Joint-liability rules clarified for cases with both negligent and intentional acts
By Gregory P. Turner

Where multiple defendants commit both intentional and negligent acts, the trial court must segregate which acts caused which part of the harm, the Washington Supreme Court recently held in a 5-to-4 decision. Joint and several liability is imposed on defendants as to only those damages that result from negligence.

In Tegman v. Accident & Medical Investigations, Inc., no. 71811-3 (Aug.28, 2003), Tegman was injured in an auto accident. She retained Richard McClellan and Accident & Medical Investigations (AMI) to handle her claims, thinking that McClellan was a lawyer. He in fact was not. He did hire lawyers, including Lorinda Noble, to work on Tegman’s case. Two years later, McClellan settled Tegman’s case without her knowledge, forged her signature, and put the $35,000 in settlement proceeds into his general bank account. He paid Tegman what he determined was her share of the settlement proceeds.

Tegman and two others later sued McClellan, AMI, Noble, and other lawyers who had worked at AMI. They alleged both negligence torts, including legal malpractice and breach of fiduciary duties, and intentional torts, including fraud and conversion. A bench trial resulted in an award against the lawyers for legal malpractice and negligence.

Noble appealed. She argued that the trial court erred in holding her and all other defendants jointly and severally liable to Tegman, since McClellan and AMI committed intentional acts but she did not. The Court of Appeals affirmed. The Supreme Court accepted discretionary review.

Justice Barbara Madsen, writing for the Tegman majority, recognized that the 1986 Tort Reform Act abolished joint and several liability in most situations. Several or proportionate liability is intended to be the rule, not the exception. But the abolition of joint and several liability applies only to torts that fall within the act’s definition of "fault." That definition includes acts that "are in any measure negligent or reckless." The Supreme Court previously held that the Legislature clearly intended that this definition exclude intentional acts. The act imposed joint and several liability among at-fault defendants for their proportionate shares of fault. Since intentional acts are outside the definition of fault, the damages that result from them are excluded from the equation.

Here, both negligent and intentional acts caused the plaintiff’s harm. The Tegman majority held that this requires the trier of fact to apportion damages attributable to intentional acts versus those attributable to negligence or recklessness. Only the latter are subject to joint and several liability. The negligent defendants, such as Noble, are not jointly and severally liable for the damages caused by the intentional acts of McClellan and AMI.

The Tegman Court noted, "All of the defendants in this case are jointly and severally liable, but not for the same damages." The Court ordered the case remanded to the trial court so that it could apportion the damages between the defendants’ joint liabilities and their several liabilities.

Justice Tom Chambers and three other justices dissented. They asserted that the majority’s decision "will be torturous if not unworkable in trials across the state and will cause absurd results for parties." It will require juries to segregate damages that are indivisible and not susceptible to such segregation. The dissenting justices contended that the statutory language permitted joint and several liability here because plaintiffs were not at fault, and that is a situation in which joint and several liability survives.

Open-meetings act requires state agencies to decide on lawsuit settlements publicly
By William R. Kiendl

State agencies must decide in public meetings, not in private, whether to approve settlements of litigation to which they are parties, the Ninth Circuit Court of Appeals recently held.

In Feature Realty, Inc. v. City of Spokane, et al., 331 F.3d 1082 (9th Cir. 2003), Feature Realty sued the City of Spokane in state court, alleging that the city wrongfully refused to issue a grading permit in connection with a property development. In fall 1998, Feature Realty conducted settlement negotiations with the city attorney’s office and reached a tentative agreement. The city attorney circulated a confidential memorandum to the Spokane City Council, which discussed settlement in executive session. The city attorney asked council members if they approved the settlement. Although no formal vote was taken, the council members indicated their approval. The council held no open meeting regarding the settlement agreement. Feature Realty and the City of Spokane signed the settlement agreement in October 1998.

In 2000, a dispute arose over the extent of the city’s obligations under the settlement agreement. Feature Realty sued in state court, seeking the appointment of an arbitrator. The City of Spokane removed the action to federal court. For the first time, the city alleged that it realized that the 1998 settlement was null and void because the City Council did not approve the settlement in an open public meeting. The federal district court dismissed the action on summary judgment, and Feature Realty appealed.

Relying on interpretations of the Open Public Meetings Act by Washington state courts, the federal Ninth Circuit Court of Appeals affirmed the district court’s dismissal of the action. The Ninth Circuit recognized that an exception to the Open Public Meetings Act allowed the City Council to discuss the confidential memorandum with the city attorney in executive session. But a "final action" based on the confidential memorandum was required by the terms of the Open Public Meetings Act to occur in an open public session. Because the City Council’s action to approve the tentative settlement took place in executive session, it violated the Open Public Meetings Act and was therefore null and void.

Feature Realty argued that the settlement agreement still should be binding on the City of Spokane under principles of equitable estoppel. The Ninth Circuit disagreed, finding that estoppel principles are inconsistent with application of the Open Public Meetings Act.

The Feature Realty decision is important to any party in litigation with a public agency in Washington. Public agencies must enter into settlements in open public meetings. This can restrict significantly their ability to propose settlement offers; instead, public agencies will have incentive to approve after the fact the negotiated settlements that their attorneys make. Private litigants probably will be well served by attending open public meetings to learn whether, prior to the conclusion of settlement negotiations, the public agency’s governing body has approved any settlement authority relating to their claim.

