Tegman v. Accident & Medical Investigations

Decision Date28 August 2003
Docket NumberNo. 71811-3.,71811-3.
Citation150 Wash.2d 102,75 P.3d 497
CourtWashington Supreme Court
PartiesMaria TEGMAN, Linda Leszynski and Diana Calixto, Respondents, v. ACCIDENT & MEDICAL INVESTIGATIONS, INC., a Washington corporation, Richard McClellan and Jane Doe McClellan, individually and as husband and wife, and the marital community composed thereof; Joy A. Brown and John Doe Brown, individually and as wife and husband, and the marital community composed thereof; Michael D. Hoyt and Jane Doe Hoyt, individually and as husband and wife, and the marital community composed thereof; James P. Bailey and Jane Doe Bailey, individually and as husband and wife, and the marital community composed thereof; Camille H. Jescavage and John Doe Jescavage, individually and as husband and wife, and the marital community composed thereof, Defendants, Delores M. Mullen and John Doe Mullen, individually and as wife and husband, and the marital community composed thereof; Lorinda S. Noble and John Doe Noble, individually and as wife and husband, and the marital community thereof, Petitioners.

Lorinda Noble, Colville, Floyd Fulle, Clinton, for petitioners.

Gregory Lucas, Mona Smith, Bellevue, for respondents.

MADSEN, J.

The issue we decide is whether negligent defendants are jointly and severally liable for damages resulting from both negligent and intentional acts. We hold that under RCW 4.22.070 the damages resulting from negligence must be segregated from those resulting from intentional acts, and the negligent defendants are jointly and severally liable only for the damages resulting from their negligence. They are not jointly and severally liable for damages caused by intentional acts of others. We reverse the Court of Appeals and remand for segregation of damages and redetermination of petitioner Lorinda Noble's liability.

FACTS

On April 26, 1989, plaintiff-respondent Maria Tegman sustained injuries in an automobile accident. She retained G. Richard McClellan and Accident and Medical Investigations, Inc. (AMI) for legal counsel and assistance in handling her personal injury claims. She signed a contingency fee agreement with AMI, believing that McClellan was a licensed attorney. McClellan has never been an attorney in any jurisdiction.

During their representation of Tegman, McClellan and AMI advanced funds for her therapy. Settlement offers were submitted on her behalf, although she only learned of these after the fact.

McClellan and AMI employed Camille Jescavage and Lorinda Noble, both licensed attorneys. McClellan entered into contingency fee agreements with AMI's clients and processed settlements of AMI cases through his own bank account rather than a legal trust account. Jescavage and Noble knew this, and knew that when they settled cases for AMI, the proceeds were placed into McClellan's account. Both attorneys also knew that McClellan was not a licensed attorney.

Noble resigned her position in May 1991, after being employed approximately six months. During her employment, she also represented Ms. Tegman in connection with her personal injury claim. She never advised Tegman that McClellan engaged in the unauthorized practice of law, that McClellan had taken her files, that settlements were processed through his personal account and not an attorney's trust account, that clients were not being properly advised of the status of their cases, and that fees were being shared with nonlawyers.

In July 1991, McClellan hired Delores Mullen as a paralegal. She quit working for McClellan and AMI in December 1991. During her period of employment, Mullen considered Jescavage to be her supervising attorney, while Jescavage worked for AMI, although Jescavage did little supervision. After Jescavage left in September 1991, McClellan advised Mullen to consider James Bailey, another attorney, as her supervising attorney. She did not confirm that Bailey was her supervising attorney, but continued to perform legal services for AMI clients while aware of some of McClellan's questionable practices and knowing of substantial improprieties. Bailey later advised her that he was not her supervising attorney. Mullen worked on 50 to 60 cases, including Tegman's. When she left, she did not advise Tegman of McClellan's and AMI's improper practices.

In December 1991, McClellan settled Tegman's case without her knowledge or consent, forged her signature, and placed the $35,000 settlement funds into his general bank account. Later he obtained a "release" from her, and sent her a check for what he determined was the balance of her share of the settlement proceeds.

In 1993, Tegman and two other individuals who had retained McClellan and AMI to represent them in pursuing personal injury claims sued McClellan, AMI, Mullen, and Jescavage. Tegman also sued Noble. The plaintiffs sought damages on numerous grounds. Their cases were consolidated, and discovery occurred from 1993 to 1998.1 The trial court entered summary judgment against McClellan and AMI on the issue of liability for "negligence, the unauthorized practice of law, legal malpractice, breach of fiduciary relationship, fraud, misrepresentation, conversion, breach of contract, violation of the Consumer Protection Act [chapter 19.86 RCW], and criminal profiteering." Clerk's Papers (CP) (conclusion of law 179) at 776. Following a six-day bench trial, the court held Mullen, Noble, and Jescavage liable for negligence and legal malpractice in Tegman's case, held that Tegman herself was not at fault, and awarded damages.

