Jared Karstetter & Julie Karstetter, Resps v. King County Corrections Guild, Pets ( 2017 )

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COURT OF AN- r.13.1_t3 MI I
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2017 EL 26 C:36
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JARED KARSTETTER and JULIE )
KARSTETTER, his spouse, who ) No. 75671-1-1
together form a marital community, )
) DIVISION ONE
Respondents, )
)
v. )
)
KING COUNTY CORRECTIONS ) PUBLISHED OPINION
GUILD, a nonprofit corporation doing )
business as a labor union, RANDY )
WEAVER,SONYA WEAVER, )
LEONARD ORTH, KATHERINE )
ORTH, GARRIN CLARK, GABRIEL )
VIGIL, )
)
Petitioners, )
)
WILLIAM ATCHISON, ANIL S. )
KARIA, TREVOR CALDWELL, )
individually and as representatives; )
and PUBLIC SAFETY LAW GROUP, )
a legal services public corporation, )
) FILED: December 26, 2017
Defendants. )
)
LEACH, J. — We granted discretionary review of the trial court's denial of
King County Corrections Guild's (Guild) motion to dismiss Jared Karstetter's
breach of contract and wrongful discharge claims. The trial court should have
dismissed Karstetter's breach of contract claim because Washington public
policy makes the contract termination provision unenforceable. And Karstetter's
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wrongful discharge claim fails because he did not plead sufficient facts to support
that claim. We reverse and remand to the trial court for dismissal of these two
claims.
FACTS
The Guild is a labor organization and the exclusive bargaining
representative of corrections officers and sergeants employed by the King
County Department of Adult and Juvenile Detention. Karstetter has served as
legal counsel for the Guild since 1996. This case involves the parties' most
recent contract, signed in 2011 by the Guild and the Law Offices of Jared C.
Karstetter Jr. PS. Titled an employment agreement between the Guild and the
law firm, it had a term of five years. The contract required that the Guild have
just cause to terminate Karstetter and required notice, an opportunity to correct,
and arbitration of any disputed termination.
In March 2016, the King County Ombudsman's Office (Ombudsman)
contacted Karstetter about a whistleblower complaint. Karstetter claims the Guild
vice-president told Karstetter to cooperate with the Ombudsman. Karstetter then
complied by producing requested documents.
On April 27, 2016, the Guild summarily fired Karstetter. Karstetter alleges
that the Guild fired him "ostensibly for disclosure of information to the
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Ombudsman and for disloyalty." The Guild claims that it fired Karstetter because
of strong evidence that he disclosed Guild client confidences.
Karstetter, along with his wife Julie Karstetter, who worked for the law firm
as a legal assistant, sued the Guild and others, alleging several claims. The
Guild moved to dismiss all claims against it: breach of contract, wrongful
discharge, retaliation, negligent infliction of emotional distress, tortious
interference with employment, and specific performance of contract. The trial
court granted the Guild's motion in part, dismissing Karstetter's retaliation claim,
tortious interference claim, and request for specific performance. The Guild
requested discretionary review of the court's decision not to dismiss the breach
of contract and wrongful discharge claims. We granted review under
RAP 2.3(b)(2). This rule allows review if the trial court committed probable error
that substantially alters the status quo or substantially limits the Guild's freedom
to act.
ANALYSIS
The Guild claims that the trial court should have dismissed Karstetter's
breach of contract and wrongful termination claims against it. CR 12(b)(6) allows
a court to dismiss a claim only when it appears beyond doubt that the claimant
can prove no set of facts, consistent with its complaint, which would justify
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recovery.' The court assumes the truth of all facts alleged in the complaint and
may consider hypothetical facts supporting the claim.2 A trial court should grant
a CR 12(b)(6) motion "'sparingly and with care" in the unusual case where the
claimant's allegations show an insuperable bar to relief on the face of the
complaint.3 The trial court's CR 12(b)(6) decision presents a question of law,
which this court reviews de novo.4
Breach of Contract
The Guild contends that the trial court should have dismissed Karstetter's
breach of contract claim because the contract's termination provision violates
Washington public policy about client's ability to terminate an attorney-client
relationship. Karstetter claims that this policy does not apply when the attorney
is the client's employee. We agree with the Guild.
