                      

the court held that although an "amount that a defendant voluntarily pays before judgment  



                                                                                                                                            

should  generally  not  be  used  as  part  of  the  numerator,  because  that  would  deter  



                                                                                                                                   

settlements prior tojudgment,"in somecasesvoluntary paymentsareproperly considered  

                                                                                                     42    As the court aptly noted,  

                                                                                                                                           

if removing them would result in meager punitive damages. 



"[a] defendant cannot buy full immunity from punitive damages by paying the likely  

                                                                                                                                           

amount of compensatory damages before judgment."43  Although we do not wish to deter  

                                                                                                                                             



settlements, $2 in actual harm would permit only the most meager punitive damages  

                                                                                                                                      



under GEICO's proposed rule.  And more importantly GEICO's post-lawsuit voluntary  

                                                                                                                                     

payment did not cure its original tortious wrongdoing or immunize its conduct44  and  

                                                                                                                                               



should not rule out the possibility of punitive damages. GEICO's calculation of the ratio  

                                                                                                                                              



is therefore flawed. When the full UIM coverage payment GEICO made after the lawsuit  

                                                                                                                                         



was  filed  is  included  in  the  calculation,  the  comparison  of  actual  harm to  punitive  

                                                                                                                                       



damages is reduced to a reasonable single-digit ratio.  

                                                                                  



                       Under thethird guidepost -thedifferencebetweenthepenaltyimposed and  

                                                                                                                                                



comparable civil penalties - AS 21.36.910 put GEICO on notice of the possibility of  

                                                                                                                                                  



$250,000            in     penalties         for      violating         Alaska's           insurance           trade       practices,         and  

                                                                                                                                             



AS 09.17.020(f) expressly permits punitive damages of up to $500,000.  The $450,000  

                                                                                                                             



             41         See  490  F.3d  1066  (9th  Cir.  2007),  vacated,  Exxon  Shipping  Co.  v.  Baker,  



  554  U.S.  471  (2008).  



             42         Id.   at   1079 (quoting  In  re  Exxon   Valdez,  270  F.3d   1215,   1244   (9th   Cir.  



  2001)).  



             43         Id.  at   1091.  



             44         See   Ennen   v.  Integon  Indem.   Corp.,   268   P.3d   277,   291   (Alaska   2012)  



  (holding  that  "[i]nterest  alone  does  not  compensate"  insured  for  insurer's  bad  faith).  



                                                                        -20-                                                                7195   


----------------------- Page 21-----------------------

punitive damages award in this case is not significantly greater than a comparable civil  

penalty and is less than the maximum punitive damages allowed by statute.45  

                                                                                                                         



                        GEICO repeatedly failed to investigate Gonzalez's and at least 15 other  

                                                                                                                                                 



insureds' UIMbenefits claims; this suggests reprehensible conduct. The ratio of the harm  

                                                                                                                                                  



suffered by Gonzalez to the punitive damages award was within a reasonable range. And  

                                                                                                                                                   



GEICO  was  on  notice  of  a  possible  punitive  damages  award  of  up  to  $500,000.  

                                                                                                                                                            



Therefore, none of the three guideposts suggests that the jury's punitive damages award  

                                                                                                                                               



violated GEICO's due process rights.  

                                                        



                        GEICO further argues that "[t]he record leaves little if any reasonable doubt  

                                                                                                                                                



that the jury impermissibly relied on GEICO's actions in other cases in determining the  

                                                                                                                                                     



amount of its punitive damages award." GEICO cites the United States Supreme Court's  

                                                                                                                                             



Philip Morris USA v. Williams decision, holding that "us[ing] a punitive damages award  

                                                                                                                                                



to punish a defendant for injury that it inflicts upon nonparties . . . , i.e., injury that it  

                                                                                                                                                



inflicts upon those who are, essentially, strangers to the litigation," would violate the  

                                                                                                                                                    

                                                      46   But the Supreme Court noted that "[e]vidence of actual  

defendant's due process rights.                                                                                                                 

                                            



harm to nonparties can help show that the conduct that harmed the plaintiff also posed a  

                                                                                                                                                        

substantial risk of harm to the general public, and so was particularly reprehensible."47  

                                                                                                                                                            



In that case the plaintiff's counsel expressly - and improperly - asked the jury to  

                                                                                                                                                      

consider Philip Morris's responsibility for harm to its "market share" of smokers.48                                                              The  

                                                                                                                                                   



trial court then denied Philip Morris's request for an instruction that the jury could not  

                                                                                                                                                    



             45          See Casciola           , 120 P.3d at 1066 n.22, 1069 (upholding $300,000 punitive                                  



  damages award with comparable $100,000 criminal fine).                                       



             46          549  U.S.  346,  353  (2007).  



