Karstetter v. King Cnty. Corr. Guild

• Decision Date: 26 December 2017
• Docket Number: No. 75671-1-I,75671-1-I
• Citation: 407 P.3d 384
• Parties: Jared KARSTETTER and Julie Karstetter, his spouse, who together form a marital community, Respondents, v. KING COUNTY CORRECTIONS GUILD, a nonprofit corporation doing business as a labor union, Randy Weaver, Sonya Weaver, Leonard Orth, Katherine Orth, Garrin Clark, Gabriel Vigil, Petitioners, William Atchison, Anil S. Karia, Trevor Caldwell, individually and as representatives; and Public Safety Law Group, a legal services public corporation, Defendants.
• Court: Washington Court of Appeals

407 P.3d 384

Jared KARSTETTER and Julie Karstetter, his spouse, who together form a marital community, Respondents,

v.KING COUNTY CORRECTIONS GUILD, a nonprofit corporation doing business as a labor union, Randy Weaver, Sonya Weaver, Leonard Orth, Katherine Orth, Garrin Clark, Gabriel Vigil, Petitioners,William Atchison, Anil S. Karia, Trevor Caldwell, individually and as representatives; and Public Safety Law Group, a legal services public corporation, Defendants.

No. 75671-1-I

Court of Appeals of Washington, Division 1.

FILED: December 26, 2017

Dmitri L. Iglitzin, Katelyn M. Sypher, Attorney at Law, Schwerin Campbell Barnard Iglitzin & Lavitt LLP, 18 W. Mercer St., Ste. 400, Seattle, WA, 98119-3971, for Petitioners.

Patrick N. Rothwell, Davis Rothwell Earle & Xochihua PC, 520 Pike St., Ste. 2500, Seattle, WA, 98101-4083, for Defendants.

Judith A. Lonnquist, Law Offices of Judith A. Lonnquist, P.S., 1218 3rd Ave., Ste. 1500, Seattle, WA, 98101-3083, for Respondents.

PUBLISHED OPINION

Leach, J.¶1 We granted discretionary review of the trial court's denial of King County Corrections Guild's (Guild) motion to dismiss Jared Karstetter's breach of contract and wrongful discharge claims. The trial court should have dismissed Karstetter's breach of contract claim because Washington public policy makes the contract termination provision unenforceable. And Karstetter's wrongful discharge claim fails because he did not plead sufficient facts to support that claim. We reverse and remand to the trial court for dismissal of these two claims.

FACTS

¶2 The Guild is a labor organization and the exclusive bargaining representative of corrections officers and sergeants employed by the King County Department of Adult and Juvenile Detention. Karstetter has served as legal counsel for the Guild since 1996. This case involves the parties' most recent contract, signed in 2011 by the Guild and the Law Offices of Jared C. Karstetter Jr. PS. Titled an employment agreement between the Guild and the law firm, it had a term of five years. The contract required that the Guild have just cause to terminate Karstetter and required notice, an opportunity to correct, and arbitration of any disputed termination.

¶3 In March 2016, the King County Ombudsman's Office (Ombudsman) contacted Karstetter about a whistleblower complaint. Karstetter claims the Guild vice-president told Karstetter to cooperate with the Ombudsman. Karstetter then complied by producing requested documents.

¶4 On April 27, 2016, the Guild summarily fired Karstetter. Karstetter alleges that the Guild fired him "ostensibly for disclosure of information to the Ombudsman and for disloyalty." The Guild claims that it fired Karstetter because of strong evidence that he disclosed Guild client confidences.

¶5 Karstetter, along with his wife Julie Karstetter, who worked for the law firm as a legal assistant, sued the Guild and others, alleging several claims. The Guild moved to dismiss all claims against it: breach of contract, wrongful discharge, retaliation, negligent infliction of emotional distress, tortious interference with employment, and specific performance of contract. The trial court granted the Guild's motion in part, dismissing Karstetter's retaliation claim, tortious interference claim, and request for specific performance. The Guild requested discretionary review of the court's decision not to dismiss the breach of contract and wrongful discharge claims. We granted review under RAP 2.3(b)(2). This rule allows review if the trial court committed probable error that substantially alters the status quo or substantially limits the Guild's freedom to act.

