Appellate court hears dispute over applying common‑fund fee rule in Rybaki v. Progressive

An appellate panel heard argument in Rybaki v. Progressive Casualty Insurance over whether the common‑fund exception to the American rule should require Progressive to reimburse part of the attorneys’ fees the insured paid to obtain a tort recovery.

Marilee Erickson, counsel for Appellant Progressive, told the court that Progressive should get reversal and a new trial because the trial court abused its discretion in evidentiary rulings and because the facts do not support a common‑fund award. "There are no cases that deal with this fact scenario," Erickson said, arguing that because the insured recovered her full payment from the tortfeasor, "a common fund has not been created." She warned that adopting the respondent’s theory would convert many ordinary UIM (underinsured motorist) cases into common‑fund situations and impose new burdens on insurers.

The respondent’s advocate (identified in the transcript as Presenter) told the court the insured, Ms. Rybaki, was not fully compensated because she had to cover about $108,000 that represented Progressive’s pro rata share of attorneys’ fees and costs. "Ms. Rybaki is not fully compensated," the Presenter said, arguing that under common‑fund precedent Progressive should not be allowed a "free ride." The Presenter cited Thuringer and other cases (Mattsiuk, Woodley, Mahler, Winters, Ham) for the proposition that an insured who must contribute to fees to preserve reimbursement is not made whole.

The panel pressed both sides on doctrinal limits. One justice asked whether recognizing a common fund in this factual posture would create a slippery slope that required insurers to reimburse every fee short of making the insured receive every last cent of a recovery. Erickson acknowledged courts may consider equitable factors but reiterated there is a meaningful distinction between the statutory or PIP contexts and the UIM facts here. The Presenter responded the position is not a maximalist rule that would eliminate insurer reimbursement rights entirely but reflected established fairness principles in reimbursement law.

Argument touched on policy language and timing. The Presenter noted the policy defines an underinsured motorist at the time of the accident and stated the available liability at the time was $100,000 while the jury’s damages were described during argument as substantially higher; the Presenter said a reasonable evaluation and prompt payment by Progressive could have avoided the dispute. Erickson countered that insurance companies cannot reliably predict non‑economic awards and that the disagreement over damages is common in UIM litigation.

Counsel also disputed evidentiary rulings: Erickson argued that certain exhibits were excluded and that testimony alone is not equivalent to the jury having documents in deliberations. The Presenter emphasized that the jury’s award did not include contractual unpaid benefits and that the pro rata share awarded compensates counsel for the additional litigation necessary to pursue both the tortfeasor and the insurer.

The court indicated it had reviewed the briefs and focused oral argument on the common‑fund issue before the parties concluded their time. The case was submitted.

What happens next: the panel will issue a written opinion applying Washington precedent on the common‑fund exception, the made‑whole doctrine, and the interplay with UIM coverage. The opinion will determine whether Progressive must reimburse part of the attorney fees the insured paid to obtain the tort recovery.