IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
CHRISTOPHER BELLING, )
) No. 34066-0-111
Appellant, )
)
V. )
)
EMPLOYMENT SECURITY ) UNPUBLISHED OPINION
DEPARTMENT of the State of )
Washington, )
)
Respondent. )
SrooowAY, J. - After Christopher Belling :successfully appealed the Department
of Labor and Industries' (DLI) termination of his workers' compensation benefits and
was awarded retroactive benefits exceeding $48,000.00, the Employment Security
Department (ESD) demanded the repayment of duplicative unemployment insurance
benefits he received for the same period he was out of work. While he does not dispute
that he was overpaid, Mr. Belling contended unsuccessfully in the administrative process,
and argues in this appeal, that ESD should have waived repayment of 30 percent of the
overpaid unemployment insurance benefits-the percentage of the award from DLI that
he owed his lawyers as a contingent fee. He demonstrates no abuse of discretion by the
ESD review commissioner, who found that (1) repayment of the unemployment
No. 34066-0-111
Belling v. Employment Security Department
insurance benefits would not leave him with less than his net recovery of workers
compensation under the ESD's decision in In re Peltier 1 and (2) he demonstrated no
financial hardship basis supporting waiver of the repayment obligation. We affirm.
PROCEDURAL BACKGROUND
In 2005, Christopher Belling suffered a disabling workplace injury. As a result,
DLI paid him time loss benefits of $1,486.00 twice each month. In March 2011, DLI
notified him that it was terminating time loss payments based on its determination that he
could work. It paid him $9,271.80 for a permanent partial disability, which compensated
him for his future reduced capacity for work. Mr. Belling appealed the DLI decision to
terminate his time loss benefits, with representatiort by a lawyer who agreed to handle the
appeal on a 30 percent contingent fee basis.
Pending the appeal, Mr. Belling applied for unemployment insurance benefits.
ESD paid Mr. Belling $22,924.00 in benefits from June 2011 to April 2012.
In June 2012, the DLI appeal was concluded by an order under which Mr.
Belling's time loss benefits were reinstated through a lump sum payment of $48,251.19.
In making payment, DLI deducted the permanent partial disability payment of $9,271.80
he had received in 2011. Mr. Belling paid his lawyers $14,475.36, which was their 30
1
No. 04-2006-22057 (Wash. Emp't Sec. Dep't Comm'r Dec. No. 910, 2d Series
Feb. 16, 2007), 2007 WL 5172355.
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percent of the $48,251.19 recovery. He also reimbursed $5,255.21 in costs that his
lawyers had advanced on his behalf.
Once notified that DLI had compensated Mr. Belling for the same period in which
he had received unemployment insurance benefits, ;BSD demanded repayment of the
$22,924.00 of benefits it had paid. Under RCW 50.20.085 a claimant may not
concurrently receive unemployment compensation and DLI time loss payments.
Mr. Belling did not dispute that he had been overpaid, but a letter and notice of
appeal from his lawyers took the position that ESD "is legally obligated to pay its share
of attorney fees for the efforts that our office has taken to recover the retroactive time-
loss benefits from [DLI]." Clerk's Papers (CP) at 102. Treating ESD as owing the 30
percent fee on the $22,924.00 it would recover as a,result of the successful DLI appeal,
Mr. Belling's lawyer tendered repayment of $16,046.80. At the hearing on Mr. Belling's
appeal ofESD's determination that he must repay, he renewed his request that ESD
waive his repayment obligation in an amount equal to its asserted pro rata responsibility
for his contingent attorney fee.
The administrative law judge (ALJ) assigned to Mr. Belling's appeal
acknowledged in her decision that when an unemployment compensation claimant is not
"at fault" in causing the overpayment (and she found that Mr. Belling was not), "[ESD]
may consider partial or full waiver of claimant's overpayment pursuant to the rationale in
Delagrave v. Emp 't Sec. Dep 't, 127 Wn. App. 596, 111 P.3d 879 (2005), which allows
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partial waiver on the basis of fairness." CP at 205. Although Mr. Belling argued that
repayment to ESD of the full amount of unemployment insurance benefits would leave
him with a net loss on his successful DLI appeal, the ALJ concluded otherwise. She also
made the following finding as to financial hardship:
The claimant continues to receive $1,486 twice each month in time loss
benefits from [DLI]. The claimant could at Some point in the future receive
another [p ]ermanent partial [d]isability payout. The claimant also receives
$1,700 per month in Social Security Disability Benefits. The claimant pays
$600 per month in rent. He is responsible for no minor children. He "eats
out a lot", and has no set grocery budget. The claimant has no debt in
collections, and owns three vehicles. He pays $280 per week for his cell
phone service.
CP at 204. She concluded that "repayment would not be unfair and repayment would not
be against equity and good conscience." CP at 206.
Mr. Belling petitioned for review. The ESD review commissioner affirmed and
adopted the ALJ' s findings of fact and conclusions. of law. Mr. Belling then appealed to
the superior court, which modified the commissionier's decision, waiving $3,645.18 of
the overpayment. In arriving at this amount, the court accepted Mr. Belling's assertion
that the workers compensation he had received net of his attorney fees was only
$19,278.82, and thereby $3,645.18 less than the amount he was being asked to repay to
ESD.
Mr. Belling appeals the trial court's decision reducing the overpayment
determination by only $3,645.18. ESD cross appeals the trial court's waiver of $3,645.18
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of the overpayment.
ANALYSIS
The Washington Administrative Procedure Act, chapter 34.05 RCW, governs our
review of a decision by an ESD commissioner. Verizon Nw., Inc. v. Emp 't Sec. Dep 't,
164 Wn.2d 909,915, 194 P.3d 255 (2008). We review only the commissioner's decision,
not the administrative law judge's decision or the Slflperior court's ruling. Id. We base
our decision on the administrative record before th1 commissioner. Id.
Under the Employment Security Act, Title 5p RCW, an individual is disqualified
from receiving unemployment insurance benefits 1ith respect to any day or days for
i
which he or she receives workers' compensation. ~CW 50.20.085. RCW 50.20.190
!
authorizes the ESD to issue an overpayment assessrent if this ineligibility applies, and
I
imposes an obligation on the individual to repay udless the commissioner waives
I
recovery. The commissioner "may waive an overpayment if the commissioner finds that
the overpayment was not the result of fraud, misrepresentation, willful nondisclosure, or
fault attributable to the individual and that the recoyery thereof would be against equity
I
and good conscience." RCW 50.20.190(2).
