Madsen et al v. Jacoby et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
JOHN MADSEN, et al.,
Plaintiffs,
vs.
RUSSELL LEE JACOBY, et al.,
Defendants.
Case No. 3:21-cv-00123-JMK
ORDER REGARDING POST-
VERDICT MOTIONS
Pending before the Court are several post-verdict motions. At Dockets 107
and 108 the parties filed cross-motions for attorney’s fees. At Docket 111 Defendants filed
a renewed motion for judgment as a matter of law, and at Docket 112 they filed a motion
requesting a new trial. 	The Court first will address Dockets 111 and 112, and then will
address the competing motions for attorney’s fees. 	As set forth below, Defendants’
Motions are DENIED. 	Plaintiffs’ Motion for Attorney’s Fees is GRANTED IN PART
and DENIED IN PART.
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I. 	BACKGROUND
A. 	Pre-October 9, 2020
Stephen Lake Lodge (“the Lodge”) is a remote lodge accessible by bush
plane which provides access to world class hunting and fishing.1 In approximately 2001,
John Madsen visited the Lodge as a customer and paid for a guided hunt.2 Subsequently,
in 2012, Mr. Madsen and his business partner, Geoffrey Rubin, purchased the Lodge.3 In
2015, Mr. Madsen bought out Mr. Rubin’s interest in the Lodge.4 	Mr. Madsen operated
the lodge as a profitable outfitting business.5 As an outfitter, Mr. Madsen would book the
hunts, but did not go out into the bush with customers.6 	Instead, customers would be
assisted in their hunts by licensed guides.7 Mr. Madsen worked closely with one registered
guide, 	Nick 	Pierskalla, 	and 	a 	team 	of 	licensed 	guides 	who 	worked 	underneath
Mr. Pierskalla.8 The guides, including Mr. Pierskalla, were independent contractors.9
For business reasons, the Lodge and the outfitting business were separated
into different limited liability companies.10 Stephan Lake Holdings LLC (“SLH”) owned
the real property, including the Lodge, and Stephan Lake Adventures LLC (“SLA”) was
the outfitting business.11
1 Docket 126 at 8.
2 Id. at 7.
3 Id. at 9.
4 Id. at 11.
5 Id. at 11–13.
6 Id. at 13–14.
7 Id.
8 Id. at 10–11, 20–21.
9 Id. at 4.
10 Docket 127 at 14–15.
11 Id.
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At some point, Mr. Madsen became interested in selling the Lodge because
he wanted to distance himself from the demands of running SLA.12 In the spring of 2020,
Mr. Madsen and Defendants began negotiations to sell the Lodge.13 From the beginning
of those negotiations, Mr. Madsen intended to retain an ownership interest in SLH so he
could recreate at the Lodge.14
Defendants operate an outfitting business in Arizona where they guide
hunts.15 	Defendants’ 	Arizona 	operation 	benefits 	from 	many 	repeat 	customers.16
Defendants’ Arizona operation also depends heavily on social media.17 In contemplating
the purchase of SLA/SLH, Defendants intended to follow their Arizona business model
and market the Lodge through social media as well as to customers who previously had
visited.18
After the parties had negotiated the basic terms that ultimately would be
finalized, Defendants traveled to Alaska to perform a due diligence trip.19 	Defendants
incurred various expenses, such as air fare, lodging, and hunt permits, while performing
their due diligence trip.20 The due diligence trip took place from August 21, 2020, through
September 2, 2020, overlapping with the moose hunt in Alaska.21 The due diligence trip
12 Docket 126 at 13.
13 Docket 128 at 35.
14 Docket 127 at 8–9.
15 Docket 128 at 11–13.
16 Id. at 12–13.
17 Id. at 24–25.
18 Id. at 25–26.
19 Id. at 15–16.
20 Id. at 17.
21 Docket 126 at 19.
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was important, not only for Defendants to see the Lodge, but also to develop a relationship
with Mr. Pierskalla.22
B. 	October 2020 through December 18, 2020
On October 9, 2020, the parties signed a contract titled “Agreement for
Purchase, Sale and Assignment of Membership Interests”23 (the “Sale Contract”). The Sale
Contract provided a purchase price of $1,500,000.00 for the sale of Mr. Madsen’s entire
interest in SLA, as well as 95 percent of Mr. Madsen’s interest in SLH.24 The Sale Contract
structured some of the payments from Defendants to Mr. Madsen based on the underlying
debt Mr. Madsen owed to Mr. Rubin which encumbered the real property SLH owned.25
The Sale Contract required Plaintiffs to provide Defendants with “[e]xisting client list for
SLA and SLH for all past clients.”26 	The Sale Contract also required SLA retain all
marketing materials, including social media accounts for Defendants’ benefit.27
Mr. Madsen did not keep a running list of clients who visited the Lodge.28
Instead, Mr. Madsen provided Defendants with hunt records that Mr. Pierskalla had
available, dating back to 2019.29 	Mr. Madsen told Defendants they could obtain hunt
records prior to 	2019 	by contacting 	the 	Alaska Department of Fish and Game.30
22 Id. at 21.
23 Docket 110-1.
24 Id. at 3.
25 Id. at 4.
26 Id. at 6.
27 Id. at 9.
28 Docket 126 at 22–25.
29 Id.
30 Id. at 26.
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Mr. Madsen did not maintain social media accounts for the Lodge and did not have access
to the Lodge’s Facebook account.31
From 	mid-October 	through 	mid-December 	2020, 	Defendants 	acted 	as
owners of the Lodge.32 	During this time, Defendants did not travel to the Lodge or
personally occupy it, but instead arranged for Mr. Patrick Schille to look after it.33
In October 2020, Defendants communicated with Mr. Pierskalla regarding
available hunts near the Lodge, as well as appropriate wages for guides.34 Subsequently,
on December 7, 2020, Mr. Pierskalla messaged Defendants expressing frustration that
Defendants had been looking for another registered guide.35 Mr. Pierskalla explained that
he had been waiting for Defendants to make him an offer for pre-season consulting services
and that he would not be providing any more assistance until his employment and
compensation details were ironed out.36
In early December 2020, Defendants called Mr. Madsen and recorded the
conversation, without Mr. Madsen’s knowledge.37 On the recorded phone call, Defendants
again asked Mr. Madsen about the client list required by the Sale Contract and expressed
disappointment that the list only contained hunt logs.38 	On that same phone call,
Defendants also asked about social media, websites, and marketing; Mr. Madsen indicated