             47          Id.  at  355.  



             48          Id.  at  350.  



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                                                                                                                                                  49  

"punish the defendant for the impact of its alleged misconduct on other persons."                                                                     The  



Supreme Court reversed, holding that courts must protect against the risk of the jury                                                                 

attempting to punish the defendant for harm to nonparties.                                               50  



                                                                                                                                                      

                        GEICOargues that the jury's punitive damages awardcanbeattributed only  



                                                                                                                                                         

to an attempt to punish the defendant for harm to other insureds, stating that "[w]ith the  



                                                                                                                                                     

finding of no harm, and the desire to award plaintiff zero damages, there can be no other  



                                                                                                                                                       

explanation other than the fact that the jury relied on the other cases as presented and  



                                                                                                                                          

argued by plaintiff." At the close of the punitive damages portion of the trial Gonzalez's  



                                                                                                                                                    

attorney estimated that GEICO's nondisclosure of UIM coverage benefits led to about  



                                                                                                                                               

$450,000 of financial gain.  The superior court later observed "that the jury's punitive  



                                                                                                                                          

damages award of $450,000 is suspiciously close to the figure suggested by Gonzalez's  



                                                                                                                                                        

counsel for harm incurred by other, nonparty insureds." But the court correctly noted that  



                                                                                                                                              

the resemblance between the figures is not enough to overturn the punitive damages  



                                                                                                                                                          

award.   Alaska Statute 09.17.020 permits the fact finder to consider "the amount of  



                                                                                                                                                         

financial gain" when making a punitive damages award, and that appears to have been the  

                                                                              51   The discussion of harm to others also was  

                                                                                                                                                       

context of Gonzalez's attorney's statement. 



used as evidence of GEICO's "particularly bad conduct," a permissible reference to  

                                                                                                                                                          

reprehensibility.52   In context Gonzalez's attorney's statement was much less potentially  

                                                                                                                                           



              49         Id.  at  351.  



              50         Id.  at  357-58.  



              51          AS  09.17.020(c)  ("[T]o  determine  the  amount of                                      punitive  damages  to  be  



  awarded,  the  fact  finder  may  consider   . . . the  amount  of  financial  gain  the  defendant  

  gained  or  expected  to  gain  as  a  result  of  the  defendant's  conduct.").  



              52          See Philip Morris, 549 U.S. at 355.  

                                                                                  



                                                                            -22-                                                                     7195   


----------------------- Page 23-----------------------

                                                                                                                                       53  

misleading than the express request to consider "market                                share"of harmin           Philip Morris.             



                                                                                                                              

We are not persuaded that the jury in this case used punitive damages to punish GEICO  



                    

for harm to others.  



                                                                                                                                   

                     GEICO           lastly      argues        that     "AS        09.17.020(f)(2)             and      (g)(3)       are  



                                                                                                               

unconstitutional because these subsections permit recovery of up to $500,000.00 and  



                                                                                                                             

 $7,000,000.00, respectively."  But those figures represent the upper limits of punitive  



                                                                                                                                

damages in Alaska, and that statute does not demand such awards when they would  



                                                                                                                                  

violate  the  United  States  Supreme  Court's  due  process  decisions.                                          GEICO's  final  



                                                                                                               

argument is unpersuasive, and we affirm the jury's punitive damages award.  



                                                                                                                                   

                     3.         The superior court correctly identified the claim accrual date  

                                                                                               

                                and pre- and post-judgment interest rate.  



                                                                                                                                  

                     Thesuperior courtdetermined that Gonzalez's bad faithclaimarosein 1996,  



                                                                                                       54  

                                                                                                                                    

requiring GEICO to pay 10.5% pre- and post-judgment interest.                                              GEICO argues that  



                                                                                                                                   

Gonzalez's claim did not arise until 1998, resulting in a much lower rate of pre- and post- 

                             55    GEICO's argument rests on AS 09.30.070(b), which Gonzalez  

                                                                                                                           

judgment interest. 



argues does not apply to this case.  

                                                        



                     Alaska  Statute  09.30.070(b)  states  in  pertinent  part  that  "prejudgment  

                                                                                                                    



interest accrues from . . . the day the defendant received written notification that an injury  

                                                                                                                                 



has occurred and that a claim may be brought against the defendant for that injury."  But  

                                                                                                                                     



            53        Id.  at 350.   



            54         Compare  former  AS  09.30.070(a)  (1996),  with  AS  09.30.070(a);  see  

                                                                                                                                     

  Marine Sol. Servs., Inc. v. Horton, 70 P.3d 393, 415 (Alaska 2003) (holding that former  

                                                                                                                                

  version of AS 09.30.070(a), providing for 10.5% interest, applied to causes of action  

                                                                                                                                 

  accruing before August 7, 1997).  

