Opinion
Supreme Court No. S-15360 No. 1550
08-26-2015
ADAM SAGERS, Appellant, v. ALASKA FAST CASH, LLC, JACKLYN JOHNSON, and COLLEEN SACKINGER, Appellees.
Appearances: Adam Sagers, pro se, Fairbanks, Appellant. Margaret O'Toole Rogers, Foster & Rogers, LLC, Fairbanks, for Appellee Sackinger. Notices of nonparticipation filed by Appellees Fast Cash, LLC and Jacklyn Johnson.
NOTICE Memorandum decisions of this court do not create legal precedent. A party wishing to cite such a decision in a brief or at oral argument should review Alaska Appellate Rule 214(d). Superior Court No. 4FA-12-01979 CI MEMORANDUM OPINION AND JUDGMENT Appeal from the Superior Court of the State of Alaska, Fourth Judicial District, Fairbanks, Bethany Harbison, Judge. Appearances: Adam Sagers, pro se, Fairbanks, Appellant. Margaret O'Toole Rogers, Foster & Rogers, LLC, Fairbanks, for Appellee Sackinger. Notices of nonparticipation filed by Appellees Fast Cash, LLC and Jacklyn Johnson. Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.
Entered under Alaska Appellate Rule 214.
I. INTRODUCTION
A father brought suit on behalf of his minor son for injuries his son allegedly sustained at a local pawn shop. The mother — who had sole physical and legal custody of the son — intervened and settled the lawsuit. The superior court approved the minor settlement, including the attorney's fees to be paid from the settlement proceeds. The father appeals, arguing that the superior court abused its discretion by approving the attorney's fees.
II. FACTS AND PROCEEDINGS
Adam Sagers and Colleen Sackinger are the parents of a minor child, C.S. In April 2012 Sagers took C.S. to a local pawn shop, Alaska Fast Cash, where C.S. was allegedly injured when a loaded handgun he was holding discharged next to his ear. Sagers filed suit against Fast Cash and one of its employees, asserting claims on behalf of his son. Sackinger, who had legal and physical custody of C.S., learned of the case and intervened as his legal guardian.
Initials have been used to protect the privacy of the minor.
We affirmed the custody order on appeal. See Sagers v. Sackinger, 318 P.3d 860, 861 (Alaska 2014).
Fast Cash, Sackinger, and the employee eventually reached an agreement to settle all of the claims for $19,000. Sackinger submitted a request to the superior court to approve the minor settlement and "order the settlement to be held by a parent or guardian for the benefit of the minor because the remaining balance of the settlement does not exceed $10,000." The request also stated, "The intervenor and undersigned counsel have agreed that attorney's fees and costs in an agreed upon amount shall be paid from the settlement funds to undersigned counsel."
See Alaska Rule of Civil Procedure 90.2(b)(2)(A) (stating that if the balance of a minor's settlement proceeds after attorney's fees and costs is less than $10,000, the funds may be held by a parent or guardian).
The superior court denied the petition to approve the minor settlement agreement because "[t]he petition ask[ed] the court to 'approve the amount of attorney's fees and costs paid from the settlement' without disclosing what the amount [was]." The court noted that it was "unable to decide [whether to release the funds to a parent or to restrict the use of the funds] without knowing the amount of the settlement funds."
Sackinger filed an amended petition to approve the settlement, stating that the agreed-upon attorney's fees and costs were $10,000. Sagers opposed the petition, arguing that $10,000 was unreasonable because it was more than half of the settlement amount. He asked "[t]he court [to] examine the original written fee agreement between Ms. Sackinger and her attorneys to determine whether this settlement [was] reasonable." Sackinger immediately offered to produce the agreement for an in camera review, but the court did not review the fee agreement or respond to Sagers's objection. Instead, it summarily approved the minor settlement.
Sagers appeals.
III. STANDARD OF REVIEW
We review the superior court's approval of a minor settlement agreement under an abuse of discretion standard, including issues relating to attorney's fees.
