Auto insurer has traditional subrogation rights to recover property damage

By William H. Waechter

An auto insurer is entitled to traditional subrogation against the tortfeasor for its property-damage payment and does not owe its insured a share of the insured's attorney fees, the Washington Court of Appeals recently held.

In Meas v. State Farm Fire & Cas. Co., no. 32818-6-II (Nov. 22, 2005), Quoc To injured Sarith Meas in an auto accident on February 19, 2002. State Farm provided no-fault collision coverage to Meas. In May 2002, State Farm paid for repair of Meas's car, less his deductible. Meas's lawyer had told State Farm by letter that Meas would claim against To and his liability insurer, Allied, not only personal-injury damages but also all subrogation claims by State Farm, including for property damage. Just a week after State Farm had paid for Meas's property damage, State Farm recovered that payment directly from Allied, before Meas had settled his personal-injury claim.

In February 2003, Meas's counsel submitted a settlement demand to Allied for both personal injury and property damage. Allied responded that it had paid State Farm for the property damage already. In April 2003, Meas's attorney wrote to State Farm, demanding that either it pay Allied back or tender Allied's property-damage payment to Meas until he settled his personal-injury claim. He argued that under Mahler v. Szucs, 135 Wn.2d 398 (1998), State Farm did not have the right to recover property damage directly from the tortfeasor or his insurer. Mahler required a personal-injury-protection (PIP) insurer to share in its insured's legal expense that resulted in reimbursement of the PIP insurer's payments. State Farm disagreed and retained the payment.

Meas sued State Farm for bad faith. Meas then settled his personal-injury claim with Allied and To. Meas and State Farm filed cross-motions for summary judgment. The trial court held that State Farm was entitled to pursue its property-damage subrogation on its own and did not owe Mahler fees. Meas appealed.

The State Farm policy provided that it possessed a right of recovery of any party it paid, but "only after the insured has been fully compensated for the bodily injury, property damage or loss." Meas argued that under Mahler, an insurer has no right of direct subrogation where its insured pursues third-party recovery for himself.

The Court of Appeals disagreed. The court noted that Mahler viewed property-damage subrogation differently from PIP reimbursement. The former caused few disputes between insurer and insured since the insured had “no interest in competing with the insurer for the right to sue the tortfeasor; economic damages could make the insured whole." By paying the property damage initially, State Farm had made the insured whole, and its policy entitled it to pursue property-damage reimbursement directly from the tortfeasor. In contrast, the policy did not permit State Farm to pursue its PIP reimbursement until the insured received full compensation for the personal-injury claim. Unlike a property-damage claim, in a personal-injury claim "the claimed noneconomic damages typically amount to many multiples of the economic damages and are almost always disputed because they are not objectively ascertainable."

Accordingly, since State Farm had traditional rights of subrogation directly against the tortfeasor for the property damage, it did not owe a proportionate share of attorney fees in connection with that subrogation recovery.

Law precludes contributory fault of victim of statutory rape at school

By Charles P.E. Leitch

An underage victim of sexual abuse by her school teacher cannot be contributorily negligent in a tort action for that abuse, the Washington Supreme Court has held.

In Christensen v. Royal School District, no. 75214-1 (Dec. 8, 2005), Leslie Christensen was a 13-year-old eighth grader at Royal Middle School. One of her teachers was 26-year-old Steven Diaz. On four occasions during the school year, Leslie and Diaz engaged in sexual activity. Diaz later contended that Leslie's participation in the relationship and sexual activity with him was voluntary.

Leslie and her parents sued the Royal School District and the school's principal, Preston Andersen, in U.S. District Court for the Eastern District of Washington, alleging negligent hiring and supervision of Diaz.

The District and Andersen's answer alleged an affirmative defense that Leslie's voluntary participation in the sexual relationship constituted contributory fault under Washington's Tort Reform Act, RCW 4.22.

The Christensens moved for partial summary judgment on the contributory-fault issue, seeking to strike that affirmative defense. The federal court certified to the Washington Supreme Court the question whether a 13-year-old victim of sexual abuse by her teacher can have contributory fault assessed against her.

The Christensen Court answered the question "no," for two reasons.

First, the Court observed that in the criminal context, a 13-year-old is below the age of consent and thus is legally incapable of consenting to sexual activity with an adult. An adult is guilty of a felony if he engages in sexual activity with a minor, whether or not the minor's conduct was supposedly consensual. In criminal cases, the minor's consent is no defense.

The Court saw no reason to reach a different result in the civil context. The Court cited cases from South Carolina, Colorado, Oregon, and elsewhere in which courts held that the minor's consent is neither a partial nor a total defense to an adult's sexual-abuse tort.

Andersen and the District argued that Washington law has held children responsible for their contributory fault in tort cases. But those cases did not involve sexual torts. The Christensen Court emphasized, "The act of sexual abuse is key here. … Our public policy is directed to protecting children from such abuse."

The Court's second reason for its holding was Washington's longstanding rule that a school has a "special relationship" with students in its custody and a duty to protect them from foreseeable dangers. Children are placed in the care of school, and they lose the ability to protect themselves. "In sum, because we recognize the vulnerability of children in the school setting, we hold, as a matter of public policy, that children do not have a duty to protect themselves from sexual abuse by their teachers."

Two of the nine justices dissented. Justice Richard Sanders argued that the same rules of contributory fault that apply in other tort cases should apply equally here. He noted, "I fail to see why a minor can be contributorily negligent for driving a snowmobile but cannot be contributorily negligent in a negligence action relating to sexual misconduct. Generally contributory negligence is a question of fact for the jury."

