Delagrave v. EMPLOYMENT SEC. DEPT. OF STATE

• Decision Date: 10 May 2005
• Docket Number: No. 22714-6-III.,22714-6-III.
• Citation: 127 Wash. App. 596,111 P.3d 879
• Parties: Don DELAGRAVE, Appellant, v. EMPLOYMENT SECURITY DEPARTMENT OF THE STATE OF WASHINGTON, Respondent.
• Court: Washington Court of Appeals

111 P.3d 879

127 Wash. App. 596

Don DELAGRAVE, Appellant, v. EMPLOYMENT SECURITY DEPARTMENT OF THE STATE OF WASHINGTON, Respondent.

No. 22714-6-III.

Court of Appeals of Washington, Division 3, Panel Five.

May 10, 2005.

As Amended on Denial of Reconsideration July 19, 2005.

Darrell K. Smart, Smart Law Offices PS, Yakima, WA, for Appellant.

Tomas S. Caballero, Attorney General of Washington, Wenatchee, WA, for Respondent.

SCHULTHEIS, J.

¶ 1 Don Delagrave seeks to reduce his obligation to the Employment Security Department (ESD) arising from overpayments it made to him. Mr. Delagrave received overlapping benefits from ESD and the Department of Labor and Industries (L & I) when he received a lump-sum retroactive time loss settlement from L & I that covered the same period he was receiving ESD benefits. He argues we should apply the "common fund" doctrine to require ESD to pay a share of the attorney fees he expended for the recovery of funds on ESD's behalf from L & I. After paying his attorney, full repayment to ESD will result in a net loss to Mr. Delagrave. Therefore, he claims, ESD will be unjustly enriched. Because the ESD statutes do not allow for the application of the "common law" rule, we find no error in the failure to apply the rule. However, we reverse and remand for consideration of Mr. Delagrave's request for a repayment waiver.

FACTS

¶ 2 Mr. Delagrave injured his neck and shoulder on January 18, 2001, in the course of his employment. He was unable to work due to his injuries and sought disability benefits through L & I. When his claim was denied, he hired counsel. He agreed to pay his attorney 30 percent of any retroactive benefits collected from L & I. Mr. Delagrave also sought unemployment compensation benefits through ESD. He began receiving unemployment benefits effective January 26, 2002, after a required waiting period due to his L & I status.

¶ 3 In June 2002, Mr. Delagrave, through counsel, succeeded in obtaining benefits from L & I. L & I paid him $10,350.31 for retroactive time loss from January 26, 2002 until June 5, 2002. He so informed ESD and returned some unemployment checks to avoid overpayment from overlapping benefits. From the $10,350.31 payment, Mr. Delagrave paid his counsel $3,105.09.

¶ 4 In August 2002, ESD notified Mr. Delagrave that due to his successful L & I claim for retroactive time loss, he was overpaid by ESD by $7,922 for the periods January 27 through June 8, 2002. ESD demanded repayment of that amount. Mr. Delagrave appealed to an administrative law judge (ALJ). He claimed the overpayment obligation should be reduced to require ESD to pay a pro rata share of the $3,105.09 in attorney fees he expended that ultimately resulted in his recovery of funds on ESD's behalf from L & I. The ALJ made the following relevant findings of fact and conclusions of law, and order.

FINDINGS OF FACT:

....

3. Appellant does not deny that he was overpaid, or that the amount of benefits at issue for unemployment insurance purposes is $7,922.00. He also does not argue that the liability to repay the amount should be waived for equitable reasons. He acknowledges he received unemployment insurance benefits through ESD and time loss compensation through L and I for the same weeks. Appellant argues that he should be allowed a pro rated reduction for attorney's fees, the sum of $3,105.09.

CONCLUSIONS OF LAW:

1. The provisions of RCW 50.20.190 and WAC 192-28-105, WAC 192-28-110, WAC 192-28-115 are applicable and will be found on the attachment.

2. Having given due consideration to each of the factors set forth in the above-cited regulations, it is concluded that the claimant was without fault but must remain liable for repayment of the $7,922.00 overpaid.

3. The undersigned has authority to waive the overpayment, for reasons of equity and good conscience, or to require claimant to pay the sum in full. The undersigned has been unable to find any legal authority which would allow the undersigned to require the Department to "pay" its share of the attorney's fees. That case law cited by the appellant is not entirely analogous to this situation, as the Department is not in a position of a third party tortfeasor.

Now therefore it is ORDERED:

The Decision of the Employment Security Department under appeal is AFFIRMED. The claimant is not at fault in causing the overpayment but remains liable for the refund of regular benefits pursuant to RCW 50.20.190 in the amount of $7,922.00.