In Delagrave v. Employment Security Department, 127 Wn. App. 596 (2005), the
lawyer representing Mr. Belling in this appeal askep this court to apply the "common
!
fund" doctrine to ESD's right to recover overpaymtnts in cases such as this, where a
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worker incurred attorney fees in recovering duplicaltive workers' compensation. He
!
I
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argued there, as he does now, that in fairness, ESD should pay a pro rata share of the cost
of the successful workers' compensation appeal. This court held that "[i]f the legislature
had intended attorney fees to be available in overlapping benefits scenarios like the one
here, the logical place to include such a provision would be within [RCW 50.32.160,
50.20.085, or 50.20.190]." Id. at 605. Because the legislature had not provided for
payment of the worker's attorney fees, this court refused to read such a requirement into
the Employment Security Act.
Sua sponte, however, this court raised the ESD commissioner's discretion to
waive recovery of an overpayment under RCW 50.20.190 if the worker was not at fault
and recovering the overpayment would be against equity and good conscience. Since the
commissioner had not considered whether Mr. Delagrave's liability for attorney fees was
a reason for waiving recovery of the overpayment, this court remanded, directing the
commissioner to entertain an argument for waiver.
Thereafter, in In re Peltier, which the ESD commissioner has designated as
precedential, 2 the commissioner waived a portion of an overpayment of unemployment
insurance benefits where the worker had incurred attorney fees in recovering the
2
Under RCW 50.32.095, the commissioner may designate certain commissioner's
decisions as precedents. Decisions thus designated are to be treated as persuasive
authority by a reviewing court. Martini v. Emp 't Sec. Dep 't, 98 Wn. App. 791, 795, 990
P.2d 981 (2000).
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duplicative workers' compensation payments. In that case, the worker had received
$9,581.00 in unemployment insurance benefits before she successfully appealed a DLI
decision and received a duplicative award of retroactive workers' compensation in the
amount of $10,351.56. After paying her lawyers, however, Ms. Peltier's net workers'
compensation recovery was $7,230.00. The commissioner explained why a partial
waiver was appropriate:
Here, the claimant argues that she should only have to repay $7,230 of her
$9,581, since $7,230 is all that she received in workers' compensation after
her attorney was paid. We believe that claimant's argument has merit in
the instant case and is certainly reasonable when considering fundamental
fairness of the claimant's situation. Accordingly, we hold that the claimant
is liable for repayment of her overpayment in the amount of $7,230 and that
$2351 of her overpayment is waived pursuant to RCW 50.20.190. See
Delagrave.
Id. at * 1.
A court may grant relief from an agency order in an adjudicative proceeding only
if it finds one of the grounds identified by RCW 34.05.570(3). Mr. Belling contended in
his petition for judicial review that the commissioner erroneously interpreted or applied
the law. RCW 34.05.570(3)(d); CP at 213 (claiming entitlement to waiver "based upon
the statutory construction of RCW 50.20.190").
A Peltier analysis was included in the ALJ's conclusions oflaw in Mr. Belling's
case, and was adopted by the commissioner. The commissioner concluded that reducing
the $48,251.19 workers' compensation award by both the $14,475.36 contingent fee and
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$5,255.21 in costs still left Mr. Belling with a net award of $28,850.62 in workers'
compensation. See CP at 205-06 (Conclusions of Law 4-7). Accordingly, even if
required to repay ESD and even after paying all of the associated fees and costs, Mr.
Belling was $5,626.62 ahead for having appealed DLI's decision.
Mr. Belling has assigned error to the relevant conclusions of law, arguing that the
starting figure for the analysis should not be the $48,251.19 award of workers'
compensation, but the $38,979.39 that Mr. Belling was paid in 2012 after DLI recouped
from his award the $9,271.80 permanent partial disability payment it had paid in 2011, to
which he was not entitled. Using $38,979.39 as the starting figure, the recovery net of
attorney fees and costs is $19,248.82-less than the $22,924.00 overpayment, and an
amount that would parallel the circumstances in which a portion of the overpayment was
waived in Peltier. We disagree that $38,979.39 is the correct starting figure. Mr. Belling
had and received the $9,271.80 workers' compensation paid in 2011. Ifhe had returned
that check, to which he ultimately proved unentitled, he would have been paid the full
$48,251.19 awarded in retroactive time loss benefits. And ifwe add the $9,271.80 that
he had and received in 2011 to the $38,979.39 he had and received in 2012, the total
workers' compensation received was $48,251.19. Notably, Mr. Belling's lawyers
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No. 34066-0-III
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calculated their 30 percent contingent fee based on the $48,251.19 award. 3 The
commissioner correctly applied Pe/tier's analysis. 4
The commissioner's findings also address financial hardship, which Mr. Belling
claimed during the hearing. Financial hardship is explicitly recognized as a basis for
waiver under WAC 192-220-030(2). While Mr. Belling assigns error to the finding on
Mr. Belling's financial circumstances, it is only to speculation in the finding about a
future permanent partial disability payout. He does not challenge the finding's discussion
of the extent by which his income exceeds his expenses.
3
By analogy, if I deliver you a piece of cake on Monday, realize on Tuesday that I
was supposed to deliver you a whole cake, and bring you the whole cake in exchange for
return of the piece, you have received a whole cake. The same would be true if you had
eaten the first piece, and I recovered it by cutting it out of the whole cake.
4
In a deviation from Peltier, the dissent proposes a "second method" of
calculation. Slip op. (dissent) at 11. Under Peltier, ESD looks at the DLI recovery on
appeal less the cost of the appeal and-if that would result in a loss-waives the
employee's obligation to repay the unemployment compensation to the extent of that
loss. In essence, under Peltier, ESD bears the burden of the unemployment
compensation that was not a windfall to the employee.
Under the dissent' s "second method" of calculation, ESD bears not only that
burden, but an additional cost, so that the employee can retain the permanent partial
disability payment to which he was not entitled.
Presumably, Mr. Belling took the risk of that further "loss" because he believed he
was better off in the long run by having his time loss benefits reinstated and avoiding the
obligation to work or remain available to work. If an employee is truly going to be better
off by keeping a permanent partial disability payment and continuing to rely on
unemployment compensation, we should not incentivize him to pursue an otherwise-
unwarranted appeal by a waiver process that lets him keep both his DLI award and an
earlier permanent partial disability payment to which he was not entitled.
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Instead, Mr. Belling's principal argument on appeal is that the commissioner's
exercise of discretion to waive overpayment where "recovery ... would be against equity
and good conscience" as provided by RCW 50.20.190(2) requires more than protecting a
successful DLI appellant against a net loss, as was done in Peltier-instead, he argues,
"ESD should be required to pay its pro rata share of attorney fees and costs, or make
some other adjustment of what it receives, when it, not Mr. Belling, acquired the greatest
financial benefit from Mr. Belling's successful litigation"-a financial benefit he argues
that ESD receives "without risk or the expenditure of any monies." Br. of Appellant at 1.
