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Blair v. Federal Insurance Co.

Supreme Court of Alaska

September 7, 2018

DANIEL BLAIR, Appellant,

          Appeal from the Superior Court of the State of Alaska, Superior Court No. 3AN-12-11530 CI Third Judicial District, Anchorage, William F. Morse, Judge.

          Gerald W. Markham, Friday Harbor, Washington, for Appellant.

          Cheryl L. Graves, Farley & Graves, P.C., Anchorage, for Appellees.

          Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.


          MAASSEN, Justice.


         A seaman sued his former employer and the former employer's liability insurer, claiming that the insurer had failed to pay him amounts due under the terms of a settlement agreement. The seaman asserted that the "policy limits" settlement included both the policy's stated limits and attorney's fees calculated under Alaska Civil Rule 82. The insurer, relying on the policy's notice that fees were included in the policy limits, argued that the settlement had been fully satisfied. The parties also disagreed about whether costs from a review of the seaman's medical bills were properly counted against the policy limits. After contentious discovery, the superior court granted summary judgment for the insurer, finding that the policy's Rule 82 notice was valid and that the settlement had been satisfied. The court awarded attorney's fees to the insurer as the prevailing party.

         The seaman appeals the grant of summary judgment, the denial of some discovery, and the award of attorney's fees. We affirm the superior court's summary judgment and discovery rulings except with regard to whether the costs of the medical review were properly deducted from the policy limits; we conclude that issues of fact precluded summary judgment on this issue. We reverse summary judgment only as to that issue, vacate the attorney's fees award, and remand for further proceedings.


         A. Facts

         Daniel Blair was injured in August 2008 while working onboard the F/V Invincible, a vessel owned and operated by Charles Fogle. Fogle held a policy of marine insurance issued by Federal Insurance Company. The policy's liability limit was "$ 1, 000, 000 Each Vessel... [for] Any One Accident or Occurrence." It also contained a notice, headed, "THIS POLICY LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL PROCEDURE 82," which summarized Alaska Civil Rule 82[1] and explained that "[i]f the limit of liability of the applicable coverage is $ 1, 000, 000 or more, we will not pay or indemnify you for any combination of judgment or claim settlement and attorney fees under Alaska Rule of Civil Procedure [sic] that exceeds the limit of liability of the applicable coverage."

         Blair and Federal, through their lawyers, negotiated over the course of several months and then reached a settlement agreement. Neither party discussed Rule 82 fees or the policy's Rule 82 notice during these negotiations. From the outset, however, the parties disagreed about the sum of $2, 268.78 paid to Mahl's Medical Review, a company that reviews medical bills in order to help "insurers save money by identifying and eliminating inaccurate, duplicate[, ] and unwarranted charges." Blair contended that the sum should not be deducted from the policy limits because Mahl's was engaged to lower costs for Federal's benefit, not Blair's. Our record shows no clear resolution of this issue during the negotiations.

         The parties signed their settlement agreement on December 27, 2009. The agreement reads, in part:

I, DANNY BLAIR, in exchange for the remaining policy limits under the vessel's $1, 000, 000 P&I [protection and indemnity] policy do hereby release and forever discharge Charles Fogle .... The P&I underwriter has calculated the remaining policy limits at $961, 447.81 and will pay that amount upon execution of this release. Mr. Blair reserves the right to claim additional amounts which he contends may be part of the policy limits, including any unpaid deductible. [2] The vessel owner and vessel's insurers do not agree that additional sums are due but if these sums are determined to be due as properly part of the P&I limits under this policy they will be paid.

Federal paid the specified sum of $961, 447.81 to Blair.

         B. Proceedings

         Nearly three years later-on December 11, 2012-Blair filed suit against Federal. He alleged that Federal had breached the settlement agreement by paying "substantially less" than the remaining policy limits, though his complaint did not identify what had not been paid. In May 2013 he filed a motion for partial summary judgment that clarified his claim. He argued that "[i]n arriving at its 'remaining policy limits' calculation Federal failed to address its obligation for [Rule] 82 attorney fees." Although acknowledging the existence of the Rule 82 notice in the policy, Blair contended that the notice did not comply with governing regulations of the Alaska Division of Insurance and was therefore void. Thus, Blair argued, the policy limits were the $ 1 million face value of the policy, less amounts already paid, plus Rule 82 attorney's fees. Blair also argued that Federal had improperly deducted the Mahl's bill from the policy limits.

         Federal cross-moved for summary judgment, arguing that the policy's Rule 82 notice was valid and that the settlement was for the sum certain of $961, 447.81, which it had promptly paid. Blair then moved under Alaska Civil Rule 56(f) for a continuance to conduct additional discovery, and the continuance was granted.

         A period of contentious discovery followed, in which the superior court conducted in camera review of some documents Federal claimed were privileged, ordered production of some requested documents but not others, and denied a motion to compel brought by Blair. The court then granted summary judgment in favor of Federal. It found that Federal's Rule 82 notice was lawful because it conformed with the standards imposed by the Division of Insurance. It also "construe[d] the Release to mean that parties completely settled the claim against the P&I policy by having Federal pay Blair $961, 447.81." The court awarded Federal, as the prevailing party, Rule 82 attorney's fees and costs.

          Blair appeals the superior court's orders granting Federal's cross-motion for summary judgment, denying his discovery motion, and awarding Rule 82 attorney's fees to Federal.


         We review a grant of summary judgment de novo.[3] "We will affirm a grant of summary judgment if there are no genuine issues of material fact and if the movant is entitled to judgment as a matter of law."[4] We draw all reasonable inferences in favor of the nonmoving party.[5]

         We review a superior court's discovery rulings, including decisions about "discovery sanctions, such as spoliation remedies, for abuse of discretion."[6] We will find an abuse of discretion upon a showing that a decision was "arbitrary, capricious, manifestly unreasonable, or stemmed from improper motive."[7]

         Whether the superior court applied the appropriate legal standard in awarding attorney's fees is a question of law that we review de novo.[8]


         A. The Superior Court Did Not Err By Entering Summary Judgment Against Blair On The Issue Whether Federal Owed Rule 82 Attorney's Fees Under The Settlement.

         We first address whether Federal's Rule 82 notice is valid and enforceable. Concluding that it is, we consider whether there is any other basis on which Blair could believe that the parties' settlement agreement entitled him to attorney's fees beyond the policy limits; we conclude there is not and that the superior court properly granted summary judgment on this issue.

         1. Federal's Rule 82 notice conformed to the notices written ...

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