In the Matter of the Estate of Brandon, 902 P.2d 1299, 1307 (Alaska 1995).
IV. DISCUSSION
Sagers argues that attorney's fees and costs totaling over 50% of the settlement are unreasonable. Because the superior court did not have sufficient evidence before it to determine whether the attorney's fees were reasonable, we remand for further explanation.
Sackinger argues that Sagers does not have standing to appeal because he does not have legal custody of C.S. But Sagers has standing to contest the attorney's fees paid out of his minor son's settlement. In this case Sackinger filed her petition for court approval of the settlement in the personal injury case. Sagers was a party in the personal injury case when the petition was filed: he was served with the petition, and he responded. Sackinger did not contest Sagers's standing when he responded to the first petition. He was served with the superior court's order denying the first petition without prejudice. He was also served with and responded to the amended petition in the personal injury case for approval of the settlement. Sackinger did not argue that Sagers lacked standing to respond to the amended petition. Sagers signed off on the final dismissal stipulation after the court approved the minor settlement petition. If Sagers fully participated in the petition proceedings without an argument about standing, it is difficult to see why he has no standing to appeal from the approval order. Moreover, Sagers is the child's natural father. Sagers may not have any legal or physical custody of the child, but his parental rights have not been terminated. We conclude on these facts that Sagers has standing to appear before the court in a Civil Rule 90.2 proceeding to advocate what he considers to be the best interests of his own child, regardless of his lack of legal or physical custody.
Alaska Rule of Civil Procedure 90.2 requires a court to review a minor settlement to ensure that it is "fair and reasonable." The court must also "approve any attorneys' fees and costs that are to be paid from the settlement proceeds when the minor claimant is represented by counsel." But the rule gives no guidance regarding the level of scrutiny required for the attorney's fees. And we have touched on the provision only once.
In In the Matter of the Estate of Brandon, divorced parents each brought wrongful death actions for the death of their son. A third action was brought on behalf of a child alleged to be the decedent's daughter. Each party had one or more attorneys. When the parties reached a settlement, the attorneys asked for more than 50% of the multi-million dollar settlement in fees. "Recognizing the total sought was clearly excessive, [the superior court judge] decided to award total fees of $1,557,298.02, about 38% of the net recovery." We remanded the case on other grounds, but noted that "the total fee award is potentially excessive given all the circumstances presented here." Among those circumstances were the multi-million dollar award, possible conflicts of interest among the attorneys, possible unethical fee splitting, and failure by the court to scrutinize the settlement agreement. We quoted with approval a Sixth Circuit case which required "[i]ndependent investigation by the court as to the fairness and reasonableness of a fee to be charged against a minor's estate or interest."
In the Matter of the Estate of Brandon, 902 P.2d at 1302.
Id.
Id. at 1302-03.
Id. at 1307.
Id.
Id. at 1319.
Id. at 1304-05, 1313, 1315.
Id. at 1309 (quoting Dean v. Holiday Inns, Inc., 860 F.2d 670, 673 (6th Cir. 1988)) (internal quotation mark omitted). --------
Alaska Rule of Civil Procedure 90.2 requires the superior court to review for fairness not only the settlement amount but also the attorney's fees that are to be paid from the settlement amount. This does not mean that the superior court must necessarily review the fee agreement, but it requires the parties to present some evidence to the court, such as an affidavit detailing the hourly rate and the hours billed (or the contingency fee amount) and the work that was done. Sackinger's attorney's statement of the total amount of the fees was insufficient to allow the court to decide whether the settlement was "fair and reasonable."
On remand, Sackinger must provide more evidence regarding the amount and basis of the attorney's fees to be paid from the settlement funds; the superior court in its discretion may conduct an evidentiary hearing if it determines it is necessary. The court must make findings regarding whether the fees were fair and reasonable under the circumstances.
V. CONCLUSION
We REMAND the case to the superior court for further proceedings consistent with this opinion and for it to file its findings with this court. We RETAIN jurisdiction to review the superior court's findings on remand.