He complains that neither the ALJ, nor the commissioner on review, provided adequate
findings as to why "equity and good conscience'' does not require ESD to pay fees for
services from which it benefitted. In short, he believes he correctly determined what
"equity and good conscience" requires when he discounted the overpayment liability by
ESD's $6,875.20 "share" of the contingent fee and tendered $16,046.80 instead. Br. of
Appellant at I 9.
Questions of statutory construction are reviewed de novo. State v. Roggenkamp,
153 Wn.2d 614,621, 106 P.3d 196 (2005). We review a decision by an ESD
commissioner declining to waive recovery of an overpayment for abuse of discretion.
Berlandv. Emp't Sec. Dep't, 52 Wn. App. 401,410, 760 P.2d 959 (1988). An abuse of
discretion occurs when a decision is manifestly unreasonable or exercised on untenable
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grounds or for untenable reasons. Graves v. Emp 't Sec. Dep 't, 144 Wn. App. 302, 309,
182 P.3d 1004 (2008).
Mr. Belling fails to show that the commissioner misconstrued RCW 50.20.190(2)
or abused her discretion. He does not demonstrate financial hardship or that repayment
of the duplicative unemployment insurance benefits would cause him to sustain a net loss
from his successful DLI appeal. He demonstrates only that the commissioner did not
share his view the ESD should, in "equity and good conscience," contribute toward the
contingent fee he owes his lawyer so he can retain a larger percentage of his recovery
from the successful appeal. The commissioner's view is not manifestly unreasonable. It
is consistent with the American rule that attorney fees are not recoverable unless
provided for by contract, statute, or recognized equitable principles. See Delagrave, 127
Wn. App. at 606. It is consistent with this court's refusal to read an equitable expansion
of entitlement of attorney fees into the Employment Security Act in Delagrave. Id. It is
consistent with the fact that under the Industrial Insurance Act, Title 51 RCW, Mr.
Belling was not entitled to recover his attorney fees even from DLI-and unlike ESD,
DLI is the agency that proved to have been wrong. RCW 51.52.130; Brand v. Dep 't of
Labor & Indus., 139 Wn.2d 659, 675 n.6, 989 P.2d 1111 (1999) (Talmadge, J.
concurring).
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We reverse the superior court's decision and affinn the decision of commissioner
dated June 14, 2013. Because we affinn the commissioner's decision, we deny Mr.
Belling's request for an award of fees under RCW 50.32.160.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.040.
I CONCUR:
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No. 34066-0-111
FEARING, CJ. (dissenting) - I dissent for three reasons. First, the Washington
Employment Security Department's (ESD's) findings of fact and conclusions oflaw fail
to adequately address, in light of Delagrave v. Employment Security Department, 127
Wn. App. 596, 111 P.3d 879 (2005), whether demanding full reimbursement of
unemployment compensation benefits serves equity and good conscience. Second, under
the ESD's own precedent, In re Peltier, No. 04-2006-22057 (Wash. Emp't Sec. Dep't
Comm'r Dec. No. 910, 2d Series Feb. 16, 2007), 2007 WL 5172355, Christopher Belling
should at the least only be required to reimburse the department $19,278.82, not the
$22,924 sought by ESD. Third, this court wrongly decided Delagrave v. Employment
Security Department. Equity and good conscience requires that ESD at least consider the
common fund doctrine when seeking recovery, from a worker, of the overlapping
amounts the worker procured by his or her attorney's efforts from the Department of
Labor & Industries (DLI). Fairness dictates that an injured and unemployed worker
should not bear, except in justifiable circumstances, the entire expense of correcting one
state agency's error when the correction benefits another state agency's accounting
balance.
No. 34066-0-III
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At the least, this court should remand to ESD for a full determination of whether
waiving partial reimbursement fulfills equity and good conscience and whether the
common fund doctrine should apply. Finally, at the least, this court should affirm the
superior court's waiver of $3,645.18.
SOME FACTS
This appeal juxtaposes the operation of two state insurance plans afforded
Washington workers: unemployment insurance available from the Employment Security
Department and work injury insurance available from the Department of Labor &
Industries. After DLI terminated Christopher Belling's worker compensation time loss
benefits, ESD paid Belling $22,924 in unemployment benefits from June 2011 to April
2012. With the assistance of hired counsel, Belling appealed DLI's termination of
benefits.
In June 2012, DLI awarded Christopher Belling worker compensation time loss
benefits for March 8, 2011 to July 24, 2012. DLI thereby awarded Belling a gross lump
sum of$48,25I.19. Nevertheless, the department deducted from the lump sum
(1) $9,271.80 to reimburse DLI for an earlier remittance to Belling for a permanent
partial disability, (2) $14,475.36 as payment to Belling's attorney as fees on a thirty
percent contingent fee basis, and (3) $5,255.21 in costs to be paid the attorney. CP at
204-05. Belling paid his counsel thirty percent of the entire $48,251.19 award, not the
net award of $38,979.39 after deducting the earlier permanent partial disability payment.
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After subtracting the three deductions, Belling netted $19,278.82.
With Christopher Belling's receipt of the lump sum payment from DLI, ESD sent
a written demand to Belling that he refund all $22,924.00 of unemployment
compensation he received from ESD from June 2011 through April 2012. In response,
Belling tendered a check to ESD in the sum of$16,046.80, seventy percent of
$22,924.00, since Belling recompensed his counsel on a thirty percent contingent fee rate.
Belling concluded that ESD should share in the expense of the attorney since the
attorney's work benefitted ESD. Belling did not seek reimbursement of any costs he
incurred in appealing DLI's denial of benefits. I assume that ESD did not cash the
$16,046.80 check.
SOME PROCEDURE
Thereafter, ESD continued to seek recovery of the $22,924.00 that it claimed
Christopher Belling owed. An ESD administrative law judge (ALJ) concluded that
Belling was responsible for reimbursing ESD the entire $22,924.00 earlier paid him by
the department. In so ruling, the ALJ found that:
9. The claimant continues to receive $1,486 twice each month in
time loss benefits from [DLI]. The claimant could at some point in the
future receive another [p ]ermanent partial [d]isability payout. The claimant
also receives $1,700 per month in Social Security Disability Benefits. The
claimant pays $600 per month in rent. He is responsible for no minor
children. He "eats out a lot," and has no set grocery budget. The claimant
has no debt in collections, and owns three vehicles. He pays $280 per week
for his cell phone service.
