Court: Alaska Supreme Court; June 30, 1992; Alaska; State Supreme Court
The case In re Soldotna Air Crash Litigation involves a cross-appeal concerning the assessment of costs and attorney's fees in a wrongful death action. The Supreme Court of Alaska reviewed the trial court's decision that imposed liability for costs and fees solely against the estates of the deceased, despite the wrongful death actions being brought on behalf of statutory beneficiaries, not the estates themselves. The court found this approach to be erroneous, vacating the trial court's judgment and remanding the case for a reassessment of costs and attorney's fees liability.
In this consolidated litigation, seven widows, representing their deceased husbands, filed wrongful death actions against multiple defendants, including SouthCentral Airlines, which did not settle and proceeded to trial. The trial ended with a jury verdict favoring SouthCentral. Following the trial, SouthCentral sought an award for costs and attorney's fees, which the trial court initially assessed at $38,312.62 but delayed final judgment on the matter. SouthCentral attempted to secure the settlement funds received by the plaintiffs from other defendants to cover its anticipated costs and fees but was rebuffed by a separate court ruling. Ultimately, the case highlights the legal complexities surrounding the liability for costs in wrongful death claims and the appropriate parties responsible for such costs.
Judge Charles J. Cranston acknowledged his discretion to set attorney's fee amounts but not to determine the allocation of costs among plaintiffs in joint actions. Consequently, he did not clarify whether liability for costs and fees was joint and several or pro rata among the plaintiffs. On May 19, 1988, the court granted attorney's fees totaling $247,650, without specifying which plaintiffs were liable or the nature of that liability. Following this, SouthCentral sought to secure its total award of $285,962.62 by obtaining a temporary restraining order on May 25, 1988, to prevent the transfer of settlement funds. However, the court vacated this order on June 1, 1988, asserting that SouthCentral had an adequate legal remedy through a writ of execution. On June 10, 1988, the court directed the clerk to issue these writs, designating that the judgment for costs and fees would be assessed pro rata, with each plaintiff responsible for one-seventh of the total. In June 1988, SouthCentral also facilitated judgment debtor exams for all plaintiffs and beneficiaries, while the court imposed further temporary restraining orders on property that could be subject to execution. On August 22, 1988, Judge Cranston issued a Clarification Order, reaffirming the pro rata liability among the seven plaintiffs and stipulating that judgments would apply to plaintiffs only as personal representatives unless individual claims were made. Beneficiaries would not be liable unless named in the judgment or a claim was asserted on their behalf. Additionally, any inquiries related to judgment debtor examinations were limited to the actions of personal representatives regarding their estates, unless individual claims were involved.
On October 4, 1988, the trial court issued an Amended Final Judgment awarding costs of $38,312.62 and attorney's fees of $247,650, totaling $285,962.62, accruing interest at 10.5% per annum until fully paid. Each estate is liable for one-seventh of this total on a pro rata basis, with the costs and fees chargeable against the estates through their personal representatives or individually named plaintiffs. However, subsequent orders from the court did not clarify that individual plaintiffs might also be liable, limiting the scope of judgment debtor examinations to the estates' assets.
Initially, the personal representatives appealed the jury verdict against them, but no issues from that appeal remain. SouthCentral cross-appealed, challenging the trial court's liability determinations regarding costs and fees. It contends that primary liability should extend to personal representatives and statutory beneficiaries, not just the decedents' estates. Additionally, SouthCentral argues for joint and several liability among all plaintiffs, estates, and personal representatives, contrary to the imposed pro rata liability. It also asserts that the initial clarification order correctly held named parties liable.
The document references Alaska Statute 09.55.580, which allows personal representatives to bring wrongful death actions on behalf of surviving beneficiaries, emphasizing that the action is fundamentally for the beneficiaries' benefit. The personal representative acts as a nominal party, holding any recovery in trust for the beneficiaries, unless no surviving dependents exist, in which case they become the real party in interest.
Damages in wrongful death actions are limited to losses incurred by the estate and are distributed as personal property of the deceased, with personal representatives acting on behalf of surviving beneficiaries. In the current case, the representatives of seven decedents initiated wrongful death claims, holding any recovery as trustees for the beneficiaries, without involving the decedents' estates. As a result, the trial court lacked grounds to classify the estates as nonprevailing parties for costs and attorney's fees under Civil Rules 79 and 82, leading to the vacation of the trial court's decision imposing costs on the estates.
The statute AS 09.60.010 allows the prevailing party to recover costs and attorney's fees, and the court's rules provide guidance on this matter. However, the current issue centers on statutory limitations regarding costs and fees associated with representatives. The law stipulates that costs may be imposed on representatives, but they are chargeable solely to the represented estate or fund, unless there is evidence of mismanagement or bad faith. Since the personal representatives did not represent the estates in their actions, costs and fees cannot be assessed against the estates. The trial court, however, recognized a "fund" that emerged from a settlement with defendants, which allowed for the assessment of costs against that fund, as specified in the wrongful death statute, which mandates that recovered amounts be allocated only after settling all costs and expenses of the suit.
