stating that employee obtained a financial benefit other than one "earned in the normal course of employment” when he embezzled trust funds and used them to cover operating expenses of company in which he was a shareholder, director, officer and employee
How later courts described this case
- stating that employee obtained a financial benefit other than one "earned in the normal course of employment” when he embezzled trust funds and used them to cover operating expenses of company in which he was a shareholder, director, officer and employee
- refusing to review appellate court's decision where respondent failed to assign error to that court's ruling
- diverting checks for trust accounts to general business account is loss to escrow company in its capacity as trustee
- “Because Hartford [respondent] failed to assign error to the Court of Appeals ruling that Jordan [petitioner] has standing, we will not review that aspect of the court’s decision.”
Written by the judges who cited it.
The opinion
Andersen, J.
(concurring in part, dissenting in part) — By awarding attorney fees in the absence of any contractual, statutory or recognized equitable ground for the award, the majority opinion perpetuates an error begun in the recent opinion of Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 52-53 , 811 P.2d 673 (1991).
In my view, the holding in Olympic Steamship was an unwarranted rejection of the American rule on attorney fee awards — a rule this court has followed since its earliest days, 10 and a rule which has generally been the law in the United States for more than 200 years. 11
*509 Because I believe that sound judicial practice requires us to rethink and then to overrule Olympic Steamship, I cannot agree that it represents a reasonable basis for granting fees in this case. For that reason, I dissent from the award of actual attorney fees.
Until this court's decision in Olympic Steamship, the law in this state on attorney fees was consistent and clear; a recognized basis had to exist before such fees could be awarded. 12
"The most careful and detailed early analysis of the American rule in the State of Washington is found in [State ex rel.] Macri v. Bremerton, 8 Wn.2d 93 , 111 P.2d 612 (1941)." Talmadge, The Award of Attorneys' Fees in Civil Litigation in Washington, 16 Gonz. L. Rev. 57 , 60 n.13 (1980) (hereinafter referred to as Talmadge). In Macri this court held:
In absence of contract, statute, or recognized ground of equity, a court has no power to award an attorney's fee as part of the costs of litigation.
(Italics mine.) Macri, 8 Wn.2d at 113-14 .
The equitable grounds upon which an award of fees may be based are (1) bad faith conduct of the losing party; (2) preservation of a common fund; (3) protection of constitutional principles, and (4) private Attorney General actions. 13
This court's failure to adhere to its own pronouncements of law violates longstanding principles of stare decisis and "create[s] a feeling of general uncertainty as to the reliance which may be placed upon all decisional law." 14 In Crown Controls, Inc. v. Smiley, 110 Wn.2d 695, 704-05 , 756 P.2d *510 717 (1988) (quoting In re Stranger Creek, 77 Wn.2d 649, 653 , 466 P.2d 508 (1970)), we stated:
When a certain legal principle has already been established in a jurisdiction, there is much to be said for its continued existence. The continuity of legal principles allows citizens to choose courses of action with a reasonable expectation of what the future legal consequences will be, even if those consequences might not arise for a considerable period of time. These interests, together with a desire to provide a society of laws and not of men, form the basis for the theory of stare decisis. . . .
. . . The doctrine requires a clear showing that an established rule is incorrect and harmful before it is abandoned.
(Italics mine.) 15
In Olympic Steamship there was no showing that the rule on attorney's fees was incorrect or harmful. There was no reason, compelling or otherwise, to depart from the rule. In fact, the issue was not even properly before this court. The briefs filed by the parties in Olympic Steamship did not even request the relief so broadly granted. After determining that a valid contractual basis existed for the award of attorney fees, the author of the majority opinion in Olympic Steamship, sua sponte — and by way of obiter dictum — proclaimed the following new rule:
[A]n award of fees is required in any legal action where the insurer compels the insured to assume the burden of legal action, to obtain the full benefit of his insurance contract . . ..
(Italics mine.) Olympic Steamship, 117 Wn.2d at 53 .
The only clear authority cited by Olympic Steamship is a 1986 West Virginia case, Hayseeds, Inc. v. State Farm Fire & Cas., 352 S.E.2d 73 (W. Va. 1986). In rejecting both Hayseeds and Olympic Steamship, the Maryland Court of Appeals held that requiring attorney's fees to be paid by
insurers, who breach their contracts by failure to pay covered benefits .. . would probably mark the elimination of the American rule as to contract actions against insurers generally and *511 leave in doubt the efficacy of the American rule as to other types of contracts.
Collier v. MD-Individual Practice Ass'n, 327 Md. 1, 17 , 607 A.2d 537 (1992). 16
While there are exceptions to the American rule, 17 none was applicable in Olympic Steamship and none is applicable here. There simply was no reasonable basis for Olympic Steamship to create a new exception to the American rule on attorney fees in this state. The Olympic Steamship decision violated our own rules on stare decisis and plays havoc with fundamental principles of our judicial system.
The rule of Olympic Steamship, which the majority applies here, was nothing short of legislating. We should leave any change in the basis for attorney fee awards in insurance cases to those whose job it is to legislate. See Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 249 , 44 L. Ed. 2d 141 , 95 S. Ct. 1612 (1975); Talmadge, 16 Gonz. L. Rev. at 74-75 (arguing that the American rule should be changed, but recognizing only legislative methods for accomplishing that change).
In the present case, unlike Olympic Steamship, there is no contractual basis for granting an award of attorney fees. I would thus deny fees and overrule Olympic Steamship.
Durham, J., concurs with Andersen, J.
Reconsideration denied February 26, 1993.
See, e.g., Potwin v. Blasher, 9 Wash. 460, 465 , 37 P. 710 (1894); Larson v. Winder, 14 Wash. 647 , 45 P. 315 (1896).
Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 , 44 L. Ed. 2d 141 , 95 S. Ct. 1612 (1975).
See, e.g., Clark v. Horse Racing Comm’n, 106 Wn.2d 84, 92 , 720 P.2d 831 (1986); Baird v. Larson, 59 Wn. App. 715, 720 , 801 P.2d 247 (1990).
PUD 1 v. Kottsick, 86 Wn.2d 388 , 545 P.2d 1 (1976). See also Barnett v. Buchan Baking Co., 108 Wn.2d 405, 408 , 738 P.2d 1056 (1987) (attorney fees as consequential damages); Stevens v. Security Pac. Mortgage Corp., 53 Wn. App. 507, 523-24 , 768 P.2d 1007 (discussing award of attorney fees under the doctrine of equitable indemnification), review denied, 112 Wn.2d 1023 (1989).
Catlett, The Development of the Doctrine of Stare Decisis and the Extent to Which it Should Be Applied, 21 Wash. L. Rev. 158 (1946).
See also State v. Collins, 112 Wn.2d 303, 309 , 771 P.2d 350 (1989) (Dore, J„ dissenting) (stare decisis requires us to stand by our decisions unless there are compelling reasons why we should not do so).
See also Indiana Ins. Co. v. Plummer Power Mower & Tool Rental, Inc., 590 N.E.2d 1085 (Ind. Ct. App. 1992) (rejecting the Hayseeds rule).
See, e.g., Barnett v. Buchan Baking Co., 108 Wn.2d 405, 408 , 738 P.2d 1056 (1987).