§17.19 - Attorney Fees

• Jurisdiction: Washington

§17.19 Attorney Fees

The Washington Supreme Court has reiterated the longstanding American rule for awarding attorney fees: no fees will be awarded absent a contractual provision, statute, or recognized ground in equity. Dayton v. Farmers Ins. Grp., 124 Wn.2d 277, 280, 876 P.2d 896 (1994); see also Panorama Vill. Condo. Owners Assn Bd. of Dir. v. Allstate Ins. Co., 144 Wn.2d 130, 142-43, 26 P.3d 910 (2001).

However, in Olympic Steamship Co. v. Centennial Insurance Co., 117 Wn.2d 37, 811 P.2d 673 (1991), the Supreme Court held that an insured is entitled to recover attorney fees incurred in a legal action to secure benefits available under an insurance policy: [A]n award of fees is required in any legal action where the insurer compels the insured to assume the burden of legal action, to obtain the full benefit of his insurance contract, regardless of whether the insurers duty to defend is at issue. 117 Wn.2d at 53.

Attorney fees are due regardless of whether the insured or the insurer initiates the coverage litigation. Butzberger v. Foster, 151 Wn.2d 396, 413, 89 P.3d 689 (2004). Such fees are one-sidedeven if the insurer prevails in an action filed by its insured, the insurer cannot recover its fees. McGreevy v. Or. Mut. Ins. Co., 128 Wn.2d 26, 37, 904 P.2d 731 (1995).

The Supreme Court reaffirmed Olympic Steamship in McGreevy, 128 Wn.2d 26. It did so, however, not on the grounds that Olympic Steamship was an exception to the American rule, as Dayton and several decisions following the reasoning of Dayton had held. See, e.g., Mailloux v. State Farm Mut. Auto. Ins. Co., 76 Wn.App. 507, 517, 887 P.2d 449 (1995) (Olympic Steamship is exception to American rule). Rather, the court held that Olympic Steamship was consistent with the long-standing rule that an award of fees may be based on recognized grounds of equity. McGreevy, 128 Wn.2d at 35.

The insureds request for attorney fees in Olympic Steamship was based upon a supplementary payments provision in the insurance policy. That provision provided as follows: The Company will pay, in addition to the applicable limits of liability ... reasonable expenses incurred by the insured at the Companys request and assisting the Company in investigation or defense of any claim or suit .... Olympic Steamship, 117 Wn.2d at 51-2. The Olympic Steamship court concluded that the supplementary payments provision entitled Olympic Steamship to an award of attorney fees. The question of whether an attorney fees award hinges on the policy language was put to rest by McGreevy, in which the court explicitly held that an award of fees is not contingent upon the...