31 Docket 127 at 11–12.
32 Docket 129 at 26–28.
33 Id.
34 Docket 122-2 at 15.
35 Id. at 20.
36 Id. at 20–21.
37 Docket 129 at 35.
38 Docket 128 at 28–31.
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he did not have access to any social media or marketing for the Lodge.39 	On December
14, 2020, Defendants terminated the Sale Contract and indicated they would vacate the
Lodge by December 18, 2020, and would not make any future payments.40 	Defendants
asked their agent, Mr. Schille, to take a video to document the condition of the premises
before he departed from the Lodge.41
C. 	Late December 2020 through Spring 2021
Mr. Stephen Hastings 	had worked 	with 	Mr. Madsen since 2018 and
transported clients out to the Lodge.42 In December 2020, Mr. Hastings was checking on
his own remote cabin, which is in the vicinity of the Lodge.43 	During this time, he flew
over the Lodge and observed an aircraft on the landing strip near the Lodge in the process
of loading propane canisters.44
Sometime in late December, Mr. Madsen asked Mr. Hastings to check on the
Lodge because Defendants “had essentially abandoned it.”45 Mr. Hastings observed that
trash, food, extension cords and generators all had been left out.46 Mr. Hastings reported
his observations to Mr. Madsen.47 Mr. Madsen asked Mr. Hastings to return and clean up
the Lodge.48 Mr. Hastings returned in a small aircraft and attempted to pack the snow on
39 Id. at 31–32.
40 Id. at 33; Docket 129 at 14.
41 Docket 129 at 13–15.
42 Docket 128 at 2.
43 Id. at 10.
44 Id.
45 Id. at 3–4.
46 Id. at 4.
47 Id. at 5.
48 Id.
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the runway which would allow for a larger aircraft to land.49 Mr. Hastings was unable to
pack the airstrip because the machine used to do so was not functional.50 	Mr. Hastings
observed the machine in working condition several months earlier when he helped
winterize the Lodge.51 	Mr. Hastings also noticed a four wheeler was left in a state of
disrepair at the Lodge.52 As was the case with the other machine, Mr. Hastings had used
the four wheeler in the fall of 2020 and experienced no issues with it at that time.53
When Mr. Madsen took back possession of the Lodge from Defendants,
many of the consumables had been used and not restocked.54 This included several 500-
gallon gasoline tanks, a 1,000-gallon generator tank, a 300-gallon tank for the water heater,
a 250-gallon fuel tank for the boats, and a handful of small gas cans. 	There also were
roughly 25 propane canisters weighing between 40 and 100 pounds that were removed
from the Lodge and not returned.55
D. 	Legal Proceedings
In February 2021, Plaintiffs filed suit against Defendants in the Superior
Court for the State of Alaska.56 	In May 2021, Defendants removed the case to the U.S.
District Court for the District of Alaska.57 On September 28, 2022, Plaintiffs sent an Offer
49 Id. at 5–6.
50 Id. at 6–7.
51 Id. at 7.
52 Id. at 8.
53 Id. at 8–9.
54 Docket 126 at 28–30.
55 Id. at 30.
56 Docket 1-1.
57 Docket 1.
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of Judgment to Defendants.58 The Offer of Judgment would have awarded $125,000.00 to
Defendants and resolved the case in its entirety. 59 Defendants did not accept the Offer of
Judgment, and the case proceeded to trial.
At Docket 68, Defendants filed their Final Witness List, which included
Mr. Schille. On the morning of the first day of trial, Defendants requested Mr. Schille be
permitted to testify telephonically because “there’s a lot of flooding. 	And for him to be
able to get here, he would have to do a lot of things, including going down a river, hiking
nine miles and then maybe getting a bush plane.”60 	Plaintiffs opposed Mr. Schille
participating telephonically, and asked the Court to hear from Mr. Schille directly before
making a final decision.61 Plaintiffs noted that no affidavit to support their assertion was
attached to Defendants’ Motion at Docket 93.62 	The Court inquired about the testimony
Defendants intended to elicit from Mr. Schille and Defendants answered that Mr. Schille
would be testifying about the videos he took of the Lodge at the time possession of the
Lodge went from Defendants to Mr. Madsen.63 When Mr. Schille called in telephonically,
the Court asked why he was unable to testify in person.64 	Mr. Schille said nothing of
adverse flooding conditions, only that the trip would be inconvenient for him, but noted
that if one Defendant drove from Anchorage to Talkeetna to pick him up he would be able
58 Docket 107-1.
59 Id.
60 Docket 125 at 6.
61 Docket 126 at 2–3.
62 Id.
63 Docket 127 at 4.
64 Id. at 5.
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to testify in person.65 Accordingly, the Court denied Defendants’ request for Mr. Schille
to testify telephonically.66 	Mr. Schille was not called as a witness.67 	Defendant Shawn
Morrison authenticated that videos recorded by Mr. Schille were true and accurate
representations of the Lodge based on his personal knowledge, and articulated that the
videos were taken by Mr. Schille at his request.68 Over an objection by Plaintiffs, the Court
allowed the videos to be entered into evidence and instructed the jury that the videos were
only relevant if the jury found that Mr. Schille recorded the videos in accordance with
Mr. Morrison’s 	instructions.69 	On 	cross 	examination, 	Plaintiffs 	pointed 	out 	that
Mr. Morrison did not have personal knowledge of when the videos were recorded.70
At Docket 81, the Court directed the parties to file proposed special verdict
forms by July 13, 2023. At Docket 90, Defendants objected to the use of a special verdict
form. The Court commented that “there are a lot of confusing aspects as to this case, both
the claims, counterclaims, and affirmative defenses.”71 On the first day of trial it was not
clear to the Court whether Defendants were raising misrepresentation as an affirmative
defense, a separate tort claim, or both.72 	The Court decided to employ a special verdict
form to provide the jury with a framework upon which to make its determination.73
65 Id. at 5–6.
66 Id. at 6.
67 Docket 101.
68 Docket 129 at 9–17.
69 Id. at 17–19.
70 Docket 132 at 4–8.
71 Docket 125 at 3.
72 Id. at 8–9.
73 Id. at 4.
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On the second day of trial, the Court further discussed with the parties the
difference 	between 	the 	affirmative 	defense 	of 	misrepresentation 	and 	the 	tort 	of
misrepresentation.74 	Specifically, Plaintiffs explained that the jury instruction regarding
the affirmative defense of misrepresentation should come before the instruction regarding
the tort of misrepresentation.75 Plaintiffs took this position because, if the jury found that
the affirmative defense was applicable, there should be an instruction regarding ratification,
because ratification only applies to the affirmative defense and not to stand-alone tort
claims.76 	Defendants argued that the special verdict form should prompt the jury to
consider the tort of misrepresentation, even if they found in Defendants’ favor for the
affirmative defense of misrepresentation.77 	Defendants explained that application of the
affirmative defense would limit Defendants’ damages to the value of deposit of the Sale
Contract while proving the tort of misrepresentation would permit recovery of earlier costs
incurred by Defendants in preparing to enter the Sale Contract, such as costs associated
with the due diligence trip.78
On the morning of the fifth day of trial, the Court discussed several
modifications the parties had requested to the Jury Packet.79 	After incorporating the
requested modifications, the Court explained that the Jury Packet would be finalized later
that day and that counsel for both parties would have a chance to review and “put on the