Justice Barbara Madsen concurred with the portion of the majority's decision that held that contributory fault is not available to Diaz as a damage-reducing defense. She argued, however, that a jury should decide “whether, through her conduct, the student failed to avoid injury caused by the alleged negligence of the school in hiring or supervising Diaz."

Both dissenting justices noted that the District alleged that Christensen had lied to her parents and school officials about what had occurred with Diaz.

Around The Firm

Duncan K. Fobes and Daniel G. Lloyd won the jury trial of Watts v. Clallam County. Plaintiff had fallen in the parking lot outside the Clallam County courthouse, fracturing her patella. She and her husband claimed more than $400,000 in damages. Duncan and Dan first obtained orders in limine that excluded much of the evidence on which the plaintiffs intended to rely. The jury returned its unanimous defense verdict after only an hour of deliberations. As a result, the plaintiffs were awarded no damages. The plaintiffs did not appeal. … Duncan Fobes and William L. Cameron obtained summary judgment in Castro v. Stanwood School District. Duncan and Bill represented Edmonds School District and Lynnwood High School, which were dismissed from the action. Plaintiff suffered a broken jaw while playing high school soccer. A fight broke out during the game, in which an opposing player struck plaintiff. Duncan and Bill argued that Edmonds School breached no legal duty to its own team member, and the court agreed. … Joel E. Wright, Sam B. Franklin, and Bill Cameron won summary judgment in Goldberg v. Preszler, an accounting-malpractice case involving advice and accounting work dating back to 1970. Plaintiff's late husband had been diverting community assets to his separate property accounts, including a trust, beginning in 1970 and that a substantial amount of his estate was community property and belonged to his wife. The wife had sued the trust and recovered more than $1 million. This prompted the trust to sue the estate of the husband's accountant, alleging that the accountant had given bad accounting advice in 1970 when the diversion of funds began. Joel, Sam, and Bill moved for summary judgment, arguing that the trust had suffered no damage because the trust had been ordered to repay funds that were never the trust's money to begin with. They also argued that the statute of limitations had run on the accounting-malpractice claim. The court agreed and dismissed the action.

Sam Franklin and Matthew D. Taylor successfully defended a homeowner's association against a former member in Krasle v. Songaia. In that case, plaintiff contended that the homeowners had breached their agreement to allow him to build a greenhouse, and that as a result, plaintiff's rare and exotic plants, allegedly worth more than $100,000, died. On summary judgment, the court dismissed plaintiff's misrepresentation and Consumer Protection Act claims, as well as the individually named homeowner association defendants, leaving only a breach of contract claim against the Association. The action then went to trial, and at the close of plaintiff's case, the court granted defendant's motion to dismiss. … Jeffrey P. Downer won a pair of appeals. In Rubin v. Juanita Shores Condominium Assn., plaintiff, who owned a condo unit, sued the condominium board because he believed that the condominium was inadequately insured. The Court of Appeals agreed with Jeff that the condominium declarations governed, required less insurance than actually provided, and provided no basis for plaintiff's claim. In Horstman v. Costco Wholesale Corp., plaintiff slipped on wet concrete and broke his leg. The Court of Appeals affirmed dismissal because mere water on a floor is not an unreasonably dangerous condition.

In Mkrtychev v. Huling Bros., August G. Cifelli won summary judgment of dismissal in favor of a car dealer. Plaintiff was injured during a test drive. The court based its ruling on the bailment relationship created by the test drive and held that the accident resulted from a superseding or intervening cause. … In Tanzi v. Shulkin, Sam Franklin and Marc Rosenberg won a trial involving claims of legal malpractice and breach of fiduciary duty arising from the attorney's representation of plaintiffs in bankruptcy proceedings. … In the federal discrimination action of Morta v. Camas School District No. 117, Michael A. Patterson and Marc Rosenberg won summary judgment of dismissal. The federal court agreed with Mike and Marc that plaintiff filed the action fewer than the required 60 days after serving her tort claim. … In CNA Ins. Co. v. Cadet Mfg. Co., Marc Rosenberg won an attorney-fee award of more than $172,000. … Patricia K. Buchanan and Dan Lloyd obtained dismissal in Elliott v. Puyallup School District, a claim under the Residential Landlord-Tenant Act. Plaintiffs had refused to comply with discovery orders, leading Pat and Dan to persuade the court to dismiss the action and impose sanctions on plaintiffs. ... Michelle A. Corsi won summary judgment in Gerard v. Shattuck. Plaintiffs sued their former lawyer in a boundary-line property dispute with ex- neighbors. They claimed that the lawyer lost the underlying case, resulting in title to a portion of their property being quieted to the neighbors, and had not timely sued the person from whom they had bought the property. The court agreed with Michelle that plaintiffs had no proof that the lawyer was negligent or proximately caused plaintiffs' damages and dismissed the action. … David L. Martin won summary judgment of dismissal in Stewart v. Inland Northwest Orthotics. Plaintiff claimed personal injury against the manufacturer of a prosthetic foot, the company that fitted and sold the prosthesis, and Dave's client, the successor company to the product seller. Dave argued that his client was exempted from liability under the Product Liability Act, and that his client's purchase agreement did not obligate it to assume its liabilities. After seeing the summary judgment motion, plaintiff agreed to dismissal. … After two years of litigation, John W. Schedler and Jenny M. Downey won summary judgment of dismissal of the medical-malpractice action of Krohn v. Evergreen Chiropractic Center, et al.