Court Opinion

ID: 4713740
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:39:56.364741+00
Date Added: 2024-06-11T08:07:19.232345
License: Public Domain

¶29 (concurring in part, dissenting in part) — I agree with the majority opinion in every respect but one. I part company with the majority only insofar as it holds that Colorado Structures, Inc., is entitled to so-called Olympic Steamship18 attorney fees. In my view, the trial court correctly concluded that it was not. I, therefore, dissent from the majority’s holding that “Olympic Steamship attorney fees apply to performance bonds.” Majority at 608.
Alexander, C.J.
¶30 In Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d 37, 52, 811 P.2d 673 (1991), this court extended “the right of an insured to recoup attorney fees that it incurs because an insurer refuses to defend or pay the justified action or claim of the insured.” Although our court did not set out its reasons for reaching this conclusion in great detail, it should be readily apparent to a reader of the opinion that this departure from the American rule *609governing entitlement to attorney fees19 was primarily based on what our court said was the “disparity of bargaining power between an insurance company and its policyholder.” Id. This, we said, “makes the insurance contract substantially different from other commercial contracts.” Id. (citing Hayseeds, Inc. v. State Farm Fire & Cas., 177 W. Va. 323, 352 S.E.2d 73, 77 (1986)).
¶31 The majority extends the Olympic Steamship reasoning to performance bonds. Unfortunately, it makes this leap unaided by any empirical evidence that the disparity in bargaining power between insurance companies and their policyholders, which was of concern to our court in Olympic Steamship, is extant in the relationship between contractors and companies that issue performance bonds. The majority dispatches this issue with the brief comment that “[t]here seems little basis for us to create an exception for performance bonds.” Majority at 598. The flaw in this reasoning is that there is currently no authority for the proposition that performance bonds fall under Olympic Steamship, and, thus, it cannot be said that Colorado Structures is seeking to be excepted from that decision. Rather it is this court that is extending the Olympic Steamship exception to the American rule on attorney fees. In my judgment, we should not do so without a showing that there is unequal bargaining power between issuers of performance bonds and contractors. Plainly, no such showing has been made.
¶32 Indeed, there is authority from the highest court of the state of California, which supports the notion that “the typical performance bond bears no indicia of adhesion or disparate bargaining power.” Cates Constr., Inc. v. Talbot Partners, 21 Cal. 4th 28, 980 P.2d 407, 422, 86 Cal. Rptr. 2d 855 (1999) (plurality opinion). In that case, the California *610court engaged in an extensive discussion of the difference between construction performance bonds and insurance policies and concluded that the bonds differ from insurance policies in that “the surety and obligee are not in unequal bargaining positions.” Majority at 599 (citing Cates, 21 Cal. 4th at 52-54). The California court went on to say:
Unlike the vast majority of insureds who must accept insurance on a “take-it-or-leave-it” basis, “obligees decide the form of the bond which they will accept from the principal, thus they can require terms which provide an incentive to the surety to timely pay claims, such as attorneys’ fees and interest.” ([R. Cooper] Shattuck, Bad Faith: Does It Apply to Sureties in Alabama? (1996) 57 Ala. Law 241, 246.) If the obligee does not agree with the terms of the bond secured by the principal, it may consent to a modification of the underlying contract or may end bargaining altogether and seek a different principal whose financial resources and qualifications enable it to procure a bond with acceptable terms. Hence, obligees generally possess ample bargaining power to negotiate for favorable bond terms.
Cates, 980 P.2d at 422 (citations omitted). The majority essentially eschews this authority, stating simply, “We disagree with this factual premise.” Majority at 599.
¶33 As noted above, our decision in Olympic Steamship was a substantial departure from the American rule that generally governs the awarding of attorney fees. We should be slow to extend the Olympic Steamship exception to that rule, particularly in cases, like this, where there is no showing that the economic reasons underlying that opinion are present. Without such a showing, it is hard for me to conclude that a contract to issue a performance bond differs from a run-of-the-mill commercial contract.
¶34 I, therefore, dissent from the majority’s conclusion that Colorado Structures is entitled to an award of attorney fees pursuant to Olympic Steamship, 117 Wn.2d 37.
J.M. Johnson, J., concurs with Alexander, C.J.

 Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 52, 811 P.2d 673 (1991).

 “ “The American Rule on attorney fees is that attorney fees are not recoverable by the prevailing party as costs of litigation unless the recovery of such fees is permitted by contract, statute, or some recognized ground in equity.’ McGreevy v. Or. Mut. Ins. Co., 128 Wn.2d 26, 35 n.8, 904 P.2d 731 (1995).” City of Sequim v. Malkasian, 157 Wn.2d 251, 284, 138 P.3d 943 (2006).