Specifically, the Guild asserts that the termination provision conflicts with
the well-established rule that a client may fire a lawyer at any time and for any
reason. Over many years, Washington courts have repeatedly recognized this
Bravo v. Dolsen Cos., 125 Wash. 2d 745, 750, 888 P.2d 147 (1995).
2 FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc., 180
Wash. 2d 954, 962, 331 P.3d 29(2014).
3 Southwick v. Seattle Police Officer John Doe No. 1, 145 Wash. App. 292,
296, 186 P.3d 1089 (2008)(internal quotation marks omitted)(quoting Tenore v.
AT&T Wireless Servs., 136 Wash. 2d 322, 330, 962 P.2d 104 (1998)).
4 Tenore, 136 Wash. 2d at 329-30.
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rule and applied it in fee disputes between an attorney and a client.5 Our
Supreme Court has noted the unique nature of the attorney-client relationship
and stated that the rule permitting a client to fire its attorney is necessary to
protect both the client and the public.6
Washington's Rules of Professional Conduct reflect this policy. RPC
1.16(a) provides that a lawyer shall "withdraw from the representation of a client
if. . .(3) the lawyer is discharged." Comment 4 to this rule states, "A client has
the right to discharge a lawyer at any time, with or without cause, subject to
liability for payment for the lawyer's services." Neither the rule nor the comment
excludes in-house counsel from the rule's application.
The contract's termination provision states,
5 Belli v. Shaw, 98 Wash. 2d 569, 577, 657 P.2d 315 (1983)("Unlike general
contract law, under a contract between an attorney and client, a client may
discharge his attorney at any time with or without cause."); Kimball v. Pub. Util.
Dist. No. 1 of Douglas County, 64 Wash. 2d 252, 257, 391 P.2d 205 (1964) ("A
client may, at any time, either for good or fancied cause, or out of whim or
caprice, or wantonly and without cause whatever, discharge his attorney and
terminate the attorney-client relationship."); Fetty v. Wenger, 110 Wash. App. 598,
600 n.4, 36 P.3d 1123 (2001)("Clients have the right to discharge their attorney
at any time, for any reason.").
6 Barr v. Day, 124 Wash. 2d 318, 328, 879 P.2d 912 (1994) ("Given the
special nature of the attorney-client relationship, we find the image of a client
unwillingly saddled with an attorney she neither wants nor needs highly
disturbing."); Kimball, 64 Wash. 2d at 257 ("This rule, though a harsh and stringent
one against the attorney, exposing him frequently as it does to undeserved
censure and criticism, is thought necessary for the protection of the client in
particular and the public in general.").
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Just Cause For Termination: It is understood by the parties that
ATTORNEY is expected to perform in a manner consistent with the
quality and expectations of the GUILD. It is further understood that
ATTORNEY is primarily answerable to the President of the GUILD
and secondarily answerable to the Executive Board of the GUILD.
Consistent with the rights and expectations of the members that the
GUILD represents ATTORNEY may be terminated for just cause.
The definition of Just Cause shall be the same definition that is
currently contained in the Collective Bargaining Agreement for
GUILD members. In the event that the GUILD wishes to exercise
this provision, due notice shall be provided to ATTORNEY and an
opportunity to correct any behavior that GUILD deems
inappropriate. ATTORNEY shall be afforded fundamental due
process and an opportunity to answer to any and all charges.
Termination of this Agreement shall be reserved as a final option.
In the event that ATTORNEY disputes the findings and
determination of the GUILD with regard to a Just Cause
termination, ATTORNEY and GUILD agree to arbitrate said dispute
in a manner consistent with the Arbitration Clause contained in the
Collective Bargaining Agreement.
This provision directly conflicts with the rule that a client may fire a lawyer for any
reason at any time. It also purports to modify Karstetter's ethical obligations by
requiring cause for discharge and allowing him to dispute his discharge rather
than withdrawing when discharged.
Karstetter does not dispute that the Guild is his client. Instead, he claims
a contractual right to challenge and arbitrate his client's decision to fire him. This
attempted modification of Karstetter's ethical obligations violates a long- and
well-established public policy adopted by our Supreme Court to protect both
clients and the general public. For these reasons, it is unenforceable.