74 Docket 126 at 31–32.
75 Id. at 32.
76 Id.
77 Id. at 33–35.
78 Id. at 34.
79 Docket 129 at 2–5.
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record any objections that they might have to that final packet.”80 	After the parties
reviewed the finalized Jury Packet, the Court asked Defendants if they had “any issues with
the final jury packet that need to be discussed.”81 Counsel for Defendants responded they
did not have any issues with the finalized Jury Packet, including the special verdict form.82
During closing arguments, Defendants asked the jury to fill out the special
verdict form by answering “no” to question one and then skipping questions two through
five, and answer question six.83
On July 25, 2023, the jury reached a verdict.84 Before ushering the jury into
the courtroom, the Court met with the parties to discuss the procedure for reading the
verdict.85 Counsel for Defendants, appearing virtually,86 indicated he had no problem with
the normal procedure outlined by the Court.87 The jury was ushered into the courtroom,
the Court received the unanimous verdict and read it into the record.88 The jury found that
Defendants did not breach the Sale Contract, but that Defendants did breach the covenant
of good faith and fair dealing, and awarded one dollar to Plaintiffs.89 	The jury further
80 Id. at 5.
81 Docket 132 at 13.
82 Id.
83 Docket 129 at 43–45.
84 Docket 100-4; Docket 105.
85 Docket 131 at 2–3.
86 Counsel for Defendants requested permission to give closing arguments immediately
after the close of evidence. Plaintiffs agreed to the unorthodox procedure and the Court granted
Defendants’ request. Counsel for Defendants gave closing argument on day five of trial, and then
left the District of Alaska. On day six of trial, Plaintiffs gave closing arguments. See Docket 129
at 22–24; Docket 130 at 1–3.
87 Docket 131 at 3.
88 Id. at 4.
89 Docket 105 at ¶¶ 1, 6–7.
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found that Plaintiffs had not made intentional misrepresentations to Defendants, but that
they had made negligent misrepresentations to Defendants, and awarded one dollar to
Defendants.90 The Court then asked both parties if they wanted the jury polled, to which
the parties responded they did not.91 Subsequently, the Court asked each party if there was
anything that needed to be addressed.92 	Counsel for Defendants stated, “Not at the
moment, Your Honor. 	I have a feeling there may be some motions filed at later date on
our account.”93
Both sides filed motions seeking attorney’s fees and costs under a provision
in the Sale Contract. 	Defendants also filed motions seeking judgment as a matter of law
pursuant to Federal Rule of Civil Procedure (“FRCP”) 50 and a new trial pursuant to
FRCP 59.
II. 	LEGAL STANDARD
A. 	FRCP 50
FRCP 50(a) provides that “[i]f a party has been fully heard on an issue during
a jury trial and the court finds that a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue, the court may,” grant a motion for
judgment as a matter of law (“JMOL”).94 	If a court does not grant the moving party’s
JMOL, the moving party may renew its motion after trial pursuant to FRCP 50(b).95 The
90 Id. at ¶¶ 12, 14–15.
91 Docket 131 at 6.
92 Id.
93 Id.
94 Fed. R. Civ. P. 50(a).
95 Fed. R. Civ. P. 50(b).
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standard for JMOL “‘mirrors’ the summary judgment standard,”96 meaning that “[t]he
district court may not weigh evidence or make credibility determinations,”97 and must
“view the evidence in the light most favorable to the nonmoving party [] draw[ing] all
reasonable inferences in that party’s favor.”98 	“A jury’s verdict must be upheld if it is
supported by evidence adequate to support the jury’s conclusion, even if it is also possible
to draw a contrary conclusion.”99 JMOL is inappropriate unless the “evidence, construed
in the light most favorable to the nonmoving party, permits only one reasonable conclusion,
and that conclusion is contrary to the jury’s verdict.”100
B. 	FRCP 59
Under FRCP 59, a court may grant a motion for a new jury trial “for any
reason for which a new trial has heretofore been granted in an action at law in federal
court.”101 While FRCP 59 does not enumerate the grounds on which a new trial may be
granted, courts are “bound by those grounds that have been historically recognized.”102
“Historically recognized grounds include, but are not limited to, claims that the verdict is
against the weight of the evidence, that the damages are excessive, or that, for other
96 Reed v. Lieurance, 863 F.3d 1196, 1204 (9th Cir. 2017) (internal quotation marks
omitted) (quoting Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150, (2000)).
97 Dees v. Cnty. of San Diego, 960 F.3d 1145, 1151 (9th Cir. 2020) (quoting E.E.O.C. v.
Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009)).
98 Id. (quoting Go Daddy Software, Inc., 581 F.3d at 961).
99 Bridge Aina Le’a, LLC v. Land Use Comm’n, 950 F.3d 610, 624 (9th Cir. 2020)
(quoting Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002)).
100 Id. (quoting Castro v. County of Los Angeles, 833 F.3d 1060, 1066 (9th Cir. 2016) (en
banc)). 101 Fed. R. Civ. P. 59(a)(1)(A).
102 Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quoting Zhang v. Am.
Gem Seafoods, Inc., 339 F.3d 1020, 1035 (9th Cir. 2003)).
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reasons, the trial was not fair to the party moving.”103 Courts considering a motion for new
trial may “weigh the evidence and assess the credibility of witnesses.”104 	If a verdict is
“contrary to the clear weight of the evidence,” a district court should set aside the verdict
and grant a motion for new trial.105
III. 	DISCUSSION
A. 	Defendants’ Renewed Motion for JMOL
Defendants argue that “[n]o evidence or arguments concerning the breach of
implied good faith and fair dealing was ever submitted to the jury” and that, because the
jury found in Defendants’ favor for their negligent misrepresentation claim, the agreement
was void as a matter of law.106 	Plaintiffs respond that they provided sufficient evidence
for the jury to find in their favor concerning breach of the implied covenant of good faith
and fair dealing.107
The Court construes Defendants’ arguments as (1) a sufficiency of the
evidence argument and (2) a challenge to the special verdict form provided to the jury.108
103 Id. (quoting Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940)).
104 Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010) (citing Landes Const. Co. v. Royal
Bank of Canada, 833 F.2d 1365, 1371–72 (9th Cir. 1987)).
105 Molski, 481 F.3d at 729.
106 Docket 112 at 3–4.
107 Docket 117 at 5–6.
108 Docket 118 at 4 (“However, given the erroneous special verdict form, the jury was
permitted to disregard the law and enter an inappropriate compromise verdict . . . the jury was
never specifically asked if Defendants were able to prove whether the Agreement was void.”).
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1. 	Implied covenant of good faith and fair dealing
Defendants argue that Plaintiffs provided no evidence or argument regarding
Defendants’ breach of the implied covenant of good faith and fair dealing.109 	Plaintiffs
argue that because the covenant of good faith and fair dealing is implied in every contract
and does not alter the expectations to a contract, evidence regarding contract negotiations,
formation, execution, and performance, or lack thereof, all are relevant for establishing a
claim for breach of the covenant.110 Defendants’ assertion is not supported by the record.
