*1 September 27301-9-I. Division One. No.

Kathryn Respondent, Desmond, v. Northwest Appellant. Corporation,

Insurance Hickman, William R. Erickson, Marilee C. and Reed appellant. McClure, respondent. Graham,

John M. Corporation J. Northwest Insurance Pekelis, appeals requiring pro an order it to a rata share of its fees incurred Kathryn insured third tortfeasor. party lawsuit Desmond brought against lacked jurisdiction, Liberty contends that con- Alternatively, Liberty thus its order is unenforceable. determining the trial court erred in tends *2 Desmond's had an a share of obligation when injured Desmond was 30, 1988, On Kathryn April car. Allstate rear-ended Nicole Larson's her car was Northwest Larson, Liberty insured and Insurance Company insur- Desmond's insured Desmond. Corporation Insurance $10,000 expenses for medical ance included policy up $10,000 wages. for lost M. Graham to 1988, Desmond retained John 28,

On June 15, On July in claims. injury her her represent personal injury 1988, Liberty requesting "personal Graham wrote (PIP) Because Graham for Desmond. protection" Larson, Gra- against was on Desmond's behalf proceeding contingency on a basis Liberty offered to represent ham also Allstate. have against claim it any subrogation might 27, 1988, confirming July on Liberty responded itself in its represent PIP that it would coverage stating claim Allstate. against in PIP July Desmond benefits Liberty began paying making months, stopped Liberty apparently After several to arbitra- took the matter and Desmond these payments, PIP payments. making to continue compel Liberty tion to resumed arbitration, Liberty in the prevailed Desmond the payments. a memo Allstate 9, 1988, Liberty sent

On September PIP rental and "forward substantiation promising Allstate, 1989, wrote 1, August On upon receipt." time was hen, at that its PIP which the status of updating On Febru- wages. and lost $18,646.18 in medical expenses hen, its final Allstate of 5, 1990, Liberty notified ary $19,984.43. totaled Meanwhile, 1989, Desmond had February commenced an action against Larson to recover for injuries sustained in the accident. On 20, 1990, March Desmond also filed a complaint against arbitration compel under (UIM) underinsured/uninsured motorist provision of her insurance policy. Desmond that she argued was entitled to UIM compensation because Larson was an underinsured motorist.

Ultimately, Desmond settled with $60,000 Larson for July 1990. Allstate a $40,015.57 issued check payable to Desmond and Graham. Allstate $19,984.43 also issued a payable check to Desmond, Graham and Liberty. The second check represented Liberty's PIP payments to Des- mond.

On 9, October Desmond filed motion in the UIM action to determine reasonable attorney fees and to disburse funds. Desmond asked the trial court to allow place her to $19,984.43 check Desmond, made out to Graham and into the registry of the court. Desmond also asked *3 the trial court to enter an order a requiring Liberty to pay pro rata share of her attorney ($6,661.48) fees and costs ($623.15) for a total of $7,284.63.

Graham submitted an affidavit to the trial court in sup- of port Desmond's Graham asserted that prosecution of Desmond's claim resulted in his expending more than an estimated 225 hours of legal work and litiga- $1,869.46. tion costs of This total included Graham's work on the PIP arbitration, the UIM action against Liberty personal injury action against Larson.

Graham took the position that although Liberty did not to agree have him obtain Liberty's payments from carrier, Larson’s Liberty's efforts had been insufficient secure repayment. Graham claimed that it was necessary for him to expend substantial time and effort persuading Larson that injuries Desmond's were proximately caused by addition, the accident. In did not Liberty substantiate Allstate that its PIP were for injuries sustained

in the accident Larson or that bills with Liberty had fact, arbitration, In reasonable. in the PIP position took, i.e., that Desmond's taken same Larson injuries proximately Thus, the accident. were not caused that his services Graham asked the court to conclude reasonably necessary Liberty its benefited and were recovery.