                                             



            55         See Marine Sol. Servs., 70 P.3d at 415 (noting that for causes of action  

                                                                                                                                 

  accruing after August 7, 1997, interest rate is "three percentage points above the 12th  

                                                                                                                                   

  Federal Reserve District discount rate" (citing AS 09.30.070(a))).  

                                                                                  



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----------------------- Page 24-----------------------

we have held that AS 09.30.070(b) applies "only to actions for personal injury, death, or                                                              



                                                                                                                                   56  

damage to property, and does not apply to claims for purely economic loss."                                                                      

                                                                                                                                       In all other  



                                                                                                                                                      

cases  interest  begins  to  accrue  when  the  claim  arises,  rather  than  when  notice  is  

                57      The  superior  court's  decision  appears  to  have  been  based  both  on  

received.                                                                                                                                 



AS 09.30.070(b) and our decision in Alderman v. Iditarod Properties, Inc. , a breach of  

                                                                                                                                         

contract  case  to  which  that  provision  did  not  apply.58                                                But  regardless  whether  

                                                                                                                                          



AS 09.30.070(b) applies here, the superior court did not err in its determination of the  

                                                                                                                                                     



prejudgment interest accrual date.  Gonzalez's claim arose, and GEICO received notice  

                                                                                                                                               



that Gonzalez might bring a claim, at least by August 1996.  On August 7 Gonzalez's  

                                                                                                                                      



attorney demanded UIM benefits and expressly stated that "[i]f you fail to respond to this  

                                                                                                                                                    



demand within [15 days] you will, undoubtedly, be placing your insured in an excess  

                                                                                                                                              

                                                                                                 59    GEICO failed to respond to  

position and subjecting [GEICO] to a bad faith suit."                                                                                                 

                                                                                        



Gonzalez's  UIM claim, leading her  attorney to  reiterate in  an  August 15 letter  that  

                                                                                                                                                   

                                                                                                                    60    Gonzalez's claim  

Gonzalez "will not waive her right to pursue the UIM further."                                                                                  

                                                                                                      



             56          K  &  K  Recycling,  Inc.  v.  Alaska  Gold  Co.,  80  P.3d  702,  724  (Alaska  2003)  



  (quoting  Beaux  v.  Jacob,  30  P.3d  90,   100  (Alaska  2001)).  



             57          See  Rice  v.  Denley,  944  P.2d  497,  501  (Alaska   1997).  



             58          104  P.3d   136,   145  (Alaska  2004).  



             59          See  Pagenkopf  v.  Chatham  Elec.,  Inc.,   165  P.3d  634,  645  (Alaska  2007)  



  (holding,  under  AS  09.30.070(b),  that  a  defendant  "does  not  need  to  receive  notice  of  an  

  actual   claim,   but   rather   only   needs  to  receive   notice   that   a   claim   may   be   brought"  

  (emphasis  in  original)).  



             60          Although we prescribe slightly different tests for when contract claims and  

                                                                                                                                                    

  tort claims arise, here the "date of injury" and the "date of breach" are both August 15,  

                                                                                                                                                     

  when GEICO first failed to respond to Gonzalez's demand for UIM coverage.  Morris  

                                                                                                                                              

  v. Morris, 724 P.2d 527, 529 (Alaska 1986) ("In contract actions, rights to prejudgment  

                                                                                                                                    

                                                                                                                                  (continued...)  



                                                                          -24-                                                                   7195   


----------------------- Page 25-----------------------

 accrued at least as of that letter, when it became apparent that GEICO was unwilling to                                                                                                                                                                                



 investigate or pay her claim. And Gonzalez expressly put GEICO on notice of a potential                                                                                                                                                                                                                                                                          



 lawsuit by threatening a bad faith claim and preserving her right to continue seeking UIM                                                                                                                                                                                                                                                                                              



 benefits.   Under any theory Gonzalez was entitled to prejudgment interest as of August                                                                                                                                                                                                                                                                                     



  1996.  