Jury instruction number 21 outlines the elements for breach of the implied
covenant of good faith and fair dealing stating in relevant part:
Defendants breached the implied promise of good faith
and fair dealing if you find that it is more likely true than not
true that:
(1) Defendants intentionally deprived Plaintiffs of a
benefit of the Sale Contract; or
(2) Defendants deprived Plaintiffs of a benefit of the
Sale Contract by acting in a manner that a reasonable person
would regard as unfair.111
Drawing all inferences in favor of Plaintiffs, it is clear that Plaintiffs provided sufficient
evidence to support the jury’s verdict that Defendants breached the implied covenant of
good faith and fair dealing.
Plaintiffs provided evidence that Mr. Madsen stood to benefit from the Sale
Contract financially and in his personal life. Mr. Madsen was to receive $1,500,000.00 as
109 Docket 112 at 3–4.
110 Docket 117 at 5.
111 Docket 104 at 23.
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the purchase price under the Sale Contract.112 Defendants’ payments to Mr. Madsen were
to coincide with payments Mr. Madsen owed on a deed of trust encumbering SLH.113
Mr. Madsen stood to gain financial flexibility, not only from the overall purchase price,
but also the structure of the payments. 	Under the Sale Contract, Mr. Madsen retained a
five percent ownership interest in SLH.114 During trial, Mr. Madsen testified that his five
percent ownership interest would enable him to recreate at the Lodge in a personal capacity
without paying to stay at the Lodge.115 By contrast, the Sale Contract transferred the entire
ownership interest in SLA.116 Mr. Madsen testified that he was selling the business arm of
the Lodge in its entirety because he intended to reduce the demands on his time and
attention.117 Thus, Mr. Madsen stood to benefit personally by retaining access to an area
where he enjoyed recreating, without having the stresses associated with running SLA.118
Plaintiffs provided evidence to support a finding that Defendants had acted
in a manner that a reasonable person would view as unfair. Defendants could not run the
outfitting operation without Mr. Pierskalla.119 However, Mr. Pierskalla felt mistreated by
his prospective employers and demanded to sort out his employment details before he
would continue working with Defendants.120 	Plaintiffs pointed out that the relationship
112 Docket 110-1 at 3.
113 Id. at 4.
114 Id. at 3.
115 Docket 127 at 9 (explaining that Mr. Madsen would pay for consumables, but other
than that would not pay for operating costs or be entitled to profits generated by SLA).
116 Docket 110-1 at 3.
117 Docket 126 at 13; Docket 127 at 9.
118 Docket 126 at 8; Docket 127 at 9.
119 Docket 129 at 32 (“[W]e couldn’t ink this deal if Nick didn’t s[t]ay on. Nick was to
stay on so that there would be some continuity.”).
120 Docket 122-2 at 20–21; Docket 129 at 29–30.
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between Mr. Pierskalla and Defendants soured on or around December 7, 2020,121 just days
before Defendants informed Plaintiffs that they were going to vacate the lodge and cease
future payments.122 Plaintiffs argued that Defendants realized they were in “deep trouble”
and decided to walk away from the Sale Contract after they had soured their relationship
with Mr. Pierskalla, using the client list and social media access as pretextual excuses.123
When control of the Lodge was returned by Defendants, there was significant
damage to the vehicles; the premises was covered with trash; roughly 25 propane tanks
were missing; and Plaintiffs had used, but not replaced, much of the consumables on site,
such as gasoline.124
The jury may have believed Plaintiffs’ theory, namely that Defendants
mishandled their relationship with Mr. Pierskalla, and, when the relationship soured,
Defendants decided to renege on their obligations under the Sale Contract.125 	It is also
plausible that the jury believed Defendants removed propane tanks, damaged equipment,
and left trash on the premises before vacating the lodge.126 Based on these facts, there was
adequate evidence for the jury to find Defendants’ actions and motivations to be objectively
unfair.
Defendants’ assertion that Plaintiffs provided no evidence or argument to
support a finding that Defendants breached the implied covenant of good faith and fair
121 Docket 129 at 29–30.
122 Id. at 42–43.
123 Docket 130 at 3–4.
124 Docket 128 at 4–11; Docket 126 at 27–30.
125 Docket 130 at 3–4.
126 Docket 128 at 4–11; Docket 126 at 27–30.
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dealing is incorrect. Because the record contains sufficient evidence to support the jury’s
finding, the Court cannot grant Defendants’ Renewed Motion for JMOL.127
2. 	Special verdict form
Defendants argue that flaws in the special verdict form empowered the jury
to disregard the law and prevented the jury from determining whether the underlying
contract was void.128 Question one of the special verdict form asks the jury to determine
whether Defendants breached the Sale Contract and, if they answer “no,” the form directs
the jury to skip questions two through five, and answer question six regarding the implied
covenant of good faith and fair dealing.129 After the close of trial and the dismissal of the
jury, Defendants now take issue with this procedure because their affirmative defenses
contained in questions two, three, and four were skipped by the jury as a result of the jury’s
answer to question one.130
The Court finds that Defendants have waived this argument by failing to raise
it before the jury was dismissed. When a “moving party argues that the jury has rendered
a verdict that contains two legal conclusions that are inconsistent with one another, and the
moving party does not object before jury discharge,” the party has waived the argument.131
127 Bridge Aina Le’a, LLC, 950 F.3d at 624 (quoting Pavao, 307 F.3d at 918).
128 Docket 118 at 4.
129 Docket 105.
130 Docket 118 at 4.
131 E.g., Kode v. Carlson, 596 F.3d 608, 611 (9th Cir. 2010); Zhang v. Am. Gem Seafoods,
Inc., 339 F.3d 1020, 1028–29 (9th Cir. 2003) (“The failure to raise this issue prior to the return of
the verdict results in a complete waiver, precluding our consideration of the merits of the issue.”);
Philippine Nat. Oil Co. v. Garrett Corp., 724 F.2d 803, 806 (9th Cir. 1984) (“We hold that PNOC
waived its right to object to the verdict by failing to object when the verdict was read.”); Home
Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1331 (9th Cir. 1995) (“We conclude that
the district court properly refused to amend the judgment because Home waived its objection to
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With input and feedback from the parties, the Court created a jury instruction
packet (“Jury Packet”) consisting of jury instructions and the special verdict form.132 On
the morning of the fifth day of trial the Court met with the parties outside the presence of
the jury and discussed several requested modifications to the Jury Packet.133 	After
incorporating the modifications, the Court explained that the Jury Packet would be
finalized later that day and that counsel for both parties would have a chance to review and
“put on the record any objections that they might have to that final packet.”134 After the
parties reviewed the finalized Jury Packet, Defendants specifically indicated they did not
have any issues with the finalized Jury Packet, which included the special verdict form.135
During closing arguments, Defendants asked the jury to fill out the special
verdict form by answering “no” to question one and specifically outlining that the jury
would then skip questions two through five, and answer question six.136 The jury followed
the special verdict form, including the procedure highlighted by Defendants during closing
arguments.137
On July 25, 2023, the jury reached a verdict.138 Before ushering the jury into
the courtroom, the Court met with the parties to discuss the procedure for reading the
the jury’s verdict on its contribution claim by not objecting to the alleged inconsistency prior to
the dismissal of the jury.”).
