Jason WOOTEN, d/b/a Glynwood Apartments, and Dennis Ray Skan, Appellants,
Jason HINTON, Lydia Martinez, Robert Brandon, and Samantha Moffet, Appellees.
Brett von Gemmingen, Law Offices of Brett von Gemmingen, LLC, Anchorage, for Appellants.
James J. Davis, Jr., Goriune Dudukgian, and Ryan Fortson, Northern Justice Project, Anchorage, for Appellees.
Before : FABE, Chief Justice, MATTHEWS, CARPENETI, and WINFREE, Justices.
FABE, Chief Justice.
This appeal addresses the claim of the owner and the senior apartment manager of the Glynwood Apartments (Glynwood) that they were the prevailing parties, and thus
entitled to attorney's fees, in a lawsuit brought by four of their tenants. Glynwood argues that because the tenants chose to dismiss their case with prejudice after they reached a settlement with Glynwood's insurance carrier, it is the prevailing party. Glynwood also appeals the trial court's refusal to award discovery sanctions against the tenants. Because the superior court acted well within its discretion, because accepting Glynwood's arguments would lead to a decision contrary to the policies in favor of settlement agreements, and because the real dispute in this case is between Glynwood and its insurance carrier, we affirm the superior court's judgment in all respects.
II. FACTS AND PROCEEDINGS
On April 5, 2006, four tenants, Jason Hinton, Lydia Martinez, Robert Brandon, and Samantha Moffet, filed a complaint for declaratory and injunctive relief and damages against their landlord, Jason Wooten, and senior apartment manager, Dennis Ray Skan. The tenants sought " to remedy the racist, illegal and abusive policies" they alleged Glynwood was applying to low-income tenants who lived at Glynwood Apartments. The tenants claimed that the Glynwood management team had created a " culture of fear and intimidation" by verbally abusing them and threatening them with " baseless eviction actions" as retaliation for routine maintenance requests. The tenants also alleged that Skan used racial epithets and that Glynwood evicted, intimidated, or bullied other African-American tenants of the apartment complex.
All four tenants alleged violations of Alaska's Uniform Residential Landlord Tenant Act, as well as claims of assault, wrongful eviction, threats of eviction, and intentional and negligent infliction of emotional distress. In addition, plaintiff Hinton alleged slander and violation of the Alaska Human Rights Act, and in an amended complaint, plaintiff Martinez alleged malicious prosecution.
Glynwood was initially represented by Brett von Gemmingen. Glynwood's insurance carrier then became involved in the case under a reservation of rights and Donald Thomas filed an entry of appearance as co-counsel. Thomas later stated that " the express reference" to himself as co-counsel in his entry of appearance " was done in recognition that so long as the insurer was defending under a reservation of rights, [Glynwood] had the right under AS 21.89.100 to be represented and defended in the lawsuit by their own independent counsel." Von Gemmingen then withdrew from the case, and he stated in a letter to Thomas that his " services as independent counsel" were no longer needed " [s]ince the insurer has elected to waive its coverage defenses by defending with [Thomas as] counsel." Thomas filed a motion to withdraw from the case, stating that " a dispute [had] arisen as to the legal effects" of his appearance as co-counsel for Glynwood. Glynwood then re-hired von Gemmingen as its attorney " at [its] own expense."
The following month, the tenants reached a settlement with Glynwood's insurer, under which the tenants received $45,000 in exchange for the release of their claims against Glynwood. The day the settlement was reached, Glynwood filed a motion to consolidate this case with a different action regarding the tenants' security deposits. On January 17, 2007, the tenants opposed the motion to consolidate and notified the court that they had reached a " global settlement" and would " be filing a stipulated dismissal of this case with prejudice in accordance with Civil Rule 41(a)." The tenants also notified the court that they had sent a copy of their opposition to the motion to Glynwood's counsel on the same date. But an affidavit by von Gemmingen dated January 24, 2007, maintained that he had " not had any settlement discussions with Plaintiffs or their attorneys" and that his clients had " not agreed to any settlement of this case." A week later Glynwood filed a motion to compel discovery and a request for sanctions.
Thirteen days later, on February 13, 2007, the tenants voluntarily moved to dismiss their case with prejudice under
Alaska Civil Rule 41(a)(2),  stating that their motion was " [i]n exchange" for a $45,000 settlement payment from Glynwood's insurer. Glynwood opposed the motion for voluntary dismissal and filed a cross-motion, seeking an entry of final judgment and designation as the prevailing party. Glynwood also asked the court to " reserve the settlement funds in the court registry" until the costs and fees owed to Glynwood could be determined.
Superior Court Judge Craig F. Stowers heard oral arguments on the cross-motions and granted the tenants' motion to dismiss their case with prejudice. The superior court concluded that the tenants were prevailing parties because Glynwood, through its insurer, had paid " a substantial amount of money" to settle the case and that " on those facts alone ... the plaintiffs would ...