American Rule Bites the Dust - Again

Kaintz v. PLG, Inc., --- P.3d ----, (Wash.App. Div. 1 Dec 15, 2008) (NO. 61333-2-I)


The American Rule generally provides that each party to litigation pays her own attorney fees. The English Rule awards attorney fees to the prevailing party. Courts have chipped away at the American Rule with so many exceptions that it is beginning to look more like the English Rule.


Kaintz is a case in which the purchaser of a business was not able to negotiate a new lease with the seller’s landlords. The landlords sued to evict the purchaser. The purchaser counterclaimed with arguments that it was entitled to rights under the prior lease. The purchaser moved out prior to trial. The landlords asked for attorney fees. The purchaser argued that attorney fees could not be awarded because it was not a party to the seller’s lease.


RCW 4.84.330 provides that a unilateral provision for attorney fees becomes bilateral in litigation. If one side can obtain attorney fees, the other side can also. Even though RCW 4.84.330 did not apply in Kaintz because the contract had bilateral provisions for attorney fees, the court announced that Washington law has a well-established equitable principle of mutuality of remedy.


This well-established new rule is hard to articulate but it apparently means that whenever a party has negotiated remedies for itself that are different than the remedies negotiated for the other party, both parties can claim the remedies of the other party.


Wouldn’t it have been easier for Division I to have merely held that equity placed the purchaser in the shoes of the seller because the purchaser made claims under the seller’s lease?


Stay tuned to see how far the well-established principle of mutuality of remedy penetrates the law of Washington State.