Court Opinion

ID: 9560095
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:42:52.292854+00
Date Added: 2024-06-11T09:12:09.014268
License: Public Domain

Baker, J., concurs.
Forrest, J. (concurring) — I concur with the majority that the trial court had jurisdiction to determine the issue as to payment of attorney fees and that the case must be remanded for detailed findings. However, I doubt that the facts are actually in dispute and I would anticipate that the ultimate issue as to whether the facts justify recovery will be a legal one. For that reason I believe a further discussion of the applicable law to be in order.
Washington law on the subject starts with Pena v. Thorington.2 Although Desmond relies almost exclusively on Pena, that case actually held that the insured was not entitled to recover on facts substantially equivalent to those here present. In doing* so, the court adopted the Oregon rule as stated in Ridenour v. Nationwide Mut. Ins. Co., 273 Or. 514, 516, 541 P.2d 1377, 1378 (1975):
[A]n insurer who makes a recovery from a third party for moneys paid its insured is only required to pay attorney fees which were "reasonably and necessarily incurred" to make the recovery. Absent an agreement to the contrary, an insurer is only obligated for attorney fees if it is benefited.
*88The court then stated that whether the services were "necessary" was a question of fact. In my view, the facts consist of the dealings between the insured's attorney and his PIP carrier, and the dealings between the PIP carrier and the liability carrier. "Necessary" is a conclusion of law.
The next Washington case, Richter, Wimberley & Ericson v. Honoré,3 denied attorneys fees from the PIP carrier, holding that the issue was controlled by the following language from the insured's PIP policy:
”6. TRUST AGREEMENT. . . .
"(b) where the insured has incurred legal expenses in recovering from a third party, payments made by the Company, under this endorsement, and out of which recovery the Company is reimbursed for such payments under the Subrogation Provision of the policy, the Company shall pay an equitable apportionment of such expense. This provision shall not apply as to amounts recovered or recoverable by the Company from another insurer pursuant to the Inter-Company Arbitration Agreements;
(Italics mine.) Richter, at 508 n.l. It reached this result by interpreting key language from Ridenour, "[a]bsent an agreement to the contrary, an insurer is only obligated for attorney fees if it is benefited",4 to mean "in the presence of an agreement to the contrary between the insured and the PIP carrier, the PIP carrier is not hable for attorney fees." Whether this is a logical application of the Ridenour language may be open to question, but if Desmond's PIP policy contains language equivalent to that in Richter, Richter would control and require denial of attorney fees.
Absent such policy language, the trial court must find other relevant facts and examine their legal significance in the light of Pena and Richter. Indeed, the Richter court went on to consider whether the services of the attorney were "necessary" as an additional ground for its decision. It considered the issue resolved by a trial court finding that *89the PIP carrier had received "no benefit" from action taken by the insured's attorneys. In my view, that too is a conclusion of law rather than a finding of fact. Be that as it may, the underlying evidence relied upon in Richter was that there was no agreement between the attorney and the PIP carrier, and there was an indication that the liability carrier recognized the PIP carrier's claim. Richter, at 511. There appears to be little to distinguish the facts here from the facts of Pena and Richter, but that remains to be determined by the trial court.
The Richter court also noted that the insured had agreed to pay one-third of "any settlement" to his attorney, that he voluntarily agreed to the PIP carrier's right of subrogation by purchasing the policy and, accordingly, had no cause for complaint, receiving the benefit of both his bargains. Richter, at 512 n.5. Although consigned to a footnote, I consider this very significant because it focuses on the ultimate issue underlying these lawsuits: should any attorney fees be paid when the PIP subrogation funds are included in a settlement or a judgment and if so, who should pay — the insured or the PIP carrier?
Pena and Richter recognize recovery of attorney fees from the PIP carrier as a legal possibility. However, I find serious conceptual difficulties in placing responsibility for the attorney fees on the PIP carrier.
First, in this case Graham was required to perform all the same services on behalf of his client regardless of whether there was a PIP obligation or not. He has identified nothing that he would have done differently without his client's receipt of the PIP payments.
Second, the attorney-client relationship must be consensual. It is highly questionable whether in the face of Liberty's rejection of Graham's offer of his services that the court should impose a liability for those same rejected services. Moreover, Graham has acted adversely to Liberty in regard to the continuance of the PIP payments and in regard to UIM coverage.
*90Third, Graham's claim is necessarily based on his performing services for both Liberty and Desmond. However, such a claim of dual representation would involve a potential conflict of interest contrary to the Rules of Professional Conduct. This is demonstrable by a simple hypothetical. Assume (1) a case with substantial damages and very thin liability; (2) $20,000 in PIP payments to the injured plaintiff; (3) an offer by the liability carrier to settle for $39,000. Any independent attorney representing the PIP carrier would wish to accept such settlement since it would produce a full recovery (less attorney fees) of the PIP payments. However, an attorney representing the injured plaintiff might well recommend that the plaintiff go to trial in hopes of a substantial recovery, knowing that in the event of no recovery there would be no obligation to repay the PIP payments.
Although not before us in this appeal, the issue as to the client's obligation to pay attorney fees from the PIP payments might arise on remand. There is a suggestion in Richter that the plaintiff's agreement to pay his attorney a percentage of "any settlement" means that he is to pay one-third of the PIP payments.5 While I agree with the Richter holding as to the effect of the policy language, I do not accept its dicta as to the client's obligation. An insured has an unequivocal legal right to receive PIP payments. To me it is anomalous to require him to pay a percentage of that sum to his attorney merely because in the course of litigation or negotiation the liability carrier reimburses the PIP carrier for those sums. At an absolute minimum, such a *91fee agreement would require full disclosure by the attorney to the client as to all the relevant facts and circumstances.
I find serious policy objections against, and no very compelling policy reason for, imposing attorney fee liability for PIP payments on either the client or the PIP carrier. However, these issues are not briefed and it is unnecessary to resolve them in the present appeal.

 23 Wn. App. 277, 281, 595 P.2d 61, review denied, 92 Wn.2d 1019 (1979).

 29 Wn. App. 507, 628 P.2d 1311 (1980), review denied, 95 Wn.2d 1012 (1981).

Ridenour, at 516.

"Because the foregoing rationale results in a determination that attorney's fees cannot he recovered by Mr. Honoré, the fact the court indicated Mr. Honoré had not been made whole to the extent of those fees is immaterial. We note Mr. Honoré voluntarily entered into a contingent retainer agreement which required payment of 33'/a percent of 'any settlement.' There have been no contentions of invalidity concerning that agreement or that he was operating under any disability when he entered it. Additionally, the PIP endorsement was voluntarily bargained for by Mr. Honoré in order to have his medical bills promptly paid. He received the benefit of both bargains and should not now be heard to complain." Richter, at 512 n.5.