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Clerk's Papers (CP) at 204. I do not know why the ALJ focused on debt in collection
rather than debt as a whole.
The ALJ entered a conclusion of law that read:
7. Here, the claimant received a back pay award for time loss
benefits in the amount of $48,251.19 including PPD. After taking into
consideration fees and costs, the amount claimant received ($28,850.62)
was greater than the overpayment amount of $5,626.62. Thus, applying the
calculation in Peltier, the claimant should be required to repay the full
overpayment, in the amount of $22,924. The undersigned further
concludes that repayment would not be unfair and repayment would not be
against equity and good conscience.
CP at 206. The ALJ did not deduct the $9,271.80 reduction imposed by DLI for the
earlier partial permanent disability payment when determining Belling's net recovery
from DLI. The ESD commissioner adopted all findings of fact and conclusions of law
entered by the ALJ.
LAW
Sufficiency of Findings and Conclusions
On appeal to this court, Christopher Belling repeats his contention raised below.
He contends that equity demands that ESD share in the expense, including the cost of an
attorney, of his obtaining DLI payments. Belling emphasizes that he or his attorney
performed all the work, took the financial risk, and paid all the fees and costs to obtain a
settlement from DLI. Furthermore, on appeal, he newly contends that ESD entered
insufficient findings of fact as to whether it was equitable for him to pay all of the
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attorney's fees and costs incurred in procuring the money that benefits ESD. I agree that
ESD failed to enter sufficient findings of fact or conclusions oflaw. I will later address
Belling's overall argument that equity demands that ESD share in the expenses of
procuring the recovery from DLI.
Two unemployment compensation statutes and one regulation control the question
on appeal. First, RCW 50.20.085 declares:
An individual is disqualified from [unemployment compensation]
benefits with respect to any day or days for which he or she is receiving, or
has received, or will receive compensation under RCW 51.32.060 or
51.32.090 [worker compensation time loss benefits for permanent total and
temporary total disability].
Christopher Belling concedes this statute compels at least partial reimbursement to ESD
of the settlement he received from DLI. Second, RCW 50.20.190 reads:
(1) An individual who is paid any amount as benefits under this title
to which he or she is not entitled shall, unless otherwise relieved pursuant
to this section, be liable for repayment of the amount overpaid. The
department shall issue an overpayment assessment setting forth the reasons
for and the amount of the overpayment. ...
(2) The commissioner may waive an overpayment if the
commissioner finds that the overpayment was not the result of fraud,
misrepresentation, willful nondisclosure, or fault attributable to the
individual and that the recovery thereof would be against equity and good
conscience . ...
(Emphasis added.) The two statutes evidence an intent by the Washington State
Legislature for DLI's ledger, not the Employment Security Department's balance sheet,
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to be charged when a work injury renders a worker unemployed. Third, WAC 192-220-
030, which implements RCW 50.20.190, states:
(1) "Equity and good conscience" means fairness as applied to a
given set of circumstances.
(2) It will be against equity and good conscience to deny waiver
when repayment of the overpayment would deprive you of income required
to provide for basic necessities including food, shelter, medicine, utilities,
and related expenses. Unless there are unusual circumstances which would
argue against waiver, the department will presume repayment would leave
you unable to provide basic necessities if your total household resources in
relation to household size do not exceed seventy percent of the Lower
Living Standard Income Level (LL SIL) and circumstances are not expected
to change within the next ninety days.
(3) The department may also consider, but is not limited to, the
following factors in determining whether waiver should be granted for
reasons of equity and good conscience:
(a) Your general health, including disability, competency, and
mental or physical impairment;
(b) Your education level, including literacy;
(c) Whether you are currently employed and your history of
unemployment;
(d) Your future earnings potential based on your occupation, skills,
and the local labor market;
(e) Your marital status and number of dependents, including whether
other household members are employed;
( f) Whether an error by department staff contributed to the
overpayment;
(g) Whether you refused or were ineligible for other government
benefits because you received unemployment benefits; and
(h) Other factors indicating that repayment of the full amount would
cause you undue economic, physical, or mental hardship.
(5) The decision to grant or deny waiver will be based on the totality
of circumstances rather than the presence of a single factor listed in
subsections (2), (3), and (4).
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(Emphasis added.) Note that the statute and regulation use three terms: equity, good
conscience, and fairness in the particular circumstances. I do not fathom any difference
in meaning between the tenns.
Christopher Belling relies on Delagrave v. Employment Security Department, 127
Wn. App. 596 (2005). Don Delagrave also received a lump sum retroactive time loss
settlement from DLI for a window of time that overlapped the same period during which
he received unemployment compensation. ESD sought reimbursement of unemployment
compensation paid. Delagrave requested a reduction in the repayment based on his
incurring attorney fees and costs in obtaining the settlement from DLI. Delagrave asked
for a waiver for equitable purposes. The ESD commissioner denied the request under a
conclusion of law that read: "neither an administrative law judge nor the undersigned has
the authority to waive part or all of an overpayment for any other reason than the 'equity
and good conscience' provisions." Delagrave v. Employment Security Department, 127
Wn. App. at 603. The Delagrave court resolved that the conclusion of law meant that
ESD took the position that, under no circumstances, would equity and good conscience
permit a reduction in the overpayment because of the claimant's payment of attorney fees
and costs to recover DLI payments.
WAC 192-220-030 does not limit the Employment Security Department to
waiving reimbursement, on the basis of ··equity and good conscience," to the financial
condition of the unemployment compensation of the claimant. Delagrave v. Employment
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Security Department addressed a former regulation, not WAC 192-220-030, but the
regulation contained similar terms that did not limit waiver to the financial circumstances
of the claimant. The Delagrave court noted that limiting waiver to the fiscal condition of
the claimant would contradict the broad language ofRCW 50.20.190 that permits waiver
when reimbursement would "be against equity and good conscience" without any
limitation. Delagrave v. Employment Security Department, 127 Wn. App. at 603. This
court rejected the application of the common fund doctrine for purposes of waiver of the
refund, a rejection I will later analyze. Nevertheless, we remanded the appeal to the
commissioner of ESD to determine under the facts of the case whether the department
should waive reimbursement. Delagrave v. Employment Security Department teaches
that ESD may not summarily deny waiver of reimbursement on the basis that the law
does not permit waiver when the unemployment compensation claimant incurs attorney
fees and costs in reversing a denial of worker compensation benefits.
In Christopher Belling's case on appeal, the ESD administrative law judge entered ·
no finding of fact that mentions whether waiver would serve equity and good conscience.
