Workland and Witherspoon, PLLC et al v. Evanston Insurance Company
Filing
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ORDER DENYING PLAINTIFFS' MOTIONS TO RECONSIDER ORDER ON AWARD OF ATTORNEY FEES - denying 37 Motion for Reconsideration; and denying 38 Motion to Amend/Correct. Signed by Chief Judge Rosanna Malouf Peterson. (CC, Case Administrator)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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WORKLAND & WITHERSPOON,
PLLC, a limited liability company; and
ERIC SACHTJEN, an individual,
Plaintiffs,
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ORDER DENYING PLAINTIFFS’
MOTIONS TO RECONSIDER ORDER
ON AWARD OF ATTORNEY FEES
v.
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NO: 2:14-CV-403-RMP
EVANSTON INSURANCE
COMPANY,
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Defendant.
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Before the Court are Plaintiff Workland & Witherspoon, PLLC’s Motion to
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Amend Order on Award of Attorney Fees, ECF No. 37, and Plaintiff Eric
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Sachtjen’s Motion to Amend Order on Award of Attorney Fees, ECF No. 38. The
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Court has reviewed the record, the memorandum in response (ECF No. 41), and is
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fully informed.
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BACKGROUND
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This case is one of four related lawsuits. Plaintiffs in this case, Workland &
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Witherspoon, PLLC (hereinafter “Workland”), and individual Eric Sachtjen, were
ORDER DENYING PLAINTIFFS’ MOTIONS TO RECONSIDER ORDER ON
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defendants in two lawsuits before the Spokane County Superior Court. ECF No. 1-
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1 at 2. Both lawsuits alleged professional liability causes of action regarding the
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purchase and sale of real property. Id. At all relevant times, Mr. Sachtjen was an
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attorney-employee of Workland. Id. Defendant in this case, Evanston Insurance
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Company (hereinafter “Evanston”), is an Illinois insurance company that issued
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both Plaintiffs professional malpractice insurance policies. ECF No. 20 at 2. When
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the underlying litigation against Plaintiffs arose, Plaintiffs tendered the defense and
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indemnity to Evanston. Id. Evanston assumed the defense of both Workland and
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Mr. Sachtjen under a reservation of rights. Id.
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In a separate case, Evanston filed a complaint for a declaratory judgment in
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this Court on June 16, 2014, seeking a judicial determination that Evanston had no
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duty to defend or indemnify Plaintiffs in the underlying state court actions. ECF
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No. 1, 2:14-CV-00193-RMP. Plaintiffs requested a stay of Evanston’s declaratory
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judgment action. ECF No. 7, 2:14-CV-00193-RMP. The Court ultimately granted a
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stay on five of Evanston’s six asserted coverage defenses. ECF No. 18, 2:14-CV-
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00193-RMP. However, the Court found “no reason at this time to abstain from, or
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stay consideration of, Evanston’s coverage defense regarding the Specific
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Incidents Exclusion provision of the policy.” Id. at 21.
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Subsequently, Evanston moved for summary judgment, arguing that the
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policies’ Specific Incidents Exclusion excluded coverage for Plaintiffs’ claims.
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ECF No. 29, 2:14-CV-00193-RMP. During oral argument, Mr. Sachtjen’s counsel
ORDER DENYING PLAINTIFFS’ MOTIONS TO RECONSIDER ORDER ON
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informed the Court that the parties had settled the underlying state court lawsuits
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and that the motion for summary judgment was moot. ECF No. 44, 2:14-CV-
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00193-RMP. Evanston’s counsel disagreed. Id. The Court determined that it would
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proceed with argument on Evanston’s motion at that time. Id. After striking as
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inadmissible Evanston’s supporting evidence, the Court denied Evanston’s motion
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for summary judgment. ECF No. 46, 2:14-CV-00193-RMP.
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On August 3, 2015, the parties stipulated to the dismissal with prejudice of
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Evanston’s declaratory judgment action, 2:14-CV-00193-RMP. ECF No. 52, 2:14-
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CV-00193-RMP. The parties specifically noted that “all claims which have been
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asserted in this action by the plaintiff against defendants are moot.” Id. at 1. The
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motion stated that “[t]he parties further agree that any claims defendants may have
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regarding the recovery of attorney’s fees are preserved and can be asserted in the
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matter styled Workland & Witherspoon, PLLC, et al. v. Evanston Insurance Co.,
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No. 2:14-CV-403-RMP.” Id. at 2. The Court granted the Stipulated Motion for
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Dismissal on August 10, 2015. ECF No. 53, 2:14-CV-00193-RMP.