132 See generally Docket 70; Docket 73; Docket 76; Docket 81 (text order); Docket 82;
Docket 85; Docket 86; Docket 89; Docket 90; Docket 104; Docket 105; see also Docket 125 at 4;
Docket 126 at 30–34; Docket 129 at 2–5.
133 Docket 129 at 2–5.
134 Id. at 5.
135 Docket 132 at 10, 13.
136 Docket 129 at 43–44.
137 Docket 105.
138 Docket 100-4; Docket 105.
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verdict.139 	Counsel for Defendants, appearing virtually,140 indicated he had no problem
with the normal procedure outlined by the Court.141 	The jury was ushered into the
courtroom, the Court received the unanimous verdict and read it into the record.142 	The
Court then asked both parties if they wanted the jury polled, to which the parties responded
they did not.143 Subsequently, the Court asked each party if there was anything that needed
to be addressed.144 	Counsel for Defendants stated, “Not at the moment, Your Honor. 	I
have a feeling there may be some motions filed at later date on our account.”145 Defendants
never objected to the verdict or to the special verdict form contained in the finalized Jury
Packet. 	By not objecting prior to jury discharge, Defendants waived their argument that
the special verdict form prejudiced them, and that the verdict was inconsistent.
Because Plaintiffs provided sufficient evidence to support the jury’s finding
for breach of the covenant of good faith and fair dealing, and Defendants waived their
argument regarding the special verdict form/inconsistent verdict, Defendants’ Renewed
JMOL is DENIED.
139 Docket 131 at 2.
140 Counsel for Defendants requested permission to give closing arguments immediately
after the close of evidence. Plaintiffs agreed to the unorthodox procedure and the Court granted
Defendants’ request. Counsel for Defendants gave closing argument on day five of trial and then
left the District of Alaska. On day six of trial Plaintiffs gave closing arguments. See Docket 129
at 22–24; Docket 130 at 1–3.
141 Docket 131 at 3.
142 Id. at 4.
143 Id. at 5–6.
144 Id. at 6.
145 Id.
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B. 	Defendants’ Motion for New Trial
Defendants seek a new trial and argue that “(1) the jury’s verdict is against
the great weight of the evidence; (2) the special verdict form prejudiced Defendants; and
(3) the jury’s verdict is an improper compromise verdict.”146 Plaintiffs argue that they did
provide evidence concerning breach of the implied covenant of good faith and fair dealing
and that the jury verdict is not inherently inconsistent.147
1. 	Sufficiency of evidence
Defendants again argue that no evidence was provided to support the jury’s
verdict that Defendants breached the implied covenant of good faith and fair dealing.148
Above, the Court examined this argument under the standard applicable to Defendants’
Renewed JMOL. 	Here, because Defendants seek a new trial, the Court will weigh the
evidence to determine whether the “verdict is contrary to the clear weight of the
evidence.”149
The 	jury 	instructions 	explained 	that 	Defendants 	breached 	the 	implied
covenant of good faith and fair dealing if “Defendants deprived Plaintiffs of a benefit of
the Sale Contract by acting in a manner that a reasonable person would regard as unfair.”150
Plaintiffs provided evidence of two separate examples of how Defendants
acted in a manner that a reasonable person could find unfair. First, Plaintiffs argued that
146 Docket 111 at 2.
147 See generally Docket 117.
148 Docket 111 at 4.
149 Molski, 481 F.3d at 729.
150 Docket 104 at 23.
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Defendants walked away from the Sale Contract not because of anything Mr. Madsen did,
but instead because Defendants had alienated Mr. Pierskalla and Defendants feared they
would be left without a registered guide.151 	This conclusion is supported by the
communication between Mr. Pierskalla and Defendants, as well as the short time period
between when Mr. Pierskalla demanded fair compensation and Defendants terminated the
Sale Contract.152 Second, Plaintiffs also provided evidence that Defendants left the Lodge
in a state of disrepair.153 This included trash strewn about the property, damage to several
vehicles, mud tracked throughout the Lodge, dirty dishes left in the Lodge, and removal of
propane and propane accessories from the Lodge.154
Defendants 	argued 	that 	they 	terminated 	the 	Sale 	Contract 	because
Mr. Madsen failed to provide required items under the Sale Contract,155 and provided a
video allegedly depicting the condition of the Lodge when it was turned back over to
Plaintiffs.156
The jury’s finding that Defendants breached the implied covenant of good
faith and fair dealing is not contrary to the clear weight of the evidence. 	Mr. Morrison
testified that he felt reservations because Mr. Pierskalla’s continued assistance was in
question.157 	While 	Mr. 	Morrison 	blamed 	the 	situation 	with 	Mr. 	Pierskalla 	on
151 Docket 130 at 3–4.
152 Docket 122-2 at 20–21; Docket 129 at 29–30, 42–43.
153 Docket 128 at 4–11; Docket 126 at 27–30.
154 Docket 128 at 4–11; Docket 126 at 27–30.
155 Docket 128 at 19–33.
156 Docket 129 at 9–17.
157 Id. at 38.
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Mr. Madsen,158 in reviewing the communication between Mr. Pierskalla and Mr. Morrison
there is evidence to support the finding that Defendants were responsible for the
relationship souring.159 Based on this evidence, the jury reasonably could have concluded
that Defendants were motivated to terminate the Sale Contract because of their own
actions. 	Additionally, Plaintiffs provided 	testimony 	from 	witnesses with 	firsthand
knowledge concerning the state of the Lodge when Defendants re-took possession.160 The
videos provided by Defendants, especially in the absence of Mr. Schille’s testimony, do
not 	provide 	a 	sufficiently 	strong 	evidentiary 	foundation 	to 	overshadow 	Plaintiffs’
testimony.
The Court, after evaluating the evidence provided by both parties, finds that
the jury’s verdict is reasonable and is not contrary to the clear weight of the evidence.
2. 	Special verdict form and compromise verdict
Defendants allege the jury found that the Sale Contract was void due to
misrepresentation and that the special verdict form prejudiced Defendants.161 	This is
incorrect; the jury did not find that the Sale Contract was void.162 The jury followed the
special verdict form and the instructions Defendants gave during closing arguments.163 As
discussed above, Defendants waived the opportunity to raise arguments regarding the
special verdict form.
