Court Opinion

ID: 4154115
Source: CourtListenerOpinion
Date Created: 2017-03-20 20:00:57.319666+00
Date Added: 2024-06-11T14:34:28.744380
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAR 20 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

GARY KRANTZ, on behalf of his minor              No.   14-35628
son K.K.; and BRENDA RUSSELL,
mother of K.K.,                                  D.C. No. 3:12-cv-05848-RBL

              Plaintiffs-Appellants,
                                                 MEMORANDUM*
 v.

ALLSTATE PROPERTY & CASUALTY
INSURANCE COMPANY,

              Defendant-Appellee.

                   Appeal from the United States District Court
                     for the Western District of Washington
                   Ronald B. Leighton, District Judge, Presiding

                       Argued and Submitted March 7, 2017
                               Seattle, Washington

Before: GRABER, IKUTA, and HURWITZ, Circuit Judges.

      Gary Krantz, on behalf of his minor son K.K., appeals the district court’s

order amending K.K’s judgment against Allstate Property & Casualty Insurance

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Company (Allstate) to grant Allstate a setoff and offset against the amount the jury

awarded. We have jurisdiction under 28 U.S.C. § 1291 and review the district

court’s ruling for abuse of discretion. Meritage Homes of Nev., Inc. v. FDIC, 753

F.3d 819, 822–23 (9th Cir. 2014). We affirm in part, vacate in part, dismiss in

part, and remand.

      The district court did not err in holding that the $65,000 that K.K. received

as part of a global settlement with the alleged tortfeasors was a payment from a

“responsible” party. Giving the word “responsible” its “plain, ordinary, and

popular meaning,” Int’l Marine Under Writers v. ABCD Marine, LLC, 179 Wash.

2d 274, 282 (2013), Dean Wenner was “responsible” for the foreseeable injuries to

K.K. that resulted from his breach of a legal duty, see Webster’s Third New

International Dictionary 1935 (2002) (defining “responsible” as “likely to be called

upon to answer” and “creditable or chargeable with the result”); see also Wash.

Rev. Code § 66.44.270(1) (prohibiting the furnishing of liquor to minors).

Because the insurance contract between Krantz and Allstate entitled Allstate to a

setoff for “all amounts paid by the owner or operator of an underinsured motor

vehicle or anyone else responsible,” the district court did not err in amending the

judgment to afford Allstate a $65,000 setoff. Allstate Insurance Co. v. Batacan is

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not to the contrary because the text of the policy in Batacan was materially

different from the text here. 139 Wash. 2d 443, 447 (1999).

      The Washington Supreme Court has not suggested that it would interpret

section 48.22.030(1) of the Washington Revised Code as forbidding this setoff.

The plain language of section 48.22.030(1), which merely defines the term

“underinsured motor vehicle,” does not limit setoffs to payments from “applicable”

insurers, and Krantz has cited no case holding otherwise. Allstate Insurance Co. v.

Dejbod addressed the distinct question whether a tortfeasor’s insurance policy is

“applicable” within the meaning of section 48.22.030(1) so that a UIM insurer can

setoff the full extent that the insured could legally require the tortfeasor’s insurer to

pay, where the insured has settled with the tortfeasor for less than that amount. 63

Wash. App. 278, 286–87 (1991). Dejbod does not suggest that section

48.22.030(1) overrides a contractual provision allowing the insurer to setoff

amounts that the insured has actually received from other responsible parties.

Moreover, Washington courts have frequently held that UIM insurance should not

permit insured parties to recover more than their total damages, see, e.g., Elovich v.

Nationwide Ins. Co., 104 Wash. 2d 543, 550 (1985), and the interpretation that

Krantz advances would allow K.K. to do so. In light of section 48.22.030(1)’s text

and purpose as elucidated in Washington case law, see id., we cannot predict that

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the Washington Supreme Court would hold that the insurance policy at issue here

violates Washington law. We therefore affirm the district court’s award of a

$65,000 setoff to Allstate.

