PIP/UIM insurer must share in claimant’s attorney fees even when repaying itself
(Continued - Page 2)

Winters sued State Farm for the fees. She based her claim on Mahler v. Szucs, 135 Wn.2d 398 (1998). The Mahler Court required State Farm, which had obtained reimbursement of PIP payments, to pay a proportionate share of the PIP claimant’s attorney fees. Mahler turned on language that was unique to State Farm’s policy. But in dictum, the Mahler Court added that it could reach the same result at common law under the "common fund doctrine," which can require a beneficiary of litigation to share in the attorney fees incurred by another claimant who obtains the recovery. Traditionally, Washington law required the claimant to show that he or she had conferred a benefit on the other party before that party could be required to pay a share of the fees.

The trial court sided with State Farm, but the Court of Appeals reversed. The Supreme Court accepted review. The Supreme Court paid little mind to the language of State Farm’s policy, instead focusing on the common fund doctrine. State Farm contended that Winters had conferred no benefit on it, because the practical effect of State Farm’s UIM coverage reimbursing State Farm’s PIP payments was to move money from one pocket to the other.

The Winters Court disagreed: "When a PIP insured creates a common fund from liability payments and UIM benefits, the common fund combines liability proceeds from the tortfeasor’s insurance carrier and UIM proceeds from the insured’s underinsured motorist carrier. The combination of liability and UIM insurance compensates claimants for those amounts that they are legally entitled to recover from tortfeasors, up to the total of applicable liability and UIM limits."

The Lee Smart Quarterly is a publication of the law offices of Lee, Smart, Cook, Martin & Patterson, P.S., Inc. for clients and others. It is intended as general information only and is not to be construed as legal advice. You should consult an attorney if you have any specific legal questions.

Editor: Jeffrey P. Downer	Eml: jpd@leesmart.com
Phone: 206.621.3482	Toll Free: 877.624.7990