158 Id. at 30.
159 Docket 122-2 at 19–21.
160 Docket 128 at 4–11.
161 Docket 111 at 5.
162 Docket 105.
163 Id.
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3. 	Compromise verdict
Similarly, Defendants allege that the verdict is a “compromise verdict” and
urge the Court to grant a new trial because the damages award was much smaller than
Defendants requested.164 Specifically, Defendants repeat their incorrect assertion that the
jury found the Sale Contract was void due to misrepresentation and therefore, at a
minimum, Defendants should have been awarded $82,100.00 for the deposit under the Sale
Contract.165 Plaintiffs argue that Defendants’ theory that the jury’s “compromise verdict”
warrants a new trial is novel and unsupported by case law from the Ninth Circuit and the
District of Alaska.166
Again, 	the 	jury 	did 	not 	find 	the 	Sale 	Contract 	was 	void 	due 	to
misrepresentation.167 	Rather, 	the 	jury 	did 	find 	Plaintiffs 	liable 	for 	the 	tort 	of
misrepresentation.168 	At trial, Defendants insisted that the special verdict form include
both the affirmative defense of misrepresentation and the stand-alone tort claims for
misrepresentation. 	They insisted on this important distinction because application of the
affirmative defense would void the Sale Contract and return the deposit, while the tort
claims could provide damages from before the Sale Contract, including expenses from the
due diligence trip.169
164 Docket 111 at 7–8.
165 Id. at 8.
166 Docket 117 at 10 n.3.
167 Docket 105 at ¶ 3.
168 Id.
169 Docket 126 at 34.
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Defendants now conflate the tort of misrepresentation with the affirmative
defense, stating, “rather than awarding Defendants $82,100 for the deposit, which should
have been mandatory per the instructions (as argued by Defendants), Defendants [sic]
awarded each party $1.”170 	Defendants cite to nothing in the record to support their
assertion that awarding $82,100 would be mandatory. 	In fact, the proposed jury
instructions provided by Defendants stated that if the jury were to find in Defendants’
favor, 	the 	jury 	must 	“decide 	how 	much 	money, 	if 	any, 	will 	fairly 	compensate
[Defendants].”171 	The 	Jury 	Packet 	contained 	the 	same 	language 	that 	Defendants
provided.172 Defendants’ assertion that the jury was required to award $82,100 if the jury
found in their favor is unsubstantiated. 	Defendants’ belief that the tort of negligent
misrepresentation voided the Sale Contract is undermined by Defendants’ previous
position: that application of the affirmative defense would void the Sale Contract, whereas
the tort of negligent misrepresentation would result in other relief.173
Defendants’ remaining arguments concerning a compromise verdict rely on
the same arguments posed in the preceding sections. As noted above, the Court has found
there to be sufficient evidence to support a finding that Defendants breached the implied
170 Docket 111 at 8 (“The jury found that the Agreement was void based on Madsen’s
negligent misrepresentation; however, rather than awarding Defendants $82,100 for the deposit,
which should have been mandatory per the instructions (as argued by Defendants), Defendants
[sic] awarded each party $1.”).
171 Docket 73-1 at 7; Docket 86-1 at 1.
172 Docket 104 at 32.
173 Docket 126 at 34.
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covenant of good faith and fair dealing, and that Defendants have waived their argument
concerning the special verdict form. Defendants’ Motion for New Trial is DENIED.
C. 	Cross Motions for Attorney’s Fees
Both parties claim to be the prevailing party and thus entitled to costs and
attorney’s fees under the Sale Contract.174 	Plaintiffs additionally argue that they are
entitled to attorney’s fees and costs under Alaska Rule 68 based on their offer of
judgment.175 	Defendants argue that Alaska Rule 68 does not apply because FRCP 68
governs in federal court, and further argue that FRCP 68 does not permit Plaintiffs to make
an offer of judgment in their capacity as Counter-Defendants.176 	The Court first will
determine the question of prevailing party. The Court then will determine the legal effect
of Plaintiffs’ offer of judgment.
1. 	Prevailing party
The Sale Contract contains an attorney’s fees provision which applies if
either party retains an attorney “to enforce any provision of this Agreement or to protect
its interest in any manner arising under this Agreement, or to recover damages for its
breach.”177 	The provision entitles the prevailing party to “all reasonable costs, damages
and expenses, including related actual attorneys’ fees, expended or incurred.”178 However,
if multiple items are disputed with a final decision against each side, the costs and fees
174 See generally Docket 107; see also Docket 108.
175 Docket 107 at 4–6.
176 Docket 108 at 3–4 (quoting Home Indem. Co. 43 F.3d 1322, 1332 (9th Cir. 1995)).
177 Docket 110-1 at 12.
178 Id.
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shall be apportioned according to “the monetary values of the items decided against each
party.”179
District 	courts 	follow 	state 	rules 	for 	awarding 	attorney’s 	fees 	when
exercising their subject matter jurisdiction over state law claims.180 	Under Alaska law,
“[t]he prevailing party to a suit is the one who successfully prosecutes the action or
successfully defends against it, prevailing on the main issue, even though not to the extent
of the original contention.”181 	“However, there is no ‘immutable rule that the party who
obtains an affirmative recovery must be considered the prevailing party.’”182 “Clearly it is
within the trial court’s discretion to deny attorney’s fees altogether,” especially where both
parties prevail on a main issue and the trial court considers the case to be a “wash.”183
In this case, each side prevailed on one claim and was awarded a single
dollar.184 	The Court can find no better example of a “wash.”185 	Neither side is the
prevailing party under the Sale Contract. 	Both sides argue that the clause within the
attorney’s fees provision apportioning costs based on the value of the respective claims
179 Id.
180 U.S. ex rel. Rebar Placement Co. v. GBC, L.L.C. Contractors, No. A03-73 CV JWS,
2005 WL 846211, at *1 (D. Alaska Jan. 18, 2005); see also D. Alaska Loc. Civ. R. 54.2; Alaska
Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 972 (9th Cir. 2013); Northon v. Rule,
637 F.3d 937, 938 (9th Cir. 2011) (internal quotations omitted) (“State laws awarding attorneys’
fees are generally considered to be substantive laws under the Erie doctrine and apply to actions
pending in federal district court when the fee award is connected to the substance of the case.”).
181 Tobeluk v. Lind, 589 P.2d 873, 876 (Alaska 1979) (quoting Buza v. Columbia Lumber
Co., 395 P.2d 511, 514 (Alaska 1964)).
182 Id at 877 (internal quotation marks omitted) (quoting Owen Jones & Sons, Inc. v. C.R.
Lewis Co., 497 P.2d 312, 313–14 (Alaska 1972)).
183 Id at 877–89; see also Schultz v. Wells Fargo Bank, N.A., 301 P.3d 1237, 1242 (Alaska
2013). 184 Docket 105 at ¶¶ 6–7, 14–15.
185 Schultz 301 P.3d at 1242.
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does not apply.186 	Therefore, Defendants Motion for Attorney’s Fees is DENIED.
Plaintiffs’ Motion for Attorney’s Fees under the Sale Contract is DENIED.
2. 	Offer of judgment
Plaintiffs assert that they are entitled to attorney’s fees pursuant to Alaska
Rule 68 because they made an offer of judgment to Defendants, which Defendants
rejected.187 Defendants argue that Alaska Civil Rule 68 does not apply because FRCP 68
should govern this diversity action.188 Defendants also argue that FRCP 68 “applies only
to offers of judgment made by a defendant.”189 	Essentially, Defendants argue that
Plaintiffs should receive no benefit from their offer of judgment that Defendants rejected.
