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O'Donnell v. Johnson

Supreme Court of Alaska

June 5, 2009

Serena L. O'DONNELL, Appellant,
Iris I. JOHNSON, John F. Johnson, and Jane Doe, Appellees.

Page 129

Brett von Gemmingen, Law Offices of Brett von Gemmingen, LLC, Anchorage, for Appellant.

Barry J. Kell, Call, Hanson & Kell, P.C., Anchorage, for Appellees Iris I. Johnson and John F. Johnson.

Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.



The plaintiff's insurer paid her medical bills, thus acquiring a subrogation interest against the defendant and the defendant's insurer. The plaintiff's insurer informed the plaintiff's attorney that it would recover its subrogated medical payments directly from the defendant's insurer. The eventual settlement in the suit between the plaintiff and the defendant provided that, in addition to payment to the plaintiff, the defendant's insurer would satisfy the subrogated medical claim

Page 130

directly with the plaintiff's insurer. The plaintiff's attorney nonetheless sought a portion of the subrogated medical payment as fees under the common fund doctrine, but the superior court refused. Because our settled case law controls this case and has not been altered by later case law, and because the plain language of the settlement offer did not contemplate that defendants would pay any part of the subrogated claim directly to plaintiff, we affirm the superior court's exclusion of the subrogation payment from the judgment entered and the superior court's determination that the defendant owes no additional attorney's fees. On the issue of post-judgment interest, we also affirm the decision of the superior court because the defendant repeatedly attempted to pay the plaintiff.


In November 2002 Serena O'Donnell, insured by State Farm, was injured in an auto accident caused by Iris Johnson, who was insured by Allstate. After the accident, State Farm paid O'Donnell's medical bills, totaling $14,047, under the medical payments coverage portion of her policy, thereby obtaining a subrogated claim against the other driver and Allstate. In April 2003 State Farm sent a letter to O'Donnell's attorney informing him that it would pursue its subrogated interest directly with Allstate, and requesting that he not " incur any expense or attorney's time on behalf of collection of" State Farm's medical payment lien. In February 2004 State Farm sent a letter to Allstate asserting a subrogation claim for the medical payment lien.

In July 2007 the Johnsons made an offer of judgment to O'Donnell. The terms of the offer were that the Johnsons would

allow entry of judgment for plaintiff SERENA O'DONNELL in this action for the sum of SIXTEEN THOUSAND DOLLARS ($16,000) plus Civil Rule 79 costs, prejudgment interest, and schedule[ ] Rule 82(b)(1) attorney's fees. In addition, Allstate will satisfy the State Farm Insurance Company lien/subrogation interest ($14,046.80) directly to State Farm Insurance Company.

O'Donnell accepted the offer ten days later. On the same day, she filed a proposed final judgment with the superior court. That proposed judgment added the State Farm subrogation amount to the $16,000 to be paid to O'Donnell to result in a $30,047 principal amount. The superior court entered this proposed judgment as the final judgment on August 1, 2007, omitting attorney's fees and costs from the total.

On August 29, 2007, the Johnsons objected to the proposed final judgment on the grounds that the judgment was contrary to Alaska law and the plain language of the agreement. O'Donnell responded that the objection was untimely, having been due within ten days of the entry of judgment in accordance with Alaska Rules of Civil Procedure 59(f) and 58.1(c)(3). In October 2007 the court determined that it had erred in signing the previous final judgment because of the omission of costs and fees and because the base figure for calculation of attorney's fees should not have included the satisfaction of the subrogated medical payment. The court vacated the judgment, and granted the Johnsons' Motion for Relief of Judgment, calculating the fees, costs, and interest on the basis of the $16,000 offered to O'Donnell in the original offer for judgment.

O'Donnell then moved to join Allstate and State Farm, claiming that State Farm was obligated to make an appearance in the case if it was the " real party in interest" regarding the medical payment claim, and that Allstate also should be joined, because Allstate's offer to pay State Farm was an essential part of the judgment. O'Donnell claimed these joinders were necessary to protect O'Donnell against later claims for reimbursement from State Farm from the judgment paid to her and to ensure enforcement of all of the terms of the Johnsons' offer of judgment to O'Donnell. The Johnsons opposed the motion on the ground that the State Farm claim was never an element of O'Donnell's damages in her suit against the Johnsons under this court's rule in Ruggles v. Grow [1] that a subrogated claim belongs to the insurer, who cannot

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be required to assert its claim as part of its insured's claim against the tortfeasor. Further, the Johnsons argued that O'Donnell was aware at the time the agreement was signed that Allstate was not a party to the agreement. The court denied the motion to join the insurance companies and entered final judgment in November 2007.

Several additional post-judgment motions were then litigated. These motions primarily concerned O'Donnell's attorney's refusal to accept payment from Allstate of the judgment calculated in October and refusal to sign a satisfaction of judgment, as well as the Johnsons' attempts to obtain the release from the court registry of funds seized from their personal bank account by O'Donnell after the initial incorrect judgment. For the first time in late November, O'Donnell's attorney notified the Johnsons by letter of his belief that they should pay one-third of the State Farm medical payment subrogation amount to him, although the letter also acknowledged that at that time the full claim had been paid directly to State Farm. At a hearing in January 2008, O'Donnell argued that this court's ruling in S ...

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