Washington Tort Law Blog

Attorney Stung By “Offer of Judgment”

omwtortlaw — Wed, 15 Feb 2012 17:30:05 +0000

Even experienced attorneys can be tripped up by some of the more arcane areas of law. Such was the case when the Court of Appeals ordered attorney Amy Hansen to pay an attorneys fees in an employment dispute she had thought she had settled for $7,500.

Paul Lietz, a paralegal and investigator sued his employer Hansen for unpaid wages and claimed attorneys fees under the wage and hour statutes. Hansen submitted an “offer of judgment” offering to allow Lietz to enter a judgment for $7,500 in exchange for dismissing the “claim.” Offers of judgment are allowed by the civil rules and provide that a party can agree that a judgment can be entered against the in the amount set forth on the offer of judgment. If the other side fails to accept the offer of judgment and the eventual judgment in the case is less than the amount offered, then the person making the offer will be considered the “prevailing party, which can shift certain litigation costs back to the party that refused to accept the offer.

In Hansen’s case, Lietz immediately accepted the offer of judgment for $7,500 and presented it to the court asking for an additional $36,000 in attorneys’ fees arguing that because Ms. Hansen’s offer of judgment did not specify that it was in settlement of his attorney’ fees claim, he was entitled to attorneys fees as well as the $7,500 settlement. The trial court was sympathetic to Ms. Hansen’s plight refusing to award fees finding that there was no “meeting of the minds” on the terms of the offer of judgment. The court of appeals reversed, holding that under existing case law the failure to specify that the offer of judgment included attorneys fees required the trial court to award fees under the applicable wage and hour statutes.

Offers of judgment are useful tools in litigation allowing a defendant to shift risk and costs to the a plaintiff who demands an unreasonable sum in settlement. However, as noted above, care must be taken in drafting the document correctly, otherwise it can result in unintended consequences and costs.
Contributed by Geoff Bridgman

Supreme Court Announces Insures Must Pay Pro-rata Share of Attorneys Fees When Offsetting PIP Benefits and Failing to Do So May Result in Liability for Bad Faith

omwtortlaw — Wed, 15 Feb 2012 17:27:50 +0000

Earlier this week the Washington State Supreme Court held that an insurance carrier that insures both the at fault driver and the injured plaintiff must reduce any offset for PIP payments by a pro-rata share of plaintiff’s attorneys’ fees. Matsyuk et. al. v. State Farm. The result is consistent with a string of other cases beginning with Mahler v. Szucs 135 Wn.2d 398 (1998) and ending with Hamm v State Farm 151 Wn.2d 303 (1998) that have held PIP insures responsible for paying a pro-rata share of attorneys’ fees in a cases involving PIP subrogation or offsets where the insured recovers money from a third party insurance carrier and where insured recover under their own underinsured or uninsured motorist policies. Although the result is not surprising in light of the Mahler line of cases, State Farm had support for its position in the Young v Teti 104 Wn. App. 721 (2001) case. The Supreme Court analyzed Young and overruled it, finding that it was inconsistent with Hamm. In addition, the Court reversed earlier dismissal of bad faith claims against State Farm finding that its refusal to settle the claim unless Ms. Matsyuk settled her PIP claim was sufficient to state a claim for bad faith.
Contributed by Geoff Bridgman

Ninth Circuit Dismisses $9 Million Claim Against Insurer That Refused to Cover Tongue Piercing Causing “Flesh Eating Bacteria”

omwtortlaw — Wed, 29 Jun 2011 22:10:20 +0000

On May 26, 2011 the Ninth Circuit affirmed dismissal of bad faith claims against Scottsdale Insurance Company. Ms. Filosa had sought to collect a $3 million judgment she obtained against Scottsdale’s insured plus treble damages under the Insurance Fair Conduct Act because Scottsdale refused to defend its insured Mr. Burns against Ms. Filosa’s claim that she had contracted “flesh eating bacteria” from Mr. Burns’s tattoo parlor after having her tongue pierced. The decision dismissing the claims is a rare victory for the insurance industry in insurer friendly Washington.

Mr. Burns purchased a Commercial General Liability insurance policy to cover a building he owned personally. The policy provided coverage for the “conduct of a business” of which he was the “sole owner,” but excluded coverage for liability “with respect to the conduct of” any limited liability company not shown in the policy declarations. Mr. Burns was sole owner of a limited liability company that ran a tattoo parlor on the premises.