      The district court properly assessed against Allstate a pro rata share of

attorneys’ fees measured as a percentage of the total recovery secured.1 See

Bowles v. Wash. Dep’t of Ret. Sys., 121 Wash. 2d 52, 72 (1993). The total

recovery provides the appropriate reference amount because “the size of the

recovery constitutes a suitable measure of the attorneys’ performance.” Id. Krantz

is also entitled to recover Allstate’s pro rata share of costs incurred in generating

the common fund, which includes expenses in securing the settlement from the

alleged tortfeasor as well as the expenses in securing the judgment. See Safeco Ins.

Co. v. Woodley, 150 Wash. 2d 765, 772 (2004). The district court assessed against

Allstate only a pro rata share of the $7,485.11 claimed in Krantz’s final bill of

      1
         The dissenting opinion errs by misapprehending what constitutes the
common fund. Under Washington law, the common fund comprises the total
amount of proceeds generated by the insured. See Winters v. State Farm Mut.
Auto. Ins. Co., 144 Wash. 2d 869, 881 (2001). K.K. generated a total recovery of
$81,708.32 ($65,000 from the global settlement and $16,708.32 from Allstate).
The jury’s verdict (that K.K. sustained $81,708.32 in damages) did not generate a
fund of $81,708.32, because Allstate was responsible for paying only $16,708.32
of that amount, given the setoff. Because the dissenting opinion’s calculation of
Allstate’s pro rata share of attorneys’ fees is based on a fund comprised of
$146,708.32 (adding $65,000 and $81,708 together), it is incorrect.
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costs for the litigation in this action. It is unclear from the district court’s order

whether it excluded Krantz’s claimed expenses unrelated to this litigation as a

matter of law, or for want of evidentiary support in the record. Under

Washington’s common fund doctrine, however, the recoverable costs are not

limited to statutory costs. See id. (referring broadly to “legal expenses”).

       Given the ambiguity in the district court’s order, we cannot effectively

review the calculation of additional costs. We therefore vacate the order amending

the judgment in part, but only as to the award of a pro rata share of costs. On

remand, the district court should consider all legal costs related to the settlement

and this litigation and assess against Allstate its pro rata share of those expenses

that Krantz can establish.2

       To the extent that Krantz challenges the district court’s award of costs to

Allstate, we dismiss the appeal for lack of jurisdiction because the district court’s

costs order was not encompassed within the certification for appeal pursuant to

Rule 54(b). See Chacon v. Babcock, 640 F.2d 221, 222 (9th Cir. 1981).

       The parties shall bear their own costs on appeal.

       2
        We express no view as to whether the current record supports awarding
any or all of Krantz’s claimed expenses, and we leave to the district court’s
discretion whether to reopen the record on remand to receive further evidence of
the claimed expenses.
                                             5
   AFFIRMED IN PART, VACATED IN PART, DISMISSED IN PART,

AND REMANDED.

                           6
Krantz v. Allstate Prop. & Cas. Ins. Co., No. 14-35628                    FILED
HURWITZ, Circuit Judge, concurring in part and dissenting in part:         MAR 20 2017
                                                                       MOLLY C. DWYER, CLERK
        I concur in the memorandum disposition except insofar asU.S.itCOURT OF APPEALS
                                                                       concerns

Allstate’s responsibility for attorneys’ fees incurred by K.K.

        I agree with the majority that Allstate must contribute its pro rata share of

K.K.’s legal expenses incurred in creating the common fund. See Safeco Ins. Co. v.

Woodley, 82 P.3d 660, 663 (Wash. 2004). I also agree with the majority that the pro

rata share is calculated by dividing the amount of personal injury protection (“PIP”)

reimbursement by the amount of total damages, see id., and that calculation results

in a pro rata share of 12%.

        But, the majority errs insofar as it concludes that Allstate is only liable for

12% of K.K.’s attorneys’ fees incurred in the underinsured motorist insurance

(“UIM”) litigation against Allstate. Rather, Woodley expressly holds that when the

insurer, as here, seeks to recoup previously paid PIP benefits, the common fund

consists of both the recovery from the tortfeasors and the recovery from the UIM

insurer. Id. It is undisputed that K.K. incurred $80,517.62 in legal expenses

(including fees) in the actions against the tortfeasors and the UIM carrier. Allstate’s

12% share should be calculated against this amount. I therefore respectfully dissent

from the memorandum disposition’s treatment of Allstate’s obligation for attorneys’

fees.

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