Facts: Petitioner Cheryl Forbes obtained a $5.6 million judgment against American Building Maintenance Company West after bringing an employment discrimination claim. After replacing her attorney, respondent Mary Schultz, as a result of a dispute regarding American Building Maintenance Company West’s settlement offer, Forbes agreed to a $5 million settlement. Schultz subsequently filed a notice of lien with the Superior Court for Spokane County seeking to recover the 44% contingency fee that she was entitled to under her fee agreement with Forbes. The trial court concluded that a 40% contingency fee would be reasonable, that it should be calculated as a percentage of the settlement amount of $5 million rather than as a percentage of the judgment amount of $5.6 million, and that Schultz was owed prejudgment interest. Both parties appealed to the Washington Court of Appeals, which affirmed the trial court’s award of prejudgment interest but reversed the trial court with regard to the amount upon which Schultz’s contingency fee should be based, holding that it should be based upon the judgment amount. Forbes appealed this decision to the Supreme Court of Washington.

Question(s): Should Schultz’s contingency fee be calculated as a percentage of the judgment amount or as a percentage of the settlement amount?

Is Schultz entitled to prejudgment interest?

Conclusion: Justice Charles W. Johnson’s opinion for a unanimous Court reversed the Washington Court of Appeals, ruling that Schultz’s contingency fee should be calculated as a percentage of the settlement amount rather than as a percentage of the judgment amount as the record clearly demonstrated that the case had been settled for $5 million and that settlement rendered the judgment unenforceable. However, the Court also concluded that Schultz was entitled to prejudgment interest as she had been improperly deprived of the contingency fee she was owed by Forbes.

Docket No. 82950-1 (from Court of Appeals Division III Case No. 25398-8)

Plaintiff: Cheryl Forbes

(Counsel: Bryce James Wilcox, Kenneth Scott Kagan, and Michael D. Franklin)

Defendant: Mary Schultz

(Counsel: Mary Schultz)

Briefs:

Argument: Tuesday, June 29, 2010 1:30pm

[Source: TVW, http://tvw.org]

Decided: Thursday, October 7th, 2010

Prevailing Party: Cheryl Forbes (Plaintiff)

Vote: 9-0

Citation: Pending

Court: Madsen1 Court (2010-2011)

Madsen

Johnson
(Majority)

Alexander

Sanders

Chambers

Owens

Fairhurst

Johnson

Stephens