ANALYSIS

¶6 The Guild claims that the trial court should have dismissed Karstetter's breach of contract and wrongful termination claims against it. CR 12(b)(6) allows a court to dismiss a claim only when it appears beyond doubt that the claimant can prove no set of facts, consistent with its complaint, which would justify recovery.¹ The court assumes the truth of all facts alleged in the complaint and may consider hypothetical facts supporting the claim.² A trial court should grant a CR 12(b)(6) motion " ‘sparingly and with care’ " in the unusual case where the claimant's allegations show an insuperable bar to relief on the face of the complaint.³

The trial court's CR 12(b)(6) decision presents a question of law, which this court reviews de novo.⁴

Breach of Contract

¶7 The Guild contends that the trial court should have dismissed Karstetter's breach of contract claim because the contract's termination provision violates Washington public policy about client's ability to terminate an attorney-client relationship. Karstetter claims that this policy does not apply when the attorney is the client's employee. We agree with the Guild.

¶8 Specifically, the Guild asserts that the termination provision conflicts with the well-established rule that a client may fire a lawyer at any time and for any reason. Over many years, Washington courts have repeatedly recognized this rule and applied it in fee disputes between an attorney and a client.⁵ Our Supreme Court has noted the unique nature of the attorney-client relationship and stated that the rule permitting a client to fire its attorney is necessary to protect both the client and the public.⁶

¶9 Washington's Rules of Professional Conduct reflect this policy. RPC 1.16(a) provides that a lawyer shall "withdraw from the representation of a client if ... (3) the lawyer is discharged." Comment 4 to this rule states, "A client has the right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer's services." Neither the rule nor the comment excludes in-house counsel from the rule's application.

¶10 The contract's termination provision states,

Just Cause For Termination: It is understood by the parties that ATTORNEY is expected to perform in a manner consistent

with the quality and expectations of the GUILD. It is further understood that ATTORNEY is primarily answerable to the President of the GUILD and secondarily answerable to the Executive Board of the GUILD. Consistent with the rights and expectations of the members that the GUILD represents ATTORNEY may be terminated for just cause. The definition of Just Cause shall be the same definition that is currently contained in the Collective Bargaining Agreement for GUILD members. In the event that the GUILD wishes to exercise this provision, due notice shall be provided to ATTORNEY and an opportunity to correct any behavior that GUILD deems inappropriate. ATTORNEY shall be afforded fundamental due process and an opportunity to answer to any and all charges. Termination of this Agreement shall be reserved as a final option. In the event that ATTORNEY disputes the findings and determination of the GUILD with regard to a Just Cause termination, ATTORNEY and GUILD agree to arbitrate said dispute in a manner consistent with the Arbitration Clause contained in the Collective Bargaining Agreement.

This provision directly conflicts with the rule that a client may fire a lawyer for any reason at any time. It also purports to modify Karstetter's ethical obligations by requiring cause for discharge and allowing him to dispute his discharge rather than withdrawing when discharged.

¶11 Karstetter does not dispute that the Guild is his client. Instead, he claims a contractual right to challenge and arbitrate his client's decision to fire him. This attempted modification of Karstetter's ethical obligations violates a long- and well-established public policy adopted by our Supreme Court to protect both clients and the general public. For these reasons, it is unenforceable.

¶12 We find support for our conclusion in LK Operating, LLC v. Collection Group, LLC.⁷ In that case, the court observed, "The RPCs are clearly directed at promoting the public good and preventing public injury.... It is therefore possible, as a general matter, to find principles of public policy relevant to the enforceability of contracts in the RPCs."⁸ It specifically found that a contract violating RPC 1.8(a) —limiting a lawyer's ability to enter into a business transaction with a client—presumptively also violated the public policy underlying the rule.⁹ The court stated, "A contract entered in violation of former RPC 1.8(a) may still be enforced where it is shown, based on the specific factual circumstances that, notwithstanding the violation, the contract itself does not contravene the public policy underlying former RPC 1.8(a)."¹⁰ The court added,

We do not purport to set out any all-encompassing rule for how violation of any RPC in connection with a contract might affect that contract's enforceability. We simply reaffirm that a contract entered in violation of former RPC 1.8(a) may not be enforced unless it can be shown that notwithstanding the violation, the resulting contract does not violate the underlying public policy of the rule.^{[11 ]}

Like the attorney in LK Operating, Karstetter cannot show that the challenged contract terms do not violate the policy behind the applicable RPC.

¶13 Karstetter correctly notes that the procedural posture of this case differs from LK Operating, There, the court reviewed a summary judgment decision. Karstetter asserts that a dismissal based on the allegations in his complaint is inappropriate. He claims that if the contract violates the RPCs, some factual inquiry is still necessary to decide if the contract violates public policy. But Karstetter identifies no facts or hypothetical facts that would support a finding that the termination provision does not violate public policy. Unlike LK Operating, the trial court needed no more factual inquiry to determine that the termination provision violated public policy. No hypothetical set of facts could reconcile this provision with Washington's strong public policy of allowing a client great freedom in a decision to fire its attorney.

¶14 Karstetter asserts that his...