Ms. Filosa had her tongue pierced at the tattoo parlor and contracted “flesh eating bacteria” incurring more than $400,000 in medical bills. She sued the tattoo parlor and later added Mr. Burns to the suit. Although Mr. Burns’s broker had told him when purchasing the policy that it did not cover the tattoo parlor, he asked Scottsdale to defend him. Scottsdale refused because the policy did not cover liability with respect to the tattoo parlor. Ms. Filosa and Mr. Burns then settled for a $3 million judgment with an agreement that Ms. Filosa would collect from Scottsdale.

Ms. Filosa sued Scottsdale claiming that because Mr. Burns was the “sole owner” of the tattoo parlor he was covered and that the limited liability exclusion was ambiguous. Her argument was supported by Washington case law that ambiguities must be construed in favor of coverage and that insurers must defend their insureds if there is any conceivable basis under which there might be coverage.

Ogden Murphy Wallace PLLC attorneys Geoff Bridgman and Jaime Allen successfully moved for summary judgment arguing that the policy was unambiguous that the insured was not covered with respect to his tattoo parlor. Aside from the fact that this was a rare victory for an insurance company, the district court opinion that the Ninth Circuit affirmed is remarkable in several other respects.

The court considered the letter from the Mr. Burns’s insurance broker and his testimony showing that he knew that the policy would not cover liability associated with the tattoo parlor. Typically, courts consider only the terms of the policy and do not consider such “extrinsic evidence” when it is offered to avoid coverage. Scottsdale convinced the court, however, that this evidence was admissible to understand the context in which the policy was issued, namely to provide coverage for the building, not for operations being run from the building.

The court also considered “extrinsic evidence” beyond the complaint that was filed against the insured in the underlying case – something courts normally only consider to find but not to deny coverage. The district court considered the motion Ms. Filosa had filed in her suit against the tattoo parlor when she sought to add Mr. Burns as a party. In that motion, she claimed that she was not seeking to hold Mr. Burns “personally liable” by adding him to the lawsuit. Later, in the suit against Scottsdale, she claimed that Scottsdale should have defended Mr. Burns because he faced personal liability. The court considered Ms. Filosa’s inconsistent positions and held that she was “judicially estopped” to claim that Mr. Burns faced liability even though this information was “extrinsic” to the complaint Ms. Filosa had filed against Mr. Burns.

Finally, the court found that tongue piercing is a “professional service” excluded from coverage. This is the first Washington case to address whether tongue piercing is a professional service.

Because the opinion is not binding on Washington State Courts and the question remains whether Washington State Courts will follow the lead set by the District Court or continue to follow the insurer friendly trend set by the Washington State courts.

Don’t leave a dead horse in the road…

omwtortlaw — Thu, 08 Jul 2010 22:26:19 +0000

Apparently, in Washington, you best not hit a horse with your car and leave it on the road. A Jefferson County jury awarded $2.7 million to a woman who was injured when she hit the dead horse in the road. The horse was left by a telephone company truck driver who accidentally struck the horse. He did not call or alert anyone to the dead animal in the roadway, or use any of the safety equipment available in his company truck to alert subsequent drivers.

Division I Decision on the Statute of Limitations for PRA Requests

omwtortlaw — Mon, 21 Jun 2010 23:43:49 +0000

The Washington Court of Appeals, Division 1, released a published opinion today in Tobin v. Worden. Under RCW 42.56, the statute of limitations to file suit for a Public Records Act request begins when either (1) the agency last claims an exemption; or, (2) last produces a record on an installment basis. The court held that when the King County Department of Development and Environment Services (DDES) produced a single, redacted document and no other documents, the statute of limitations was never triggered and the requesting party’s PRA claim was not time barred.

King County Jury Awards $1.3M for Slip and Fall on Bus

omwtortlaw — Fri, 28 May 2010 13:05:41 +0000

A King County jury awarded Keith Knappett $1.3M for injuries he sustained when he slipped and fell exiting the stairs on a bus. The County maintained that the buses were safely maintained and that non-skid material is used on the buses. A complete article can be found in The Seattle Times.

Are Administrative Court Records Subject to the PRA?

omwtortlaw — Wed, 10 Mar 2010 12:36:37 +0000

On March 9, 2010, the Washington Supreme Court heard arguments in Yakima County v. Yakima Herald-Republic regarding whether administrative court records are subject to the PRA. The case involves whether the Yakima Herald-Republic was entitled to receive records regarding billing charges by two attorneys appointed to represent indigent criminal defendants. Given the October decision in Koenig v. Federal Way, it seems unlikely that these records will be subject to the PRA, and much more likely that the all court records will be exempt. The Washington Supreme court also blogs on this topic.