The Court will determine: (1) whether FRCP 68 forecloses recovery under
Alaska Civil Rule 68; and (2) whether FRCP 68 permits Plaintiffs to make an offer of
judgment in these circumstances.
(a) 	FRCP 68 and Alaska Rule 68
Defendants argue that, because this Court sits in diversity, Alaska Rule 68 is
inapplicable, and that the issue is moot because the Sale Contract contains an attorney’s
fees provision.190 Plaintiffs argue that the Court should apply Alaska Rule 68 because state
laws entitling a party to attorney’s fees are substantive rather than procedural.191
186 Docket 107 at 3; Docket 108 at 3.
187 Docket 107 at 4–5.
188 Docket 108 at 3.
189 Id. at 4 (quoting Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1332
(9th Cir. 1995)).
190 Docket 110 at 3–4.
191 Docket 109 at 5–6.
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Under FRCP 68, when a party makes an offer of judgment at least 14 days
before trial, the offer is denied and the judgment “that the offeree finally obtains is not
more favorable than the unaccepted offer, the offeree must pay the costs incurred after the
offer was made.”192 The plain language of FRCP 68 only entitles the offeror to costs.193
In situations where a federal court is applying state substantive law, state law generally will
govern an award of attorney’ fees.194 In addressing this issue, the Ninth Circuit explained
that “[t]he Supreme Court’s construction of [FRCP] 68 in Marek v. Chesny . . . governs an
award of post-offer attorneys’ fees” Marek applies to both federal statutes and state statutes
granting attorney’s fees.195 	Marek looked to the underlying statute which permitted
recovery of attorney’s fees to determine whether those fees were considered “costs for
purposes of [FRCP] 68.”196 If the underlying state law considers attorney’s fees as costs,
then FRCP 68 applies to those fees and forecloses recovery.197 If, however, the underlying
state law considers attorney’s fees separate from costs, then FRCP 68 does not apply to
those fees and a party may be entitled to fees if they comply with the relevant law which
entitles the party to such fees.198
Alaska law does not consider attorney’s fees as part of costs.199 When Alaska
Rule 68 applies, the offeree must pay “all costs” and a percentage of attorney’s fees based
192 Fed. R. Civ. P. 68.
193 Id.
194 Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1024–25 (9th Cir. 2003)
(citing Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000)).
195 Id. at 1026–28.
196 Marek v. Chesny, 473 U.S. 1, 9 (1985).
197 Haworth v. State of Nev., 56 F.3d 1048, 1051 (9th Cir. 1995).
198 Id.
199 Alaska R. Civ. P. 68.
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on when the offer of judgment was made.200 Under Marek, FRCP 68 does not apply to the
attorney’s fees sought by Plaintiffs pursuant to Alaska Rule 68. 	Instead, the procedure
outlined in FRCP 54 permits a party to seek attorney’s fees, provided the moving party
timely files and specifies the grounds entitling them to attorney’s fees.201 	In Cheffins v.
Stewart, the Ninth Circuit permitted Stewart to recover attorney’s fees based on a Nevada
law entitling a party to recover attorney’s fees if an offer of judgment is rejected.202 The
Cheffins court noted that even where the offer of judgment did not satisfy the requirements
of FRCP 68, Stewart could recover attorney’s fees through FRCP 54 because the offer of
judgment satisfied the underlying Nevada state law.203 Therefore, the Court will examine
whether Plaintiffs complied with Alaska Rule 68 and FRCP 54.
Alaska Rule 68 applies when a party makes an offer of judgment at least ten
days before the start of trial and the offer is rejected.204 “The offer may not be revoked in
the 10 day period following service of the offer.”205 “If the judgment finally rendered by
the court is at least 5 percent less favorable to the offeree than the offer,” the offeror is
entitled to all costs and a percentage of the offeror’s attorney’s fees.206 On September 28,
2022, Plaintiffs made an offer of judgment to Defendants that would have “resolve[d] all
claims between all parties.”207 The offer of judgment remained open for 14 days and would
200 Alaska R. Civ. P. 68.
201 Fed. R. Civ. P. 54.
202 825 F.3d 588, 597 (9th Cir. 2016).
203 Id.
204 Alaska R. Civ. P. 68(a).
205 Id.
206 Alaska R. Civ. P. 68(b).
207 Docket 107-1 at 1.
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have paid $125,000.00 to Defendants.208 	Defendants rejected the offer, and on July 17,
2023, the case went to trial.209 The jury awarded Defendants one dollar; this award is much
less favorable than the offer of judgment made by plaintiffs.210 	Therefore, Plaintiffs
complied with Alaska Rule 68. Plaintiffs made their offer of judgment more than 90 days
before the first day of trial and more than 60 days after initial disclosures were due, entitling
them to all costs and 50 percent of Plaintiffs’ attorney’s fees incurred after the offer of
judgment was made.211
FRCP 54 requires that a “claim for attorney’s fees” be made by motion, filed
within 14 days of judgment being entered, specify the “grounds entitling the movant to the
award,” and provide the amount sought or a fair estimate of the amount sought.212 	On
July 26, 2023, the Court entered judgment.213 Nine days later, on August 4, 2023, Plaintiffs
filed their Motion for Fees and Costs.214 Plaintiffs’ Motion for Fees and Costs explained
the grounds they believe entitled them to their attorney’s fees and costs.215 	Plaintiffs
provided a rough estimate of the amount sought.216 	Thus, Plaintiffs complied with
FRCP 54.217
208 Id. at 1–2.
209 Docket 94.
210 Compare Docket 107-1 with Docket 105 at ¶¶ 6–7, 14–15.
211 Alaska R. Civ. P. 68; compare Docket 107-1 with Docket 12 and Docket 94.
212 Fed. R. Civ. P. 54.
213 Docket 106.
214 Docket 107 at 6.
215 Id. at 1–5.
216 Id. at 5.
217 See generally Docket 107.
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Because attorney’s fees are considered separately from costs under Alaska
substantive law, and FRCP 68 only applies to costs, the Court considered Plaintiffs’ request
for attorney’s fees under Alaska Rule 68. 	Plaintiffs’ offer of judgment complied with
Alaska Rule 68, and their Motion for Fees and Costs complied with FRCP 54. Plaintiffs
are entitled to 50 percent of their attorney’s fees pursuant to Alaska Rule 68 from the date
the offer of judgment was made.
