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COURT OF APPEALS REJECTS PRO-RATA ATTORNEY FEES FOR PROPERTY DAMAGE RECOVERY

The Court of Appeals upheld the trial court’s summary judgment that dismissed Plaintiff Juan Chen’s claims against the carrier for a pro rata share of attorneys fees from property damage subrogation recovered by the carrier directly from the carrier for the third-party tortfeasor.

Since the Washington Supreme Court decided in Mahler v. Szucs that an insurer could be required to pay its insured a pro rata share of attorney fees when PIP payments made by the Plaintiff’s insurer are recovered from the tortfeasor, plaintiffs have sought to expand the circumstances when an insurer must make such payment. In this case, the Plaintiff failed in her attempt to extend Mahler to property damage recovery.

After considering a brief written by Colleen Barrett and Greg Worden, and after Colleen presented oral argument, the Court of Appeals quoted the trial court and found that the carrier had a "classic subrogation right" and owed no pro rata share of attorney fees for the property damage subrogation recovered:

The carrier had a classic subrogation right to recover for property damage under its policy and it directly pursued that right. Plaintiff contends that Mahler applies, however that case is distinguishable from this case because the Mahler decision only addressed recovery under Personal Injury Protection (PIP) coverage. Mahler does not extend to other types of coverage. Another difference between that case and this case is the Mahler insurers did nothing to pursue their rights, other than plaintiff=s efforts, until after settlement was reached whereas here, the carrier did pursue its rights prior to the time settlement was reached. Finally, there is a distinction between the type of right the insurer had in that case, and the type of right the insurer had in this case.

As the trial court recognized, this was Aa classic subrogation right." Because it was a classic subrogation right, the plaintiff assigned her rights to recover to the carrier when she accepted the check for $8373.44 in July 1997 for property damage under her collision policy. Therefore, the carrier had the right to pursue property damages, and further, it did pursue those rights on its own.

The Court of Appeals affirmed the dismissal of Plaintiff’’s bad faith claims, at 123 Wn.App. 150, 94 P.3d 326 (2004), and the Washington Supreme Court denied plaintiff's request for review.

Subsequent appellate courts have cited the Chen decision in Nieshe v. Concrete School Dist, 129 Wn.App. 632, 647, 127 P.3d 713 (2005), and Meas v. ... 130 Wn.App. 527, 535, 123 P.3d 519 (2005).