No prejudgment interest on medicals, even if admitted
By Jeffrey P. Downer

Medical expenses are not "liquidated" sums on which the court may award prejudgment interest, even if the defense admits that they are reasonable and necessary, the Washington Court of Appeals has held.

In Lakes v. von der Mehden, 117 Wn. App. 212 (2003), Melvin Lakes was injured in an auto accident caused by Paul von der Mehden. Lakes later sued. During discovery, Lakes sent requests for admissions to von der Mehden. Von der Mehden admitted that most of these medical bills, or $7,191, were reasonably necessary. At trial, they admitted $7,307 in medical bills. The jury included those admitted medical expenses in its verdict.

Lakes requested prejudgment interest on the admitted medical expenses. He argued that because those amounts were not disputed, the court had no discretion in awarding them, and they therefore were liquidated. The trial court disagreed, and Lakes appealed.

Division III of the Court of Appeals affirmed. It noted that a claim is liquidated or determinable by computation under a fixed contractual standard that requires no reliance on discretion or opinion. But no prejudgment interest is awarded if the defendant cannot ascertain the amount owed. Here, "by their nature, medical expenses are not liquidated until the judge or jury determines that the expenses were reasonably and necessarily incurred. … Unliquidated claims are not rendered liquidated by the fact that the defendant stipulates to the damages or agrees to the reasonableness of a settlement."

Around The Firm

The September 12-18, 2003 edition of the Puget Sound Business Journal has recognized Lee Smart, P.S., Inc. as "the fastest growing among large Puget Sound law firms" in the current decade. Lee Smart ranked first in growth on a percentage basis as part of the Business Journal’s annual survey of local law firms. The number of attorneys at Lee Smart increased 32 percent, to 49, between April 2000 and August 2003. This compares favorably to two much larger firms that grew 24 and 22 percent, respectively, and to several large local firms that shrank by as much as 17 percent. … Washington Law & Politics has named Tammy L. Williams and William R. Kiendl as "Rising Stars" again, for 2004. The designation honors young lawyers who are up and coming in the profession. The magazine also recognized several Lee Smart lawyers as "Superlawyers" again this year for their high degree of excellence in the profession, including David L. Martin, Michael A. Patterson, Joel E. Wright, Steven J. Jager, Jeffrey P. Downer, Sam B. Franklin, and August G. Cifelli. … Seattle University Law School has named Lee Smart associate attorneys Eric S. Newman and Aaron V. Rocke as adjunct professors for its trial advocacy team.

Jennifer M. Ilenstine won dismissal of all federal claims against her attorney clients in Rodriguez v. Perez, another legal-malpractice case arising out of the infamous Wenatchee "sex ring" trials in the mid-1990s. Plaintiffs filed civil-rights claims under 42 U.S.C. § 1983 against the owner of the firm, the associate who tried the case, and another employee of the firm under an agency theory. To prove a claim under § 1983, however, plaintiff was required to prove that the defendants were "state actors" at the time of the alleged acts. The judge ruled that the attorney who tried the case as a matter of law cannot be acting on behalf of the state because an attorney’s loyalties are to the client. The court also held that the attorney who owned the law firm was not an administrator for the county and therefore also could not be liable under § 1983. As to the attorney sued under an agency theory, the judge found that plaintiff failed to meet his burden of proof on that issue because he had failed to produce any competent proof to support his claim.

David L. Martin and Frank A. Cornelius won summary judgment of dismissal of Garza v. PCE Enterprises. Plaintiff suffered a serious arm injury while working at a potato-processing plant, when she attempted to pull a piece of tape from a conveyor belt. Her arm was pulled into a roller on the conveyor, fracturing bones in her wrist and forearm, and causing a degloving-type injury to the soft tissue on her arm. PCE was the electrical contractor that performed electrical work as part of a revision to the plant. Plaintiff claimed that PCE negligently installed the electrical system for the conveyor that caused her injury. The court dismissed the action on summary judgment because PCE was not responsible for the design or engineering of the conveyor, including safety issues for the electrical system, owed no duty to plaintiff, and was not negligent. … Dave Martin, Jeffrey P. Downer, and William R. Kiendl won the appeal of Minahan v. Western Wash. Fair Assn., in which a drunk driver hit plaintiff, but she settled with the drunk driver before suing the owner of the Puyallup Fair premises near where plaintiff was standing when the accident occurred. After the trial court denied summary judgment of dismissal, the Court of Appeals agreed with Dave, Jeff, and Bill that the possibility of premises liability was too remote to impose liability and directed the trial court to dismiss the action. … Jeff Downer and Jennifer Ilenstine also won the appeal of Larson v. MOA Hospitality. In that case, a man walked uninvited into a motel, crashed a party in one of the motel rooms, and shot and killed a motel patron. The Court of Appeals agreed with Jeff and Jennifer that the incident was not foreseeable, rejecting plaintiff’s allegations of a history of criminality and inadequate security at the motel and directing the trial court to dismiss the case.