The ALJ entered a conclusion of law that may be meatier than the conclusion of law in
Delagrave v. Employment Security Department, but the conclusion still suffers from the
same shortcoming as the conclusion of law in Delagrave. The ALJ's conclusions of law
in this appeal includes the language: "The undersigned further concludes that repayment
would not be unfair and repayment would not be against equity and good conscience."
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No. 34066-0-111
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CP at 206. The ESD commissioner adopted this conclusion of law. The conclusion of
law, as its label implies, is only a conclusion. The conclusion does not inform us as to
the reason for denying waiver. Since the findings of fact analyze the financial
circumstances of Christopher Belling, the reader could judiciously conclude that, in
violation of Delagrave v. Employment Security Department, ESD limited the question of
waiver to the fiscal welfare of the claimant. The conclusion of law suggests that ESD
repeated the mistake of denying waiver as a matter of law for the reason that the claimant
seeks partial waiver on the ground of payment of attorney fees and costs in appealing a
DLI decision. Therefore, at the least, this court should remand this appeal to ESD for a
reassessment of waiver.
Brevity in opinion writing is commendable, but sometimes a terse opinion raises
more questions than it answers. Our concise opinion in Delagrave v. Employment
Security Department failed to provide any guidelines to ESD as to if and when it may or
should grant waiver on the basis of the claimant's incurring attorney fees and costs when
recovering DLI benefits. Delagrave does not answer the question of whether ESD may
always exercise its discretion by denying reimbursement, when the claimant paid fees
and costs, after reviewing the individual facts of the claimant's challenge to repayment of
benefits. Nor does Delagrave explicitly answer the question as to whether equity and
good conscience always requires that ESD share in the expense of the worker's recovery
of worker compensation benefits.
9
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No. 34066-0-III
Belling v. Employment Security Department (dissent)
The ESD ALJ and this court's majority opinion rely on In re Peltier, No. 04-2006-
22057 (Wash. Emp't Sec. Dep't Comm'r Dec. 910, 2d Series Feb. 16, 2007), 2007 WL
5172355. This court may consider ESD commissioner rulings, such as Peltier, as
persuasive authority. Martini v. Employment Security Department, 98 Wn. App. 791,
795, 990 P.2d 981 (2000). Peltier, however, provides no guidance for the factual
circumstances and arguments forwarded by Christopher Belling in this appeal.
In Peltier, DLI also denied Suzanne Peltier time loss benefits, after which Peltier
applied for and received unemployment compensation of $9,581.00. Later Peltier
received retroactive worker compensation benefits of $10,351.56. After paying her
attorney, Peltier received a net recovery from DLI in the sum of $7,230.00. ESD,
nonetheless, sought reimbursement of$9,581.00. On appeal, the ESD commissioner
ruled, under principles of equity and good conscience, that Peltier need only reimburse
the department her net payment of $7,230.00. Peltier did not seek any other waiver of
reimbursement. The commissioner never commented whether other circumstances might
merit waiver to an extent more than the worker's net recovery. Assuming the ALJ and
the ESD commissioners based conclusion of law seven on Peltier, they misplaced their
reliance.
Peltier Rule
Remember that the ESD commissioner ruled, in In re Peltier, that Suzanne Peltier
need not reimburse ESD more than her net payment from DLI. Peltier only argued that
10
No. 34066-0-111
Belling v. Employment Security Department (dissent)
she should be able to deduct her attorney fees from her gross DLI payment to reach the
sum of overpayment by ESD.
One could reach two different conclusions as to the amount of the net payment
received by Christopher Belling from DLI. Under the first calculation, one only deducts
attorney fees and costs incurred by Belling in order to obtain the additional DLI recovery.
Under this calculation, one deducts fees of $14,475.36 and costs of $5,255.21 from the
gross lump sum of $48,251.19 to arrive at the net recovery of $28,850.62. This net
recovery exceeds the unemployment compensation payment of $22,924.00, such that
Belling lost nothing by reason of appealing the DLI denial of benefits. The ESD ALJ and
this court's majority impliedly employ this first calculation.
Under a second method of calculation, one deducts all amounts taken by DLI from
the lump sum payment of$48,251.19, including the $9,271.80 that reimbursed DLI for a
2011 remittance to Christopher Belling for a permanent partial disability. After
subtracting the attorney fees, costs, and earlier payment, Belling netted $19,278.82. This
net recovery deceeds Belling's unemployment compensation benefits of $22,924.00.
Under this calculation, Belling loses $3,645.18 by reason of challenging DLI's denial of
continued benefits. He would have kept the $9,271.80 permanent partial disability
payment and the $22,924.00 in unemployment compensation but for hiring the lawyer to
challenge the DLI denial of worker compensation benefits. The superior court apparently
performed this calculation and ruled that Belling need only reimburse ESD $19,278.82.
11
No. 34066-0-III
Belling v. Employment Security Department (dissent)
On appeal, ESD contends that the $9,271.80 covers the period that Christopher
Belling received unemployment benefits. Nevertheless, ESD does not cite the record to
support this factual proposition. Neither the ALJ nor the commissioner expressly so
found. One might surmise that the 2011 lump sum payment covered a period during
which Christopher Belling garnered unemployment compensation, but such surmising is
speculative. Since the $9,271.80 compensated Belling for a reduced ability to garner
income because of a permanent partial disability, the payment also likely compensated
Belling primarily for a time period well into the future and beyond April 2012.
Common Fund Doctrine and Delagrave Revisited
If I did not otherwise dissent from the majority's ruling, I might withhold, in favor
of stare decisis, any challenge to the validity of Delagrave v. Employment Security
Department's rejection of the common fund doctrine. Since I dissent on other grounds, I
forward this challenge.
Delagrave v. Employment Security Department held, in part, that the common
fund doctrine does not apply to a worker's reimbursement of unemployment
compensation benefits paid from the worker's recovery of worker compensation
payments. The condensed reasoning of Delagrave miscarries. The purpose behind the
common fund doctrine fulfills the prerequisite of equity, good conscience, and fairness in
order to waive repayment. The common fund doctrine operates commensurately with
12
No. 34066-0-III
Belling v. Employment Security Department (dissent)
equity, good conscience, and fairness. The Delagrave court should not have outright
rejected the use of the common fund doctrine.
The common fund doctrine provides that an attorney who renders services in
recovering or preserving a fund, in which a number of persons are interested, may in
equity be allowed his or her compensation out of the whole fund, when his or her services
are rendered on behalf of, and are a benefit to, the common fund. Winters v. State Farm
Mutual Automobile Insurance Co., 144 Wn.2d 869, 877, 31 P.3d 1164, 63 P.3d 764
(2001); 20 AM. JUR. 2o Costs§ 63 (2015). Stated differently, the doctrine allows an
attorney "in equity" to recover fees in the absence of a contract or statute when his
services confer a substantial benefit for a group of people. John P. Lynch, PS v.
