Neslon v. Erickson – Recovery of Attorney Fees in Car Accident Lawsuit

Our Charlotte car accident lawyers know that consideration of attorneys fees is an important one to those who have been injured. We usually explain, first of all, that our services are offered on a contingency fee basis, meaning if we don’t win, you don’t pay attorney’s fees. If we do win, the fee will not be a surprise. It will be a set percentage of the overall damage award decided at the outset of the case. gavel21

However, there are some situations in which attorney’s fees may be paid by the other side. The are two basic approaches to the recovery of attorneys fees: The English Rule and the American Rule. The English Rule says the losing side pays both parties’ attorney fees. The American Rule holds that each party pays his or her own attorney’s fees, regardless of how the case ends. North Carolina follows a modified American Rule. It holds that while each party generally pays his or her own attorney fees – except under certain circumstances. Those can include personal injury claims where recovery is less than $10,000, claims that are unsupported by fact or law or claims in which a reasonable settlement offer is refused (Rule 68).

Anytime a lawyer can work out a situation wherein the other side pays the fees, they’re going to do it. But that doesn’t necessarily mean it’s a given, and each case is different. 

In the recent case of Nelson v. Erickson, the question before the Washington Supreme Court was whether a defendant “improved his position” at trial. After an arbitrator offered a plaintiff $45,000, including $1,500 for attorney fees, defendant sought a court trial. Looking to avoid this, plaintiff offered to settle for $26,000, plus taxable costs from arbitration. Defendant didn’t respond and the case went to trial, with jurors awarding plaintiff $24,00. Plaintiff filed a motion for additur, for which the judge assessed an additional $3,000 for future non-economic damages, bringing the total to $27,000. Then, plaintiff moved for attorney’s fees, arguing defendant hadn’t improved his position at trial and judge agreed with that also, awarding plaintiff $59,000 in attorney fees and $4,500 in costs. Defendant appealed.

The question was whether defendant actually improved his position at trial, such as to avoid having to pay attorney fees. He argued that the settlement offer prior to the trial was $26,000, plus the known arbitration costs of $1,522. That meant the total offer of $27,522 was more than what was ultimately awarded to plaintiff at trial.

The appellate court agreed and vacated the award of fees and costs to plaintiff. The Washington Supreme Court reviewed and affirmed.

The court noted that if a party requests a trial de novo following mandatory arbitration, he or she has to pay the other side’s attorney’s fees if their position is not improved at trial. So this was an important matter.

Plaintiff contends the car accident offer was just $26,000. Defendant contends the offer was $26,000 plus known arbitration costs. That $1,522 difference could make a $63,500 difference in fees for the defendant.

The court did analyze one prior case in which it was held that generally, parties cannot include costs in their settlement offer and also that courts determine the amount of the settlement offer by reading the offer as an ordinary person would. In this case, those two principles conflict. So the court was left to decide which principle should prevail.

The court decided to “treat this offer as an ordinary person would interpret it,” which was that plaintiff offered to settle for $26,000 plus the additional costs incurred at arbitration, which would mean a total of $27,522. Because plaintiff was awarded $24,000 by jurors, defendant did in fact improve his standing at trial, despite the judge’s later additur.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Nelson v. Erickson, Aug. 18, 2016, Washington Supreme Court

More Blog Entries:

Christ v. Schwartz – Car Accident Victims’ Claims for Damages Must be Credible, Corroborated, Aug. 17, 2016, Charlotte Car Accident Lawyer Blog

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