Dearlove v. Campbell

The passenger of a car was injured in a two-car accident. The passenger brought suit against the other car's driver; the passenger's requested recovery included her insurer's subrogation claim for medical expenses. The driver made an early offer of judgment, which the passenger rejected. The driver then paid the subrogation claim, thereby removing it from the passenger's expected recovery. The driver then made a second offer of judgment, which the passenger rejected, and the case proceeded to trial. After trial the jury awarded the passenger damages and both parties claimed prevailing party status; the driver sought attorney's fees under Alaska Civil Rule 68. The superior court ruled the first offer of judgment did not entitle the driver to Rule 68 fees, but the second offer did. Both parties appealed, arguing the superior court improperly considered the subrogation claim in its Rule 68 rulings. Upon review, the Supreme Court concluded the subrogation payment had to be taken into account when evaluating the first offer of judgment, but not the second. The Court therefore affirmed the superior court's rulings.