Liberty, terms of hand, other contended that the on the Liberty policy and RCW 7.04 insurance with Desmond's governed and that neither allowed the UIM arbitration a fees in a UIM action for trial court to award against subrogation a lawsuit filed third hen collected Liberty party addition, asserted that Graham's tortfeasor. against have from the Larson and would fees derived suit subrogated regardless Liberty's interest. been incurred Liberty position its it have collected took the that would hen from even in the absence Allstate argued against thus to the Desmond's suit Larson. trial court that did benefit from Graham's work and it necessary reasonably its Graham's that efforts were not recovery from Allstate. Liberty to 19, 1990, the trial court ordered

On October requested. The fees and costs Desmond paid $19,984.63 into the trial court ordered the check to be registry The court also ordered court. trial $12,699.60 Graham and that receive a check $7,284.63. receive check for Liberty appeals.

II appeal, first contends On jurisdiction motion to assess lacked to rule on Desmond's jurisdiction may challenge fees. A the court's 2.5(a). Although appeal. RAP on raised for the first time *4 jurisdic- attempts Liberty as to its contention characterize tional, without merit. its claim is jurisdiction are threefold: of

The essential elements (1) of the class of cases cognizance must have the court (2) parties proper the adjudged belongs; one to be the

85 (3) present; point be, must be in the decided must sub- effect, stance and -within the issues the before court. State ex rel. Court, New York Cas. v. Wn.2d Superior Co. 31 (1948). 834, 199 840, P.2d 581

Liberty does not claim lacked jurisdiction over the subject matter of Desmond's claim for Furthermore, fees against Liberty. at oral argu ment, Liberty conceded that before proper parties were it. Liberty apparently contends that the third of element jurisdiction is absent because fees Graham's incurred in v. Desmond Larson are not within the issues of the underin action, sured Liberty. Therefore, Desmond v. Liberty con tends, Desmond must file a against action separate Liberty address of We question disagree. concedes,

As Liberty of issue whether should contribute to attorney fees Gra- ham bemay litigated under Desmond's name. Liberty's only is, essence, complaint trial court erred in allow- ing Desmond to add another issue in her UIM action against Liberty. This does not implicate jurisdictional issue. Although Desmond did not formally move to amend her action, UIM pleading her motion add the claim for attorney fees from the suit to the UIM action negligence was the equivalent.1 constructive

Ill next contends that trial court erred in grant- ing Desmond's motion to portion recover her attorney fees because did not benefit from Graham's efforts and because Graham's efforts neces- reasonably sary its recovery.

In Pena v. Thorington, 277, 61, 23 Wn. P.2d App. 595 denied, (1979), review 92 Wn.2d 1019 an insured recovered 1Liberty ruling assign allowing does not error to court's the trial Desmond to event, any allowing add her fees claim. amendments is within the permission freely given trial court's discretion and to amend "shall when 15(a); justice requires." Cy. Culpepper Dep't Planning so CR v. Snohomish & Dev., 166, (1990), Comm'ty denied, 59 Wn. P.2d 1285 review (1991). Wn.2d 1008 *5 in an auto from incurred

damages injuries a tortfeasor for first party Pena's offered to attorney represent accident. for to obtaining insurer its repayment fact, offer, and, The declined the insured. insurer Pena's personal injury disassociated itself from expressly party from the third sought guarantee action. It then and for- for its interest subrogation insurer for third insurer. party warded medical bills to the directly Pena, 23 at 278-79. Wn. App. and denied the

