Settlement of All Claims, Settles All Claims
I was taught to expressly include costs and attorneys’ fees in any release or settlement agreement because – if I didn’t -- the opposing party would come back and demand that the client pay those claims on top of the settlement amount. I always did it but, frankly, I thought this was an urban legend. I was wrong -- this issue made it all the way to the Washington Supreme Court. The dispute in McGuire v Bates illustrates the wisdom of using belts and suspenders when drafting agreements.
After a settlement of $2,180 plaintiff asserted that the settlement of “all claims” did not include statutory attorneys fees, which are awarded to a prevailing party in Washington in certain situations. An arbitrator denied this claim; the Superior Court decided plaintiff was the prevailing party and awarded attorneys' fees, costs and interest on the settlement amount. The Court of Appeals affirmed. The Washington Supreme Court, in a unanimous decision, reversed and ruled that a settlement of “all claims” includes a claim for attorney fees.
Despite this decision, it seems like a good idea to always expressly include costs and attorney fees in any settlement and release, since one superior court judge and an appellate panel saw this the other way.
