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Catalina Yachts v. Pierce1/14/2005
No. 5860
BRYNER, Justice, dissenting.
I. INTRODUCTION
Jim and Karen Pierce rejected an offer of judgment made by Catalina Yachts under Alaska Civil Rule 68 in a breach of warranty case. The superior court denied Catalina's later motion for attorney's fees and costs under Alaska Civil Rule 68, holding that the rule did not apply and was preempted by the Magnuson-Moss Warranty- Federal Trade Commission Improvement Act. Because we conclude that Alaska Civil Rule 68 applies, we reverse and remand.
II. FACTS AND PROCEEDINGS
The underlying facts of this case are set out in Pierce v. Catalina Yachts, a breach of contract and warranty case that came before us in 2000. In summary, Jim and Karen Pierce purchased a new fiberglass sailboat from Catalina Yachts in 1992. Under the warranty, Catalina was responsible for repairing any blisters in the gel coat of the boat that occurred within a year of the boat being placed in the water. The Pierces claimed that their boat's hull developed blisters and that Catalina was responsible for repairing the hull under the warranty. The Pierces were unable to convince Catalina that the gel coat needed to be replaced. They filed suit, bringing claims under the federal Magnuson-Moss Warranty Federal Trade Commission Improvement Act and under Alaska law.
Before trial, in January 1996, the Pierces rejected a $38,000 offer of judgment from Catalina, made under Alaska Civil Rule 68. Following trial, the jury awarded the Pierces $12,445 as the reasonable cost of repair. The superior court then calculated the value of the Pierces' judgment using the formula we laid out in Farnsworth v. Steiner. Magnuson-Moss provides for awards of attorney's fees and costs for prevailing consumers like the Pierces; the superior court calculated the Pierces' fees and costs under the federal law through the date of the offer ($22,236). It then added that figure to the jury award ($12,445) and pre-judgment interest ($1,964), for a total judgment of $36,645, less than Catalina's offer. Under Rule 68, the Pierces were therefore barred from receiving post-offer fees and costs and Catalina was entitled to an award of post-offer fees and costs as well a reduced pre-judgment interest rate. The court awarded the Pierces $35,721 as their judgment as recalculated under Rule 68, awarded Catalina $35,211 in post-offer fees and costs, and offset the two amounts to reach a net award of $510 for the Pierces. Because we held on appeal that the Pierces were entitled to recover consequential damages on remand, we did not address the fee awards, apart from concluding that Magnuson-Moss entitled the Pierces to an award of attorney's fees. Following trial on remand, the jury determined that the Pierces suffered no consequential damages, and Superior Court Judge Larry C. Zervos agreed that the Pierces' damages claim was "frivolous."
Catalina moved for attorney's fees and costs under Alaska Civil Rule 68. The court looked first to Magnuson-Moss, which states:
If a consumer finally prevails in any action brought under . . . this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys' fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action . . . .
The court determined that Catalina, as a manufacturer and not a "consumer," was not entitled to attorney's fees and costs. The court also declared that the underlying policy goals of Magnuson-Moss do not support allowing defendants to recover at
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