Noble appealed.2 She argued, among other things, that the trial court erred in holding her jointly and severally liable to Tegman for compensatory damages in the amount of $15,067.25 (the amount representing compensatory damages after deducting amounts Tegman had already received). She maintained the trial court erroneously imposed joint and several liability for both negligent and intentional torts, rather than imposing joint and several liability only as to the negligent torts. The Court of Appeals affirmed, reasoning that the trial court had in fact held Noble, Jescavage, and Mullen jointly and severally liable only for the actual damages caused by their negligence. Tegman v. Accident & Med. Investigations, Inc., 107 Wash. App. 868, 883, 30 P.3d 8 (2001),review granted, 145 Wash.2d 1034, 43 P.3d 21 (2002). The Court of Appeals said the trial court treated the action against McClellan and AMI as functionally separate from the action against Noble, Jescavage and Mullen. Id.

This court granted Noble's petition for review on the issue of joint and several liability. She maintains that the actual compensatory damages due to intentional torts must be segregated, and that under RCW 4.22.070(1)(b) she is jointly and severally liable only for the remainder, i.e., that portion of the damages resulting from negligent acts.

ANALYSIS

In 1986, the legislature enacted the tort reform act of 1986, declaring its purpose to "enact further reforms in order to create a more equitable distribution of the cost and risk of injury and increase the availability and affordability of insurance." Laws of 1986, ch. 305, § 100. The legislature specifically noted the escalating costs to governmental entities through increased exposure to lawsuits, awards, and increased costs of insurance coverage, as well as increases in costs in professional liability insurance for physicians and other health care providers, and other professionals. The legislature stated its intent "to reduce costs associated with the tort system, while assuring that adequate and appropriate compensation for persons injured through the fault of others is available." Id.3 The act furthered reforms, which began with adoption of comparative negligence in 1973, by abolishing joint and several liability in most situations. Kottler v. State, 136 Wash.2d 437, 443, 963 P.2d 834 (1998).

RCW 4.22.070, enacted as part of the tort reform act of 1986, is "the centerpiece of the 1986 amendatory package." Kottler, 136 Wash.2d at 443, 963 P.2d 834; accord Morgan v. Johnson, 137 Wash.2d 887, 895, 976 P.2d 619 (1999)

. As we have consistently recognized, RCW 4.22.070 provides that several, or proportionate, liability is now intended to be the general rule.4

Kottler, 136

Wash.2d at 444-45, 963 P.2d 834; Welch v. Southland Corp., 134 Wash.2d 629, 633, 952 P.2d 162 (1998); Anderson v. City of Seattle, 123 Wash.2d 847, 850, 873 P.2d 489 (1994); Gerrard v. Craig, 122 Wash.2d 288, 292, 857 P.2d 1033 (1993); Washburn v. Beatt Equip. Co., 120 Wash.2d 246, 294 n. 7, 840 P.2d 860 (1992) ("[w]hile RCW 4.22.030 suggests that RCW 4.22.070 is an exception to a general rule, RCW 4.22.070 is in fact an exception that has all but swallowed the general rule"); id. at n. 7.

RCW 4.22.070(1) states that "[i]n all actions involving fault of more than one entity, the trier of fact shall determine the percentage of the total fault which is attributable to every entity which caused the claimant's damages...." (Emphasis added.) "Fault," under chapter 4.22 RCW, does not include intentional acts or omissions. RCW 4.22.015 defines "fault" to include "acts or omissions, including misuse of a product, that are in any measure negligent or reckless ... or that subject a person to strict tort liability or liability on a product liability claim."

This court has concluded that "intentional torts are part of a wholly different legal realm and are inapposite to the determination of fault pursuant to RCW 4.22.070(1)." Price v. Kitsap Transit, 125 Wash.2d 456, 464, 886 P.2d 556 (1994); see Morgan, 137 Wash.2d at 894-96,

976 P.2d 619; Schmidt v. Cornerstone Invs., Inc., 115 Wash.2d 148, 162, 795 P.2d 1143 (1990) ("the Legislature's intent to exclude intentional conduct from the definition of fault is clear"). In Welch, this court held that in light of the statutory definition of "fault," a defendant who was not an intentional actor could not apportion...

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