The court held for the insurer fees, the efforts concluding claim for insured's the first insurer party of Pena's did benefit liability. had The court challenged neither insurer because Pena's offer the first insurer declined party also noted its pursued claim actively and instead representation attorney had been court concluded that Pena's itself. The his for client adequate recovery motivated to secure himself, fees for not reimbursement thereby attorney However, court acknowledged insurer. the Pena party first subrogee, benefits the that where an insured's "reasonably necessary" attorney’s where the efforts are his rata share of may pro its the insured recover recovery, Pena, 23 Wn. the first insurer. party fees from at 281-82. the trial court Here, to allow inadequate the record was or efforts benefited to determine whether Graham's recovery. Although necessary Liberty's were reasonably was necessary of the causal connection proof subrogation Liberty's it not have affected recovery, may the trial court to take such therefore remand to rights. We make this it to permit properly as will further evidence to decide whether would order determination. Graham's its claim without have recovered consider, things, other efforts, among trial court should insurance with policy of Desmond's language the specific responsi- detail the relative may The terms Liberty. policy's recoupment regard Liberty's bilities of each with party how their respec- state may expressly its PIP payments trial court should also consider The interplay. tive interests otherwise, or between contractual any agreements, bear on the issue of whether and Allstate which would in order parties necessary efforts other third by any The interest to be Liberty's protected. interrelationship of whether Graham's might probative between insurers Liberty's recovery. necessary efforts were fees, is entitled to If trial court finds that Graham his determine whether the amount he is requests it must then so, In order to do determine may reasonable. that more detailed fee affidavits from Graham are neces- *6 sary segregation both for substantiation his attorney fees claim. and remanded.

Reversed

Baker, J., concurs. — I concur with (concurring) J. the majority Forrest, jurisdiction the trial court had to determine the issue attorney as to fees and that the case must be However, findings. remanded for detailed I doubt that the actually facts are and would dispute anticipate that the ultimate issue as whether the facts justify recovery will be a one. For that reason I legal believe a further discussion of the law to be in applicable order. law on the starts

Washington subject with Pena v. Desmond relies Thorington.2 Although almost on exclusively Pena, held that the actually that case insured was not enti- facts substantially tled to recover on equivalent those so, In the court doing* adopted here the rule present. Oregon v. Co., as stated in Ridenour Nationwide Mut. Ins. 273 Or. (1975): 1377, 514, 516, 541 P.2d recovery insurer who makes a from a third party [A]n for moneys only required its insured is paid pay attorney fees "reasonably necessarily were incurred" to make the recovery. agreement contrary, Absent an to the an insurer is if only obligated fees it is benefited. (1979). denied, 277, 281, review 2 23Wn. 595 P.2d 92 Wn.2d 1019 the that whether services The court then stated view, the facts my of fact. was a "necessary" question insured's between the dealings of the consist PIP between the carrier carrier, dealings and the his PIP is a conclusion of law. "Necessary" carrier. and the Richter, case, Wimberley & Ericson Washington The next carrier, PIP hold- fees from the Honoré,3 attorneys v. denied following language the by issue was controlled ing PIP policy: from the insured's . . . AGREEMENT.

”6. TRUST "(b) legal expenses insured has incurred where the by Company, made payments recovering under party, from a third recovery the Com- endorsement, and out of which this Subrogation under the such is reimbursed for pany Provision of the equitable an Company shall policy, apply provision shall not expense. This of such apportionment by Company or recoverable amounts recovered as to from Inter-Company Arbitration pursuant another insurer Agreements; (Italics mine.) this result Richter, n.l. It reached at 508 Ridenour, an "[a]bsent from language key interpreting only obligated insurer is an contrary, to the agreement "in the benefited",4 presence to mean if it is fees and the the insured between contrary agreement an fees." is not hable for carrier, the PIP carrier lan- of the Ridenour is a logical application this Whether *7 PIP policy if Desmond's but open question, guage may Richter, Richter in to that equivalent language contains attorney denial of require control and would find must language, such policy Absent in legal significance facts and examine their relevant other Indeed, court Richter. the Richter Pena and of light the of the whether the services went on to consider for its decision. It additional ground as an were "necessary" a trial court that finding by resolved considered the issue (1981). denied, (1980), review 95 Wn.2d 1012 628 P.2d 1311 3 29Wn. 4Ridenour, at taken from action "no benefit" received had

the PIP carrier a conclu- view, that too is my attorneys. insured's the by may, Be that as it of fact. finding than a rather sion of law that in Richter was relied upon evidence underlying the PIP the and the between agreement was no there that the carrier liability an indication was carrier, and there Richter, There claim. at 511. PIP carrier's recognized the facts here from distinguish little to to be appears to be deter- Richter, that remains but facts of Pena the trial court. mined agreed the insured had also noted that