Deaconess Medical Center, 113 Wn.2d 162, 167-68, 776 P.2d 681 (1989). When one
person creates or preserves a fund from which another then takes, the two should share,
pro rata, the fees and costs reasonably incurred to generate the fund. Winters v. State
Farm Mutual Automobile Insurance Co., 144 Wn.2d at 877. A person who benefits from
a lawsuit without contributing to its expense is unjustly enriched at the successful
litigant's expense. 20 AM. JUR. 2o Costs§ 63 (2015). Common fund fee awards present
an exception to the American rule that each litigant pays his or her own attorney for
services performed. Mahler v. Szucs, 135 Wn.2d 398, 426-27, 957 P.2d 632, 966 P.2d
305 (1998).
13
No. 34066-0-111
Belling v. Employment Security Department (dissent)
Appellate decisions repeatedly proclaim that the law grounds the common fund
doctrine in equity, good conscience, and fairness, the requirements for waiver of ESD
reimbursement under RCW 50.20.190 and WAC 192-220-030. According to
Washington courts, the common fund doctrine generates an "equitable sharing rule."
Hamm v. State Farm Mutual Automobile Insurance Co., 151 Wn.2d 303,310, 88 P.3d
395 (2004); Mahler v. Szucs, 135 Wn.2d at 426-27. The doctrine is grounded in equity.
Bowles v. Department of Retirement Systems, 121 Wn.2d 52, 70, 847 P.2d 440 (1993).
The doctrine arises from "equitable principles." Hamm v. State Farm Mutual Automobile
Insurance Co., 151 Wn.2d at 311. According to commentators and foreign decisions, the
doctrine is calculated to achieve equity. Johnny Parker, The Common Fund Doctrine:
Coming ofAge in the Law of Insurance Subrogation, 31 IND. L. REV. 313, 323 (1998).
The common fund doctrine invokes a court's general equity power "to do equity in a
particular situation." Sprague v. Ticonic National Bank, 307 U.S. 161, 166, 59 S. Ct.
777, 83 L. Ed. 1184 ( 1939). The doctrine touches the power of equity in doing justice
between a party and the beneficiaries of his litigation. Morris B. Chapman & Associates,
Ltd. v. Kitzman, 193 Ill. 2d 560, 575, 739 N.E.2d 1263 (2000). The common fund
doctrine requires a beneficiary of the common fund to pay attorney fees "as a matter of
fairness." Butson v. Department ofEmployment & Training, 2006 VT 10, 179 Vt. 599,
892 A.2d 255, 257.
Three factors should be present before a court adopts the common fund approach:
14
No. 34066-0-III
Belling v. Employment Security Department (dissent)
( 1) those benefiting from the litigation should be small in number and easily identifiable,
(2) the benefits should be traceable with some accuracy, and (3) the benefits should be
capable of being shifted with some exactitude to those benefiting. 20 AM. JUR. 2o Costs
§ 63 (2015). The circumstances of this appeal fit all three factors. Only two parties,
Christopher Belling and ESD, benefited from Belling's litigation to gain worker
compensation payment. One can readily identify ESD's benefit from the litigation before
or after removing thirty percent for attorney fees. Belling can easily shift the benefits of
the worker compensation payment by forwarding some of the payment to ESD.
The appeal raises the unusual question of whether the common fund doctrine
applies when the liable party or the party whose payment creates the common fund is a
state agency and a beneficiary of the fund is another state agency. Government's
involvement should not preclude use of the doctrine. In Bowles v. Department of
Retirement Systems, 121 Wn.2d at 70 (1993), the state high court applied the common
fund doctrine when a State obligation created the fund.
Even if the Washington State Employment Security Department and the
Washington State Department of Labor & Industries are considered one entity as
branches of one state government, the common fund doctrine should apply despite the
same entity creating and benefiting from the common fund. The Washington Supreme
Court has applied the doctrine in the context of an insurance company which created the
common fund and benefited from the common fund. Hamm v. State Farm Mutual
15
No. 34066-0-III
Belling v. Employment Security Department (dissent)
Automobile Insurance Co., 151 Wn.2d 303 (2004). Unemployment compensation and
worker compensation are forms of insurance provided by the same legal entity.
The common fund doctrine has been applied in many types of cases covering a
large range of civil litigation. Morris B. Chapman & Associates, Ltd. v. Kitzman, 193
Ill. 2d at 573 (2000). Whether the doctrine applies in a particular case is not determined
by a label, but rather by a proper understanding of the doctrine and its limitations. Morris
B. Chapman & Associates, Ltd. v. Kitzman, 193 Ill. 2d at 573.
The common fund doctrine differs from other theories authorizing the granting of
attorney fees. Bowles v. Department of Retirement Systems, 121 Wn.2d at 70 (1993).
The common fund doctrine does not authorize a party to shift fees to an adversary, but
rather authorizes the spread of the fees among those who benefit from the litigation.
Morris B. Chapman & Associates, Ltd. v. Kitzman, 193 Ill. 2d at 572. The award of fees
is still borne by the prevailing parties, not the losing party. Bowles v. Department of
Retirement Systems, 121 Wn.2d at 70. As mentioned later, the Delagrave court failed to
recognized that the common fund doctrine permits fee sharing, not fee shifting.
In light of this background of the common fund doctrine, I review Delagrave's
succinct scrutiny of the common fund doctrine. This court wrote then:
There is no express provision in the statute that allows ESD to
forgive an amount attributable to attorney fees on an overpayment. When
the legislature does not act to create such a provision, we may not read one
into the statute even if we believe the omission is unintentional. State ex
rel. Ewingv. Reeves, 15 Wn.2d 75, 85,129 P.2d 805 (1942);Dep'tof
16
No. 34066-0-III
Belling v. Employment Security Department (dissent)
Labor & Indus. v. Cook, 44 Wn.2d 671,677,269 P.2d 962 (1954). RCW
50.32.160 provides for payment of attorney fees and costs out of the
unemployment compensation administration fund only if a commissioner's
decision is reversed. A provision for attorney fees for recovery of
overpayment is notably absent from this provision as well as from the
overpayment provisions of the statutes. See RCW 50.20.085, .190. If the
legislature had intended attorney fees to be available in overlapping
benefits scenarios like the one here, the logical place to include such a
provision would be within these three statutes. Mr. Delagrave correctly
notes that there is a provision for fees upon recovery from third parties in
the L&I statute (RCW 51.24.060(1)). But that only underscores this point.
