Rekhter v. Department of Social & Health Services
180 Wash. 2d 102
| Wash. | 2014Background
- DSHS in-home care program contracts with live-in providers who live with clients; payments depend on client service plans and CARE-derived hours.
- CARE process introduced a shared living rule reducing paid hours by 15% for live-in clients, regardless of tasks; rule applied despite service plans.
- Contracts incorporated clients’ service plans but defined hours later; initial contracts left key terms undefined until after performance began.
- Jenkins v. DSHS (2007) held the shared living rule violated federal parity requirements; DSHS repealed the rule in 2007 but continued its application until 2008.
- Separate class actions were filed by clients and providers; trial court later certified issues and summary judgment on wage claims for DSHS.
- Jury found DSHS breached an implied duty of good faith and fair dealing in performance of a term; damages awarded to providers; prejudgment interest awarded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the implied duty of good faith applicable here? | Providers argue discretionary CARE/SLR triggers good faith duty. | DSHS contends no contractual discretion, no implied duty. | Yes; implied duty applies when discretionary future terms exist. |
| Do instructions accurately state the law on implied duty? | Instructions correctly framed the duty in relation to contract terms. | Some instructions were allegedly misleading or incomplete. | Instructions, read as a whole, accurately reflect the law. |
| Can clients recover damages when providers recover damages for the same loss? | Client damages are pass-through and should be recoverable. | Entering both would cause double recovery; disallow client damages. | Double recovery barred; clients cannot recover damages. |
| Was summary judgment proper on providers’ wage claims? | DSHS acted as employer for clients; wage claims should survive. | No agency relationship; MWA does not apply to state-delivered care. | Summary judgment proper; wage claims denied. |
| Is prejudgment interest proper on contract damages? | Damages could be computed exactly from contract terms and CARE data. | Data not entered; damages not ascertainable with certainty. | Prejudgment interest improper; damages could not be determined with certainty. |
Key Cases Cited
- Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748 (7th Cir. 2010) (implied covenant can breach even where contract terms are fulfilled)
- Carma Developers (Cal.), Inc. v. Marathon Development Cal., Inc., 2 Cal.4th 342 (Cal. 1992) (covenant not necessary where contract terms are explicit and deterministic)
- Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732 (1997) (duty arises when one party has discretionary authority to determine terms)
- Yousoofian, 84 Wn. App. 755 (1996) (unconditional authority can negate duty of good faith)
- Badgett v. Sec. State Bank, 116 Wn.2d 563 (1991) (implied covenant exists to ensure mutual benefit from performance)
- Stevens v. Brink's Home Security, Inc., 162 Wn.2d 42 (2007) (prejudgment interest upheld where data enables exact damages)
- Monotype Corp. v. International Typeface Corp., 43 F.3d 443 (9th Cir. 1994) (implied covenant analysis in context of contract interpretation)