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In the instant lawsuit, Plaintiffs have alleged a number of causes of action
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against Evanston arising from the aforementioned state court lawsuits. ECF No. 1-
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1. As envisioned by the Stipulation of Dismissal, ECF No. 52, 2:14-CV-00193-
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RMP, Plaintiffs moved for Attorney Fees arising from 2:14-CV-00193-RMP under
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Olympic S.S. Co., Inc. v. Centennial Ins. Co., 117 Wn.2d 37 (1991) (hereinafter
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“Olympic Steamship”). ECF Nos. 22 and 23. This Court denied Plaintiffs’ motions
ORDER DENYING PLAINTIFFS’ MOTIONS TO RECONSIDER ORDER ON
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for attorney’s fees on October 30, 2015. ECF No. 35. Plaintiffs now move for
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reconsideration of the Court’s prior Order. ECF Nos. 37 and 38.
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DISCUSSION
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Under the doctrine of the “law of the case,” courts are “generally precluded
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from reconsidering an issue that has already been decided by the same court, or a
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higher court in the identical case.” United States v. Alexander, 106 F.3d 874, 876
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(9th Cir. 1997). A court may depart from the law of the case and grant
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reconsideration only where 1) the first decision was clearly erroneous, 2) an
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intervening change in the law has occurred, 3) the evidence on remand is
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substantially different, 4) other changed circumstances exist, or 5) a manifest
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injustice would otherwise result. Failure to apply the doctrine of the law of the case
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absent one of the requisite conditions constitutes an abuse of discretion. Id.
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Plaintiffs argue that, under Washington State law, the Court’s prior decision was
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“clearly erroneous.” ECF No. 37 at 2; ECF No. 38 at 2.
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Plaintiffs’ primary argument is that, under the Olympic Steamship doctrine,
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an award of attorney’s fees is mandated whenever an insurer compels an insured to
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assume the burden of legal action. ECF No. 37 at 2. Further, Plaintiffs contend that
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the Court incorrectly found that an award of fees would be inappropriate based on
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the coverage issue having never been adjudicated on the merits. Id. at 6.
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The Court does not find that its prior decision was “clearly erroneous.”
Contrary to Plaintiffs’ assertion that a “final judgment on the merits is not
ORDER DENYING PLAINTIFFS’ MOTIONS TO RECONSIDER ORDER ON
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required,” id., Washington courts have held that “fees under Olympic are awarded
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only if the insured prevails.” Alaska Nat’l. Ins. Co. v. Bryan, 125 Wn. App. 24, 36
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(2004). Further, the Supreme Court of Washington has noted, when applying
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Olympic Steamship to surety performance bonds, that “pursuant to Olympic
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Steamship, an award of attorney fees [is appropriate] when the surety wrongfully
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denies coverage.” Colo. Structures, Inc. v. Ins. Co. of the West, 161 Wn.2d 577,
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601 (2007) (emphasis added). As cited by Plaintiffs, Olympic Steamship fees are
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required to avoid imposing “a back-breaking burden upon the small, but justified,
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litigants.” ECF No. 37 at 4 (quoting Louisiana-Pacific Corp. v. Asarco Inc., 131
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Wn.2d 587, 695 (1997) (Sanders, J., concurring) (emphasis added)).
Due to the truncated nature of Evanston’s declaratory judgment action, see
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2:14-CV-00193-RMP, the Court does not know whether Evanston wrongfully
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denied coverage to Plaintiffs or whether Plaintiffs were justified in their defense.
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As such, the Court reaffirms its prior decision that, as “the Court cannot know
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whether Plaintiffs had a ‘justifiable expectation of insurance protection,’” an award
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of Olympic Steamship attorney’s fees would be “premature.” ECF No. 35 at 6
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(internal citation omitted).
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Plaintiffs’ reliance on Washington State decisions awarding attorney’s fees
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where there has been no final adjudication on the merits is misplaced. ECF No. 6.
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These cases concern other fee-shifting mechanisms, not the Olympic Steamship
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rule. See Andersen v. Gold Seal Vineyards, Inc., 81 Wn.2d 863, 864 (1973) (costs
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under the long-arm statute); Soper v. Clibborn, 31 Wn. App. 767, 767 (1982)
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(unlawful detainer action); W. Stud Welding, Inc. v. Omark Indus., Inc., 43 Wn.
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App. 293, 295 (1986) (terms of a buy-out contract); Walji v. Candyco, Inc., 57 Wn.
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App. 284, 287 (1990) (lease clause and Mandatory Arbitration Rule 7.3); Beckman
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v. Wilcox, 96 Wn. App. 355, 357 (1999) (condemnation action). As none of these
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cases concerned fee-shifting under Olympic Steamship, the Court is not convinced
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that a different result is mandated.
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Accordingly, IT IS HEREBY ORDERED:
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1. Plaintiff Workland & Witherspoon, PLLC’s Motion to Amend Order on
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Award of Attorney Fees, ECF No. 37, is DENIED.
2. Plaintiff Eric Sachtjen’s Motion to Amend Order on Award of Attorney
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Fees, ECF No. 38, is DENIED.
The District Court Clerk is directed to enter this Order and provide copies to
counsel.
DATED this 14h day of December 2015.
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s/ Rosanna Malouf Peterson
ROSANNA MALOUF PETERSON
Chief United States District Judge
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ORDER DENYING PLAINTIFFS’ MOTIONS TO RECONSIDER ORDER ON
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