The trial court erred by not reserving some or all of the settlement funds until it could fully assess the 'costs and expenses of suit' as required by AS 09.55.580. These expenses included potential costs owed to SouthCentral if they prevailed in the plaintiffs' ongoing action, necessitating the reservation of funds until that matter was resolved. Upon judgment favoring SouthCentral for costs and fees, the judgment would have been against the personal representatives in their official capacities, chargeable only against the reserved funds.
SouthCentral contends that the personal representatives should be personally liable for these costs and fees, citing Sloan v. Atlantic Richfield Co., where attorney's fees were awarded against a personal representative in a wrongful death action. However, the prior ruling did not clarify the capacity in which the representative was liable and did not establish a precedent for personal liability based solely on representative status. Liability for costs and fees is not applicable unless mismanagement or bad faith is proven.
SouthCentral's argument of mismanagement relies on the personal representatives pursuing disbursement of settlement funds while the action against SouthCentral was pending. The court disagreed, noting that the representatives acted under the trial court's approval to obtain fund distribution, indicating no mismanagement under the circumstances. Thus, the trial court's decision not to hold the personal representatives individually liable for costs and fees was deemed correct.
The trial court failed to reserve a portion of the plaintiffs' recovery to cover costs and fees, resulting in the fund being depleted. SouthCentral is entitled to pursue recovery of its costs and fees by tracing the distributed funds through the personal representatives to the statutory beneficiaries, as mandated by section 580(a) of the Death Act, which stipulates that costs must be paid before distribution. The trial court's approval of fund distribution without addressing these costs was erroneous. Upon remand, the court must vacate its prior judgment regarding costs and fees and impose liability against the personal representatives in their official capacity, specifying that this liability applies only to the actual beneficiaries.
SouthCentral also contests the trial court's decision to assess costs and fees against multiple plaintiffs on a pro rata basis rather than imposing joint and several liability. The court found that joint and several liability was not required under Stepanov v. Gavrilovich, as the consolidation of cases was not initiated by a united effort among the plaintiffs, and discretion was exercised appropriately by Judge Cranston. Although the pro rata assessment is being vacated, the trial court must reassess how costs and fees are allocated among beneficiaries, considering the fairness of its original decision.
Lastly, SouthCentral challenges the trial court's refusal to require three personal representatives, who also filed individual lawsuits, to appear for individual judgment debtor examinations, suggesting this decision effectively absolved them of costs and fees liability.
The personal representatives contend that SouthCentral's argument is based solely on the captions of various complaints and overlooks the substantive issues and evidence presented at trial. They assert that the trial court did not abuse its discretion by determining that the individually named plaintiffs were not nonprevailing parties in relation to costs and fees. SouthCentral, however, argues that as named plaintiffs, they are liable for costs and attorney's fees, a position deemed unpersuasive by the court. The court highlights that the captions in wrongful death actions can be misleading, noting that the estates listed as plaintiffs played no role in the case. It concludes that SouthCentral has failed to provide justification beyond the captions for disputing the trial court's prevailing party determination. Therefore, the trial court exercised its discretion properly under Civil Rules 79 and 82 by not imposing costs and fees on the individually named plaintiffs. The judgment regarding costs and attorney's fees is partially vacated and partially affirmed, with a remand for further proceedings.
In dissent, Justice Matthews argues that personal representatives should be held liable for distributing settlement funds without reserving enough for court-awarded costs and fees, as required by section 580(a) of the Death Act. He suggests that they may seek reimbursement from beneficiaries based on equitable principles and that potential defenses like res judicata or estoppel should be evaluated on remand. The excerpt also references relevant statutes and rules regarding wrongful death claims and the awarding of costs and fees in civil actions.
By early 1988, all personal representatives except Martha Rider had successfully distributed settlement funds to their beneficiaries. Martha Rider faced delays in disbursing the Rider share due to complexities in identifying statutory beneficiaries under the wrongful death statute. The court ordered SouthCentral to receive $247,650 for attorney and paralegal fees, which SouthCentral has not appealed. Disputes arose regarding SouthCentral's ability to enforce judgments against decedent estates, as the settlement funds went directly to beneficiaries, and the estates held little value. SouthCentral claims it has been unable to enforce its judgment, while personal representatives state SouthCentral satisfied some of its fees against certain estates, though they did not claim the legal issues were moot.
Awards of costs and attorney's fees are generally at the trial court's discretion, but this case also involves statutory construction, where the appellate court is not bound by the trial court's legal conclusions. A wrongful death claim encompasses all statutory beneficiaries, and settlements release all claims. The terminology in Chapter 60 of the Code of Civil Procedure broadly includes costs and attorney fees, while Civil Rule 79 is more specific. The trial court can allocate liability for costs in proportion to the settlement amounts recovered by each representative. In this case, plaintiffs recovered against two of three defendants, creating a fund for costs. The question of whether statutory beneficiaries can be liable for a prevailing defendant's costs and fees in cases where the plaintiffs do not prevail is left unresolved in this opinion. The individually named plaintiffs included Sharon Kay Breitenfeld, Patricia Ann Lazar, and Lorna Hodgin, who were all statutory beneficiaries and personal representatives. Additionally, AS 13.16.575 outlines the liability of distributees or claimants for improperly distributed property.