Defendants’ argument that the issue is moot based on the attorney’s fees
provision in the Sale Contract is unpersuasive. 	Defendants rely on caselaw concerning
attorney’s fees provisions and the application of Alaska Rule 82.218 The caselaw does not
discuss whether a provision for attorney’s fees has any effect on application of Alaska
Rule 68.219 Alaska Rule 82 states in relevant part: “Except as otherwise provided by law
or agreed to by the parties, the prevailing party in a civil case shall be awarded attorney’s
fees calculated under this rule.”220 Under this language, if the parties agree to a provision
for attorney’s fees, Alaska Rule 82 is inapplicable. 	Alaska Rule 68, however, does not
limit recovery based on the presence of a provision for attorney’s fees.221 	The Court
disagrees with Defendants, the attorney’s fees provision in the Sale Contract does not
prevent application of Alaska Rule 68 in the general sense.222
218 Docket 110 at 4.
219 Bernie’s Pharmacy, Inc. v. AmerisourceBergen Drug Corp., No. 3:18-CV-00183-
TMB, 2019 WL 5156273 (D. Alaska May 1, 2019).
220 Alaska R. Civ. P. 82.
221 Alaska R. Civ. P. 68.
222 The Court notes that it is unclear the effect an attorney’s fees provision may have on
Alaska Rule 68(c), which discusses the potential amount of attorney’s fees to which a party may
be entitled. 	Under Alaska Rule 68(c), an offeror who satisfies the requirements of Alaska
Rule 68(b) is entitled to whichever is greater, the attorney’s fees calculated using Alaska
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(b) 	FRCP 68 and counter-defendants
Defendants argue that FRCP 68 does not permit Plaintiffs to make an offer
of judgment in their capacity as counter-defendants.223 	Plaintiffs argue that the express
language of FRCP does not distinguish between Plaintiffs and Defendants, but instead only
requires that a party be defending against a claim.
Under FRCP 68, if “a party defending against a claim” makes a valid offer
of judgment which is denied, and the “judgment that the offeree finally obtains is not more
favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer
was made.”224 	FRCP 68 provides an incentive for parties defending against a claim to
make reasonable settlement offers early in litigation.225 	The specific language, “a party
defending against a claim,” as opposed to just “defendants,” indicates that any party who
finds themselves defending against a claim may benefit from the incentive scheme
provided in FRCP 68.226
Rule 68(b) or the attorney’s fees calculated using Alaska Rule 82. Where Alaska Rule 82 does
not apply, if the parties have agreed to an attorney’s fees provision it is unclear whether Alaska
Rule 68(c) could entitle Plaintiffs to a greater amount than that specified under Alaska Rule 68(b).
Neither party has raised this issue, and Plaintiffs’ request for attorney’s fees pursuant to Alaska
Rule 68 clearly presumes application of Alaska Rule 68(b). See Docket 107 at 4–5 (“Given the
timing of when the Rule 68 offer was made, the Plaintiffs would be entitled to 50% of their actual
attorney’s fees after the date of the offer being made pursuant to ARCP 68(b)(2).”). The Court
has found no caselaw on this issue. 	Therefore, the Court takes no position on how Alaska
Rule 68(c) applies in situations where there is an agreement between the parties concerning
attorney’s fees, such as the provision in the Sale Contract.
223 Docket 108 at 4 (quoting Home Indem. Co. 43 F.3d 1322, 1332 (9th Cir. 1995)).
224 Fed. R. Civ. P. 68.
225 Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1024 (9th Cir. 2003).
226 Fed. R. Civ. P. 68(a).
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Madsen, et al. v. Jacoby, et al. 	Case No. 3:21-cv-00123-JMK
Order Regarding Post-Verdict Motions 	Page 34
In Simon v. Intercontinental Transp. (ICT) B.V., Simon sued the owners of a
boat, ICT, for injuries he suffered while working as a stevedore on the boat.227 	Simon’s
employer, MTC, had been paying workmen’s compensation for Simon’s injuries.228 After
Simon and ICT began settlement negotiations, MTC formally appeared and requested a
lien against Simon’s potential recovery against ICT.229 Simon, the original plaintiff, made
an offer of judgment to MTC, which MTC rejected.230 After judgment issued, the district
court concluded that FRCP 68 was satisfied and ordered MTC to pay costs to Simon.231 In
reviewing MTC’s appeal, the Ninth Circuit noted that Simon was permitted to make an
offer of judgment under FRCP 68 for MTC’s claim even though he also was a plaintiff in
the action.232
Defendants’ reliance on Home Indem. Co. v. Lane Powell Moss & Miller is
misplaced. In Home Indem. Co. an insurance company, Home Indemnity Co. (“Home”),
sued for legal malpractice against the firm which had represented them in an underlying
action; there were no claims against Home.233 Because Home was a plaintiff and was not
defending any claims, FRCP 68 did not permit Home to benefit from its offer of
judgment.234
227 Simon v. Intercontinental Transp. (ICT) B.V., 882 F.2d 1435, 1437 (9th Cir. 1989).
228 Id.
229 Id.
230 Id. at 1438.
231 Id.
232 Id. at 1439.
233 Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1325 (9th Cir. 1995).
234 Id. at 1332.
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Madsen, et al. v. Jacoby, et al. 	Case No. 3:21-cv-00123-JMK
Order Regarding Post-Verdict Motions 	Page 35
Plaintiffs made their offer of judgement in accordance with FRCP 68. The
offer of judgment was made more than 14 days before the start of trial and permitted
Defendants to accept it anytime within 14 days from when it was served.235 	Plaintiffs’
offer of judgment was for $125,000.00236 and Defendants received only one dollar for their
claims against Plaintiffs at trial.237 	Pursuant to FRCP 68, Plaintiffs are entitled to costs
incurred after the offer was made.
Because Plaintiffs complied with the requirements outlined in FRCP 68, they
are entitled to costs permitted under the FRCP from the date the offer was made, pursuant
to FRCP 68. Based on Plaintiffs’ offer of judgment, they also are entitled to 50 percent of
their reasonable actual attorney’s fees from when the offer was made, pursuant to Alaska
Rule 68 and FRCP 54.
Plaintiffs request leave to supplement their Motion for Attorney’s Fees with
an accounting of attorney’s fees incurred in the post-verdict motion practice.238 FRCP 68
does not include a cutoff date for costs once judgment is entered.239 Similarly, Alaska Civil
Rule 68 does not include a cutoff for attorney’s fees once judgment is entered.240 	The
Court will permit Plaintiffs to recover any costs and attorney’s fees incurred in the post-
verdict motion practice. Plaintiffs are directed to file revised accountings of their costs and
attorney’s fees from the date of their offer of judgment. Because Plaintiffs are entitled to
235 Docket 107-1.
236 Id.
237 Docket 105 at ¶ 15.
238 Docket 117 at 11.
239 Fed. R. Civ. P. 54.
240 Alaska R. Civ. P. 68.
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Madsen, et al. v. Jacoby, et al. 	Case No. 3:21-cv-00123-JMK
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costs pursuant to FRCP 68, and attorney’s fees pursuant to FRCP 54 in connection with
Alaska Rule 68, Plaintiffs should provide two separate accountings, one for costs and one
for attorney’s fees.
IV. 	CONCLUSION
For the reasons stated above: Defendants Motions at Dockets 108, 111, and
112 are DENIED; Plaintiffs Motion at Docket 107 is GRANTED IN PART and DENIED
IN PART.
IT IS SO ORDERED this 3rd day of April, 2024, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
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