Moreover, Washington follows the American rule-attorney fees are
not recoverable unless provided for otherwise in contract, statute, or
recognized equitable principles. Rettkowski v. Dep 't ofEcology, 128
Wn.2d 508,514,910 P.2d 462 (1996). Although Mr. Delagrave correctly
notes that the common fund rule is a common law rule of equity, it is
susceptible to modification by statute. "If the merits of the litigation fall
within a statutory scheme which prohibits the award of attorney fees, or
allows such an award under narrow circumstances, a party cannot enlarge
those circumstances by reference to the common fund doctrine or other
equitable powers of the trial court." Leischner v. Alldridge, 114 Wn.2d
753, 757, 790 P.2d 1234 (1990) (citing Fleischmann Distilling Corp. v.
Maier Brewing Co., 386 U.S. 714, 719, 87 S. Ct. 1404, 18 L. Ed. 2d 475
(1967)). RCW 50.32.160 provides for attorney fees under narrow
circumstances. The statute may not be enlarged under the doctrine.
Delagrave v. Employment Security Department, 127 Wn. App. at 605-06 (2005).
The Delagrave court reasoned that, if a statute lacks an express provision that
allows an entity to forgive an amount attributable to attorney fees on an overpayment, the
court may not read the provision into the statute even if the court believes the omission is
unintentional. The court cites State ex rel. Ewing v. Reeves, 15 Wn.2d at 85 (1942) and
Department of Labor & Industries v. Cook, 44 Wn.2d at 677 (1954) to support this
ratiocination. Ewing does state that a court may not read into a statute an omission. The
17
No. 34066-0-111
Belling v. Employment Security Department (dissent)
Ewing decision, however, did not consider an award of attorney fees or the common fund
doctrine. Cook also cites the proposition that a court cannot insert into a statute a
provision that the court imagines the legislature inadvertently skipped. Cook,
nonetheless, also does not review an award of fees or the common fund doctrine.
The rule, that a court cannot read into a statute a provision that the court believes
the legislature mistakenly overlooked, lacks any import in our setting. The legislature in
RCW 50.20.190 distinctly declared that a waiver may be awarded on grounds of equity
and good conscience. The common fund doctrine quintessentially enforces equity and
good conscience.
The Delagrave court next relied on RCW 50.32.160, which provides for payment
of attorney fees and costs out of the unemployment compensation administration fund
only if a commissioner's decision is reversed. The court also noted that the
reimbursement and waiver statutes, RCW 50.20.085 and .190, do not mention imposition
of any fees on the ESD. Based on these statutes, Delagrave deduced that attorney fees
may not be removed from a DLI payment. In so ruling, the Delagrave court
misunderstood the nature of the common fund doctrine. Application of the doctrine
would not require payment of fees from the unemployment compensation fund. The
common fund doctrine is not a fee shifting rule that requires ESD to pay fees from its
own pocket. Rather the doctrine, in consideration of fairness and equity, demands that a
portion of the reimbursement to ESD be removed before deposited into the
18
No. 34066-0-III
Belling v. Employment Security Department (dissent)
unemployment compensation fund in order to pay for the cost of procuring the
reimbursement.
The Delagrave court next mentioned that, if the merits of the litigation fall within
a statutory scheme which prohibits the award of attorney fees, or allows such an award
under narrow circumstances, a party cannot enlarge those circumstances by reference to
the common fund doctrine or other equitable powers of the trial court. The court cited
Leischner v. Alldridge, 114 Wn.2d at 757 (1990) and Fleischmann Distilling Corp. v.
Maier Brewing Co., 386 U.S. at 719 (1967) for this imperative. The Delagrave court
then remarked that RCW 50.32.160 provides for attorney fees under narrow
circumstances. Once again, however, the court failed to understand the nature of the
common fund doctrine and the import ofRCW 50.32.160. The statute addresses
instances when ESD must pay fees to the worker. The common fund doctrine is not a fee
shifting rule. ESD does not pay any fees to the worker.
The Delagrave court's reliance on Leischner v. Alldridge and Fleischmann
Distilling Corp. v. Maier Brewing Co. is also misdirected. The Leischner court
mentioned the rule stated, but only in dicta. No statutory scheme addressing attorney fees
was at issue in Leischner. The court rejected application of the common fund doctrine
because the plaintiff never created any common fund. The Leischner suit involved
quieting title to real property. Although Fleischman Distilling Corp. mentioned the
19
No. 34066-0-III
Belling v. Employment Security Department (dissent)
common fund doctrine, the doctrine was not at issue. The court was asked to award
attorney fees against the losing party under the federal Lanham Trade-Mark Act.
Despite my disagreement with Delagrave v. Employment Security Department, the
decision compels me to ask: if the Washington State Legislature wanted the common
fund doctrine to apply when ESD recovers DLI payments from the worker, why would
the legislature not expressly reference the doctrine in the language of RCW 50.20.190?
Answers readily surface. The legislature may have wished to write in general terms
rather than defining and thereby impliedly limiting waiver to discrete circumstances.
Since the common fund doctrine intimately intertwines with equity, good conscience, and
fairness, one could conclude that the legislature particularly sought to allow waiver based
on the common fund doctrine. By referring to equity, good conscience and fairness, the
legislature expressly meant, in part, the common fund doctrine. To the contrary and
because of the inviting interrelationship between the common fund doctrine and equity,
the legislature would have expressly excluded waiver based on the doctrine if the
legislature did not want ESD to consider the doctrine.
Only one foreign decision, Butson v. Department ofEmployment & Training, 892
A.2d 255 (VT 2006), addresses the same issue: whether a worker may deduct the cost of
collecting worker compensation payments when the worker must reimburse, to the
unemployment compensation insurance administration, benefits collected when the
worker later recovers payment from a worker compensation insurance administration and
20
No. 34066-0-III
Belling v. Employment Security Department (dissent)
the benefits overlap in time. The Butson court ruled against the worker, but the reasoning
of the Vermont decision, assuming the reasoning supports either side, bolsters
Christopher Belling' s position.
In Butson v. Department ofEmployment & Training, Kenneth Butson received
unemployment compensation benefits from April 20, 2002 through January 4, 2003,
totaling $8,440. He later filed a worker compensation claim and received benefits
covering the period from April 20, 2002 to January 4, 2003, and greater in the amount
than the unemployment compensation benefits earlier garnered. The Vermont
Employment. Security Board issued an order demanding that Butson repay the
unemployment compensation fund all monies earlier received. Butson argued that he
should be allowed to deduct from the repayment a share of the attorney fees he incurred
when seeking worker compensation funds. The Board disagreed and Butson appealed.
