Summary
The Supreme Court of Alaska held that an automobile insurer was not required to pay additional Alaska Civil Rule 82 attorney's fees under underinsured motorist coverage when it had already paid the full potential attorney's-fee liability in settling the related liability claim. The court concluded that the insured was not underinsured with respect to court-awarded attorney's fees, although additional amounts were owed for the facial UIM limit and prejudgment interest. The court reversed the superior court's ruling requiring additional attorney's-fee payments.
Topics
Practice areas
Questions Presented
- Whether an automobile insurer must pay additional unlimited Alaska Civil Rule 82 attorney's fees under underinsured motorist coverage when it already paid the full Rule 82 attorney's-fee liability attributable to the same projected verdict under the liability coverage.
- Whether the UIM mirror rule requires an automatic duplicate payment under UIM coverage even when the insured is not underinsured with respect to the particular category of loss claimed.
Holdings
- State Farm was not required to pay additional Civil Rule 82 attorney's fees under the UIM coverage because Lestenkof was not underinsured with respect to court-awarded attorney's fees.
- The UIM mirror rule does not require courts automatically to award under UIM coverage an amount duplicating the liability recovery; the relevant inquiry is whether the insured is underinsured as to the specific type of loss.
Key quotations
“We conclude therefore that although Odden's UIM coverage included mirror-image coverage for unlimited court-awarded attorney's fees, that coverage may not be invoked under the facts of this case.” (509)
“Odden was fully insured, rather than underinsured, with respect to his potential liability for court-awarded attorney's fees.” (509)
“As a result, Lestenkof may not recover Civil Rule 82 attorney's fees as part of her UIM claim.” (509)
Factual background
Timothy Lestenkof died in a 1998 automobile collision involving a vehicle driven by Keith Odden, whose State Farm policy provided $50,000 in liability coverage and equivalent UIM coverage. Because the policy's attempted limitation on attorney's-fee coverage did not conform to the required Alaska insurance notice, State Farm remained responsible for unlimited Rule 82 attorney's fees on the liability claim. State Farm paid $172,160.27 to settle the liability claim, including the $50,000 policy limit, prejudgment interest, and Rule 82 fees calculated on a hypothetical $1,000,000 verdict; it had also made a $62,313 advance UIM payment. Lestenkof sought approximately $110,000 more under the UIM coverage, including additional attorney's fees.
Procedural history
After State Farm paid liability-policy proceeds and an advance UIM payment, Lestenkof requested approximately $110,000 in additional UIM benefits representing the difference between the liability settlement and the advance UIM payment. State Farm filed a declaratory-judgment action asserting that additional payment would create a double recovery. The parties filed cross-motions for summary judgment, and the superior court ruled for Lestenkof. After that ruling, the parties agreed to use a hypothetical $1,000,000 verdict for evaluating the UIM claim. The Alaska Supreme Court reversed.