Opinion ID: 2572696
Heading Depth: 1
Heading Rank: 8

Heading: the common fund as an equitable doctrine

Text: The purpose for the court's crafting equitable remedies, any equitable remedy, has not changed over the centuries. It is now and has always been to mitigate the perceived harshness of some legal rule. [5] And while courts have only recently applied the equitable doctrine of the common fund to insurance disputes in Washington, that doctrine has a long and well-developed legacy outside of the insurance context. It is a doctrine grounded in the dictates of a specific public policy fairness. [6] Like other equitable doctrines, the common fund is calculated to achieve equity. Johnny Parker, The Common Fund Doctrine: Coming of Age in the Law of Insurance Subrogation, 31 IND. L.REV. 313, 323 (1998). In that connection, the common fund is grounded in the proposition that equity does not favor the position of one who sits idly by and allows another, who obviously expects to be paid, to perform valuable services for him, to escape with the value of those services without compensating the same. Id. at 332-33, 876 P.2d 896. So like the genesis of many equitable doctrines, the doctrine of the common fund arises out of the notion that one party (here an insurance company) is being enriched through the efforts of another (the plaintiff's lawyer). And to put it in the vernacular, that ain't right, or said more eloquently: It is grossly inequitable to expect an insured, or other claimant, in the process of protecting his own interest, to protect those of the [insurer] as well and still pay counsel for his labors out of his own pocket, or out of the proceeds of the remaining funds. And this is precisely the view taken by the overwhelming majority of decisions, in that a proportionate share of fees and expenses must be paid by the insurer or may be withheld from its share. Mahler v. Szucs, 135 Wash.2d 398, 425 n. 17, 957 P.2d 632, 966 P.2d 305 (1998) (quoting 8A JOHN A. APPLEMAN & JEAN APPLEMAN, INSURANCE LAW AND PRACTICE § 4903.85, at 335 (1981)). There is no magic about the equitable theory of the common fund doctrine in the insurance context. If the plaintiff's lawyer works to build and prosecute a damage case, and prevails, then he or she is entitled to be paid by all who benefit from his or her efforts. But to spell out the rationale is to describe the problem here. By the terms of this policy, Ms. Hamm was never entitled to recover in a UIM arbitration the PIP benefits State Farm already had irrevocably paid her. All she could additionally recover under the terms of the policy (terms which were uncontested) were the damages over and above the PIP paymenther UIM benefits. The term common fund should not be used to describe something other than an equitable common fund. There is nothing here being reimbursed to anyone. State Farm is paying (as it is obligated to do) under two separate coveragesPIP and UIM. It has recovered nothing. It should not have to pay a portion of Ms. Hamm's fees for that privilege.