Washington Supreme Court is Tough on Discovery Violations

omwtortlaw — Wed, 25 Nov 2009 20:01:18 +0000

In Magana v. Hyundai Motor Am., the Washington Supreme Court upheld a trial court’s $8,000,000 sanction against Hyundai for its discovery violations.
Procedural History
Plaintiff, Magana filed suit against Hyundai claiming that injuries he sustained in a car accident were due to a design defect in his car that allowed the seat to collapse. He requested copies of all complaints and related documents regarding alleged seat back failure on Hyundai products since 1980. Hyundai responded that the request was overly broad and not calculated to lead to the discovery of admissible evidence. It then responded that there were no personal injury or fatality lawsuits or claims in connection with the seat or seat back of the Hyundai Accent from 1995-1999. Hyundai also responded to an interrogatory requesting the name and model of all Hyundai vehicles that used the same right front seat as the 1996 Accent that Plaintiff drove. Hyundai responded that the 1995-1999 Accents used the same or substantially similar right from seat, but that no other models did.
At a trial, the jury found Hyundai and the driver of the other car involved in the accident liable for $8,000,000 in damages. Smith and Hyundai appealed. The Court of Appeals reversed, determining that the trial court’s failure to instruct the jury that an expert’s testimony had been stricken was misleading. A retrial was ordered on the limited issue of liability.
Four months before the retrial, Magana asked Hyundai to update its discovery responses that it had submitted 5 years earlier. Three months before the retrial, Hyundai amended its discovery responses by producing complaints and claims of alleged seat back failure in 1995-1999 Accents and in 1992-1995 Elantras. It also supplemented its interrogatory response stating that the 1992-1995 Elantras had a recliner that was substantially similar to the 1996 Accent. It produced documents of two claims relating to seat back failure. Magana filed a motion to compel all documents it originally requested in 2000. Hyundai objected that the request was too burdensome, but never requested a protective order.
Ultimately, Hyundai produced additional documents regarding 9 reports of seat back failures.
One month before trial, Magana moved for default against Hyundai, arguing it would be impossible to prepare a proper case with the other similar incidents that had just been produced, because evidence was lost due to the delay. An evidentiary hearing was held, and then Hyundai produced the last of its documents 2 weeks before trial. The trial court granted Magana’s motion for default.
Hyundai appealed and the Court of Appeals remanded for a new trial.
Supreme Court’s Decision
Magana appealed to the Supreme Court and the Court reinstated the $8,000,000 default judgment. In some discussion that is important to practicing attorney, the Court reasoned that “[i]t is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears to be reasonably calculated to lead to the discovery of admissible evidence.” Further, the Court stated that if a party objects to discovery, then the party must seek a protective order or respond to the discovery request. The Court found Hyundai willfully violated its discovery obligations since it had initially only searched its legal department and not other departments within the corporation for its records. The Court also held that a lesser sanction, such as postponing the trial date, was inappropriate when (1) the discovery withheld made it difficult to identify potential other similar cases given the passage of time; and (2) the sanction should be serious enough to sanction the willful violations of an international corporation.

Court Records are not Subject to the Public Records Act

omwtortlaw — Fri, 16 Oct 2009 17:45:58 +0000

In Federal Way v. Koenig, the Washington Supreme Court held that the Public Records Act does not apply to court files. David Koenig requested records from the Federal Way Municipal Court regarding correspondence between a then-sitting-judge and the presiding judge. In a 6-3 opinion, the Court reaffirmed its decision in Nast v. Michels, that the PRA does not apply to court files because the judiciary is not an “agency” within the PRA.
See also the Washington Supreme Court’s blog.

Seattle Times Editorial- Debunking a Myth: an epidemic of medical malpractice, not of malpractice lawsuits

omwtortlaw — Wed, 23 Sep 2009 15:22:52 +0000

In an editorial in today’s Seattle Times, Patricia Greenstreet a registered nurse and attorney offers a unique perspective on the reality of medical malpractice and “tort reform.” She advocates that the “best way to save money in the health-care system is to prevent injuries from preventable errors in the first place.” According to Greenstreet, “[i]t is by curing the epidemic of preventable medical errors that we can achieve reduced costs for patients and families, but also for the whole system. Let’s focus on what has been proven to reduce costs and improve lives — eliminating preventable errors — rather than giving up fundamental rights as a bargaining chip.”