On appeal to the Vermont Supreme Court, Kenneth Butson argued that a reduced
repayment was authorized by equitable considerations and the common fund doctrine.
The Vermont court disagreed based on its reading of its state statute. The unemployment
compensation statute read:
Any person who receives remuneration ... which is allocable in
whole or in part to prior weeks during which he or she received any
amounts as benefits under this chapter shall be liable for all such amounts
of benefits or those portions of such amounts equal to the portions of such
remuneration properly allocable to the weeks in question.
21
No. 34066-0-III
Belling v. Employment Security Department (dissent)
21 V.S.A. § 1347(b) (emphasis and alterations in original). The express terms of the
statute required a claimant to repay all of the benefits received for the time period
duplicated by his worker compensation benefits, without any indication that he may .
reduce the amount for any purpose. Because of this clear legislative mandate, the court
could not permit a deduction pursuant to the common fund doctrine, even for equitable
considerations. Of course, the Washington statute, unlike the Vermont statute, allows
reduction of the reimbursement to ESD based on equity and good conscience. RCW
50.20.190.
A Washington case consistent with Butson v. Department of Employment &
Training is Department of Labor & Industries v. Dillon, 28 Wn. App. 853,626 P.2d 1004
(1981). Donald Dillon recovered $11,493.95 in benefits from DLI, under the victims of
crime compensation act, as a result of an assault. He later recovered $15,000.00 against
his assailant. DLI then demanded full reimbursement of the benefits paid. Dillon's
attorney wished payment from some of the settlement proceeds and filed a lien against
the recovery from the tortfeasor. DLI sued to recover all amounts paid. Former RCW
7.68.050 (1973) then read:
No right of action at law for damages incurred as a consequence of a
criminal act shall be lost as a consequence of being entitled to benefits
under the provisions of this chapter. In the event any person entitled to
benefits under this chapter additionally seeks a remedy for damages
incurred as a consequence of a criminal act, then and in that event the
department shall be subrogated to the rights of such person and have a lien
upon any recovery so made to the extent of the benefits paid or payable by
22
No. 34066-0-111
Belling v. Employment Security Department (dissent)
the department to or on behalf of such person under this chapter.
(Emphasis added.) This court refused to apply the common fund doctrine because of the
language of the statute. The court noted the imposition of a lien in favor of DLI on any
recovery. Of course, the statute contained no exception for a waiver on equitable
grounds. RCW 50.20.190, the unemployment compensation reimbursement statute,
contains no lien provision and affords an important exception for circumstances in equity
and good conscience, circumstances consistent with the common fund doctrine.
Fairness demands that ESD at least consider the common fund doctrine when the
state government generated and profited from the fund created by the worker's effort.
DLI wrongfully withheld benefits owed Christopher Belling. ESD did nothing to assist
Belling to litigate the wrong. Yet, when Belling prevailed against DLI, ESD immediately
demanded payment of much of the recovery. Fairness, equity and good conscience does
not sanction an injured worker expending time, energy and money to obtain rightful
benefits from the government only to remit most of the benefits back to the government
while paying the entire cost of obtaining the benefits. ESD would not have boosted its
ledger sheet without the expense incurred by Belling.
Christopher Belling's counsel took his thirty percent share of Belling's worker
compensation recovery from the full $48,251.19. Therefore, ESD' s payment of a portion
of the fees would allow reimbursement to Belling of some of his payment to counsel. I
23
No. 34066-0-III
Belling v. Employment Security Department (dissent)
assume and expect that counsel would repay to Belling the portion of the fees deducted
from ESD' s reimbursement.
ESD contends that the common fund doctrine should not apply, in part, because,
even without waiver of some of the overpayment, Christopher Belling remains in the
same financial position as without receiving unemployment benefits. According to ESD,
Belling would have remained responsible for any attorney fees and costs associated with
litigating his worker compensation claim even without earlier receiving unemployment
compensation. Compelling reflections, however, deflect this contention. The State of
Washington agencies caught Belling in the middle. DLI wrongfully withheld benefits
and placed Belling in a position that required him to rely on ESD. Belling may have
never pursued DLI payments if he had known ESD would garner almost all of the worker
compensation recovery. When considering that DLI deducted $9,271.80 from the award,
Belling actually lost by reason of seeking recovery from DLI. ESD's contention ignores
the unjustness of it reaping a windfall without paying a fair share of the expenses of that
windfall.
My analysis must continue. The ESD reimbursement waiver statute, RCW
50.20. I 90(2), reads that the ESD "may waive an overpayment if the commissioner finds
... that the recovery thereof would be against equity and good conscience." (Emphasis
added.) The word "may" connotes discretion. A court construes "may" as permissive.
In re Parentage of K.R.P., 160 Wn. App. 215,223,247 P.3d 491 (2011). Generally, the
24
No. 34066-0-III
Belling v. Employment Security Department (dissent)
court has no discretion in determining whether to apply the common fund doctrine.
Either it applies or does not apply. Granting ESD discretion to apply the common fund
doctrine presents the same conundrum raised in the first section of this dissent: what, if
any, guidelines or considerations should ESD follow when exercising its discretion in
determining waiver based on fees incurred by the worker.
One abuses its discretion if it relies on unsupported facts, applies the wrong legal
standard, or adopts a position no reasonable person would take. State v. Lord, 161 Wn.2d
276, 284, 165 P.3d 1251 (2007). Thus, discretion has limits and must be reasonably
applied. It is wrong to apply discretion contrary to the law.
Under a correct reading ofRCW 50.20.190, ESD must exercise some discretion in
applying the common fund doctrine. ESD cannot just dismiss the doctrine. As the
Delagrave court directed ESD to consider fees incurred by the worker when ESD
exercises equity and good conscience when resolving waiver, ESD must consider
whether the common fund doctrine should lead to waiver of the reimbursement
requirement. When the worker asserts the common fund doctrine, the department should
address the contention and declare whether it applies the doctrine. In doing so, ESD
should apply fairness under the circumstances and explain the reason for applying or not
applying the theory. Because of the compelling connection between the common fund
doctrine, on the one hand, and equity, good conscience and fairness, on the one hand, I
would hope that ESD would almost always allow waiver. Nevertheless, because of
25
No. 34066-0-III
Belling v. Employment Security Department (dissent)
discretion afforded ESD, I would expect some circumstances may not call for application
of the common fund doctrine.
Since this appeal is from an administrative hearing, the court should remand for
ESD to exercise its discretion. During the remand, the parties could present input on how
the discretion should be exercised. If need be, this court could address this exercise at a
later date.
I DISSENT:
~ ~ J,
Fearing,~ )
26