The Richter court that he attorney, to his settlement" "any one-third of of right subrogation the PIP carrier's voluntarily agreed had no cause for and, accordingly, the policy by purchasing his bargains. of both the benefit receiving complaint, footnote, to a Richter, Although consigned at 512 n.5. on the ulti- it focuses because very significant consider this any these lawsuits: should underlying mate issue included in PIP funds are fees be when paid — the so, if who should pay judgment a settlement or a PIP carrier? insured or the fees from recovery of recognize Richter

Pena and However, I find serious legal possibility. as a the PIP carrier attor- for the in placing responsibility difficulties conceptual the PIP carrier. fees on ney all required perform this case Graham was

First, regardless of his client services on behalf the same identi- He has PIP or not. obligation there was a whether his without differently he done would have nothing fied of the PIP receipt payments. client's must be consen- Second, attorney-client relationship in the face whether is highly questionable It sual. his services offer of of Graham's rejection Liberty's rejected those same impose should court adversely to Moreover, has acted Graham services. to the continuance in regard coverage. to UIM

regard *8 Third, Graham's claim is necessarily based on his per- forming services for both Liberty However, Desmond. such a claim of dual representation would involve a poten- tial conflict of interest contrary to the Rules of Professional Conduct. This is demonstrable by a simple hypothetical. (1) Assume a case with thin substantial damages and very (2) liability; $20,000 in PIP payments to the injured plain- (3) tiff; an offer by liability carrier to settle $39,000. Any independent the PIP representing carrier would wish to such accept settlement since it would produce (less fees) a full recovery of the PIP payments. However, an attorney representing the injured plaintiff might well recommend that the plaintiff go to trial in hopes of a substantial recovery, knowing that in the event of no recovery there would be no obligation repay payments.

Although not before inus this appeal, the issue as to the client's obligation to pay attorney fees from the PIP pay- ments might arise on remand. There is a suggestion in Richter that the plaintiff's agreement to pay his percentage "any settlement" means that he is to pay one-third of the PIP payments.5 I While agree with the Richter as to holding the effect of the policy I do language, its dicta accept as to the client's obligation. An insured has an unequivocal legal right receive PIP To payments. me it is anomalous to him to require percentage that sum to his attorney merely because in the course of or litigation negotiation the carrier reimburses PIP carrier for those sums. At an absolute minimum, such a foregoing 5"Because the rationale attorney's results a determination that Honoré, by fees cannot he recovered Mr. the fact the court indicated Mr. Honoré had not been made whole to the extent of those fees is immaterial. We note Mr. voluntarily contingent agreement Honoré entered into a retainer required percent 'any of 33'/a settlement.' There have been no con invalidity concerning agreement operating tentions of or that he was under any disability Additionally, when he entered it. the PIP endorsement was volun tarily bargained by promptly for Mr. Honoré in order to have his medical bills paid. bargains He received the benefit of both and should not now be heard to complain." Richter, at 512 n.5. full disclosure would agreement require fee facts and circumstances. to the client as to all the relevant and no com- against, very policy objections *9 find serious for, fee imposing reason pelling policy PIP carrier. the client or the on either unnecessary and it is However, these issues are not briefed to resolve them in the present appeal. September One. 25061-2-I. Division

No. Young Company, Inc., Gall Landau Construction Respondent, Hedreen, et al, C. v. Richard Defendants, R.C. Hedreen Appellant. Co.,