Clerk's Papers (CP) at 8-9. Mr. Delagrave appealed to the ESD commissioner. The commissioner affirmed the ALJ's decision and adopted the ALJ's findings of fact and conclusions of law, subject to certain "additions, modifications, and comments." CP at 106. Specifically, the commissioner held:

Claimant contends, in part, that the Employment Security Department would never have had a claim on him for the $7,922 overpayment but for the fact he expended an attorney fee to obtain the L & I award, and seeks the reduction either as a matter of right or on legal authority separate and apart from the "equity and good conscience" overpayment waiver provisions contained in RCW 50.20.190 and WAC 192-28-115.1

While we can appreciate the general principle behind claimant's contention (though we are perhaps as unclear as was the administrative law judge at the efficacy of the particular formula proposed), neither an administrative law judge nor the undersigned has the authority to waive part or all of an overpayment for any other reason than the "equity and good conscience" provisions of the cited statute and regulation.

1 The record indicates that the claimant chose not to avail himself of the aforementioned waiver provisions.

CP at 106-07.

¶ 5 The superior court made findings of fact and conclusions of law and affirmed the commissioner's decision. Mr. Delagrave now appeals to this court.

DISCUSSION

STANDARD/SCOPE OF REVIEW

¶ 6 This review is governed by the Administrative Procedure Act (APA), chapter 34.05 RCW. Tapper v. Employment Sec. Dep't, 122 Wash.2d 397, 402, 858 P.2d 494 (1993). Under the APA, the ESD commissioner is empowered to review the ALJ's decision. Id. at 404, 858 P.2d 494; RCW 50.32.080. The commissioner is the final authority for the agency's determinations on unemployment compensation. Tapper, 122 Wash.2d at 404, 858 P.2d 494. We therefore review the commissioner's decision to the extent it modifies or replaces the ALJ's findings relevant to the appeal. Id. We sit in the same position as the superior court and apply the APA standards directly to the record. Id. at 402, 858 P.2d 494. However, the findings of fact and conclusions of law entered by the superior court here are superfluous to our review. Durham v. Dep't of Employment Sec., 31 Wash.App. 675, 676, 644 P.2d 154 (1982) (citing Andreas v. Bates, 14 Wash.2d 322, 128 P.2d 300 (1942)).

¶ 7 We review the challenged findings of fact to determine whether they are supported by substantial evidence. In re Farina, 94 Wash.App. 441, 449-50, 972 P.2d 531 (1999). "Substantial evidence is `"evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premises."'" Id. at 450, 972 P.2d 531 (quoting Heinmiller v. Dep't of Health, 127 Wash.2d 595, 607, 903 P.2d 433, 909 P.2d 1294 (1995)). Findings that are not properly challenged are treated as verities. Tapper, 122 Wash.2d at 407, 858 P.2d 494. The findings are presumed prima facie correct; the challenger bears the burden of rebutting this presumption. RCW 34.05.570(1)(a); Safeco Ins. Cos. v. Meyering, 102 Wash.2d 385, 391, 687 P.2d 195 (1984).

¶ 8 We review challenged conclusions of law de novo. Farina, 94 Wash.App. at 450, 972 P.2d 531. We give ESD's construction of the statutes it has been charged to interpret substantial deference. Safeco, 102 Wash.2d at 391, 687 P.2d 195. Ultimately, however, it remains our duty to determine what the law is and, thus, we may substitute our interpretation of the law for ESD's interpretation. Id. at 391-92, 687 P.2d 195; Farina, 94 Wash.App. at 450, 972 P.2d 531.

BENEFIT OVERPAYMENTS

¶ 9 A person is disqualified from receiving unemployment compensation if he or she is receiving or will receive industrial insurance disability benefits. RCW 50.20.085. Generally, when one is overpaid as a result of overlapping ESD and L & I payments he or she must repay the amount overpaid to ESD. RCW 50.20.190(1).

COMMON FUND DOCTRINE

¶ 10 Mr. Delagrave argues that since ESD received a pecuniary benefit to which it would not have been entitled absent his attorney's successful efforts, attorney fees should be paid from the fund which his attorney created. See, e.g., Mahler v. Szucs, 135 Wash.2d 398, 957 P.2d 632, 966 P.2d 305 (1998)

. Under the common fund doctrine, the court may award attorney fees out of a common fund to a litigant who has maintained a successful suit for the preservation, protection, or increase of the common fund for the benefit of the litigant and others. Id. at 426-27, 957 P.2d 632; Grein v. Cavano, 61 Wash.2d 498, 505-06, 379 P.2d 209 (1963). Under this doctrine, a court may obligate an insurer to pay a pro rata share of attorney fees when the insured's action against a third party generates a recovery for both the insured and the insurer. Mahler, 135 Wash.2d at 436,

957 P.2d 632; Winters v. State Farm Mut. Auto. Ins. Co., 144 Wash.2d 869, 877, 31 P.3d 1164, 63 P.3d 764 (2001).

¶ 11 There is no express provision in the statute that allows ESD to forgive an amount attributable to attorney fees on an overpayment. When the legislature does not act to create such a provision, we may not read one into the statute even if we believe the omission is unintentional. State ex rel. Ewing v. Reeves, 15 Wash.2d 75, 85, 129 P.2d 805 (1942); Dep't of Labor & Indus. v. Cook, 44 Wash.2d 671, 677, 269 P.2d 962 (1954). RCW 50.32.160 provides for payment of attorney fees and costs out of the unemployment compensation administration fund only if a...