                                C.                            Post-Trial Motions   



                                                              Gonzalez filed a number of post-trial motions related to the verdict and                                                                                                                                                                                                                                                      



judgment,   seeking   judgment   notwithstanding   the   verdict   (JNOV),   a   new   trial,   and  



 amendment of the judgment                                                                                                       nunc pro tunc                                                     .   Her motions for JNOV and a new trial both                                                                                                                                          



 arose from the jury's verdict awarding nominal damages but not compensatory damages,                                                                                                                                                                                                                                                                               



 an award she claims was insufficient to remedy her harm.                                                                                                                                                                                                                



                                                              1.                            The court did not err by denying Gonzalez's JNOV motion.                                                                                                                                                                                                    



                                                              Gonzalez argues that the superior court erred by denying her motion for                                                                                                                                                                                                                                                           



 JNOV.     Gonzalez requested that the superior court change the jury's answer to the                                                                                                                                                                                                                                                                                                         



 question whether GEICO's bad faith was a substantial factor in causing her harm from                                                                                                                                                                                                                                                                        



 "no" to "yes."                                                    The superior court denied the motion, stating that "[t]he evidence at trial                                                                                                                                                                                                                                              



 could lead a reasonable jury to conclude that Gonzalez did not suffer financial hardship                                                                                                                                                                                                                                                                             



 from the delayed payment."                                                                                                         The court noted that Gonzalez ultimately did receive the                                                                                                                                                                                                    



 UIM benefits and that in the meantime she had received a bodily injury settlement.                                                                                                                                                                                                                                                                                                          On  



 appeal Gonzalez argues that the superior court's reliance on those facts to support its                                                                                                                                                                                                                                                                                                          



                                                                                                                                                                                                                                                                                                                                                                               61  

 decision was flawed and that the decision was contrary to our holding in                                                                                                                                                                                                                                                                   Ennen.    



                                60                            (...continued)  



                                                                                                                                                                                                                                                                                                                                                                                                    

     interest generally arise on the date of breach.  In tort actions, they arise on the date of  

     injury.").  



                                   61                             268 P.3d 277, 291 (Alaska 2012).  

                                                                                                                                                                                              



                                                                                                                                                                                                 -25-                                                                                                                                                                                    7195   


----------------------- Page 26-----------------------

                            "In reviewing the denial of motions for a directed verdict or JNOV, we do                                                                           



                                                                                                                                             62  

not weigh conflicting evidence or judge the credibility of witnesses."                                                                                           

                                                                                                                                                  "[W]e determine  



                                                                                                                                                                          

whether the evidence, when viewed in the light most favorable to the non-moving party,  



                                                                                                                                                                        63  

                                                                                                                                                           

is such that reasonable persons could not differ in their judgment as to the facts." 



                            As we interpret the verdict, the jury found that although GEICO acted in bad  

                                                                                                                                                                               



faith by delaying payment and therefore caused Gonzalez some harm, Gonzalez failed to  

                                                                                                                                                                                  



prove that GEICO's bad faith was a substantial factor in causing additional compensatory  

                                                                                                                                                         



damages beyond GEICO's post-lawsuit payment of the policy benefits plus interest.  

                                                                                                                                                                                       



Viewing the evidence in the light most favorable to GEICO, reasonable minds could  

                                                                                                                                                                         



differ  whether  additional  harm  resulted  from  GEICO's  bad  faith,  making  JNOV  

                                                                                                                                                    



inappropriate.  Although Gonzalez testified about her financial distress the jury could  

                                                                                                                                                                          



have attributed her difficulties to ordinary life events, such as having a child and car  

                                                                                                                                                                               



trouble, rather than to GEICO's bad faith. The superior court did not err in relying on the  

                                                                                                                                                                               



facts of Gonzalez's financial circumstances, such as her receipt of the bodily injury policy  

                                                                                                                                                                         



limits, as those were relevant considerations for whether Gonzalez sufficiently proved  

                                                                                                                                                                       



financial and emotional damages.   Nor was the court's  decision contrary to Ennen,  

                                                                                                                                                                      



because the issue was not whether Gonzalez was harmed by GEICO's bad faith delay of  

                                                                                                                                                                                 



payment - she was - but rather whether she adequately proved additional financial and  

                                                                                                                                                                              

emotional harm.64   We therefore affirm the superior court's decision denying Gonzalez's  

                                                                                                                                                              



JNOV motion.  

               



                62           Ben Lomond, Inc. v. Schwartz                                    , 915 P.2d 632, 635 (Alaska 1996) (citing                                  



  Mullen v. Christiansen                          , 642 P.2d 1345, 1348 (Alaska 1982);                                            Richey v. Oen                 , 824 P.2d     

  1371, 1374 (Alaska 1992)).                 



                63           Id. (citing Mullen, 642 P.2d at 1348).  

                                                                                              



                64           See 268 P.3d at 291.  

                                                               



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