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We find support for our conclusion in LK Operating, LLC v. Collection
Group, LLC.7 In that case, the court observed,"The RPCs are clearly directed at
promoting the public good and preventing public injury. . . . It is therefore
possible, as a general matter, to find principles of public policy relevant to the
enforceability of contracts in the RPCs."8 It specifically found that a contract
violating RPC 1.8(a)—limiting a lawyer's ability to enter into a business
transaction with a client—presumptively also violated the public policy underlying
the rule.8 The court stated, "A contract entered in violation of former RPC 1.8(a)
may still be enforced where it is shown, based on the specific factual
circumstances that, notwithstanding the violation, the contract itself does not
contravene the public policy underlying former RPC 1.8(a)."1° The court added,
We do not purport to set out any all-encompassing rule for
how violation of any RPC in connection with a contract might affect
that contract's enforceability. We simply reaffirm that a contract
entered in violation of former RPC 1.8(a) may not be enforced
unless it can be shown that notwithstanding the violation, the
resulting contract does not violate the underlying public policy of the
rule.[11]
Like the attorney in LK Operating, Karstetter cannot show that the challenged
contract terms do not violate the policy behind the applicable RPC.
7 181 Wash. 2d 48, 331 P.3d 1147 (2014).
8 LK Operating, 181 Wash. 2d at 86-87.
9 LK Operating, 181 Wash. 2d at 89.
18 LK Operating, 181 Wash. 2d at 89.
11 LK Operating, 181 Wash. 2d at 89-90. Any difference between the former
and current version of RPC 18(a) is not significant or important to our decision.
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No. 75671-1-1 / 8
Karstetter correctly notes that the procedural posture of this case differs
from LK Operating. There, the court reviewed a summary judgment decision.
Karstetter asserts that a dismissal based on the allegations in his complaint is
inappropriate. He claims that if the contract violates the RPCs, some factual
inquiry is still necessary to decide if the contract violates public policy. But
Karstetter identifies no facts or hypothetical facts that would support a finding that
the termination provision does not violate public policy. Unlike LK Operating, the
trial court needed no more factual inquiry to determine that the termination
provision violated public policy. No hypothetical set of facts could reconcile this
provision with Washington's strong public policy of allowing a client great
freedom in a decision to fire its attorney.
Karstetter asserts that his status as an employee of the Guild12
distinguishes his case from Washington cases allowing a client to fire an attorney
at any time and for any reason because courts decided those cases in the
context of a typical attorney-client relationship.13 He asserts that the principles of
contract and employment law should take precedence over established
Washington public policy and govern the parties' relationship.
12Karstetter's complaint alleged that he was an employee of the Guild.
The Guild does not contest the adequacy of this allegation. We assume for
purposes of this decision that Karstetter was an employee of the Guild.
13 Barr, 124 Wash. 2d at 328; Belli, 98 Wash. 2d at 577; Kimball, 64 Wash. 2d at
257.
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No. 75671-1-1 / 9
Karstetter relies on Corey v. Pierce County." There, a Pierce County
deputy prosecutor made a promissory estoppel claim based on a representation
that her employment contract contained a "just cause" provision.15 But our Corey
decision does not help Karstetter because we were not asked to consider and did
not decide whether the alleged contract violated public policy.16
Karstetter also relies on Chism v. Tri-State Construction, Inc.17 Karstetter
cites Chism for the proposition that no inherent conflict of interest exists when an
attorney negotiates with his employer about his compensation. Karstetter's claim
does not turn on that issue. And Chism did not consider any contract provision
limiting the client's right to sever the attorney-client relationship. Chism sought
only earned bonuses, consistent with his compensation agreement, for services
provided.15 Here, Karstetter seeks lost future income for services that he will
never provide. Chism provides no support for this claim.
14 154 Wash. App. 752, 225 P.3d 367 (2010).
15 Corey, 154 Wash. App. at 757. Corey had no contract claim because the
county received no consideration for the promise that she could be fired only for
just cause. Corey, 154 Wash. App. at 768.
16 Cont'l Mut. Say. Bank v. Elliott, 166 Wash. 283, 300, 6 P.2d 638 (1932)
("An opinion is not authority for what is not mentioned therein and what does not
appear to have been suggested to the court by which the opinion was
rendered.").
17 193 Wash. App. 818, 374 P.3d 193, review denied, 186 Wash. 2d 1013
(2016).
18 Chism served as in-house counsel to Tri-State Construction. Chism,
193 Wn. App. at 825-26. He negotiated his own salary arrangement and
bonuses. Chism, 193 Wash. App. at 825-34. After Chism resigned from his in-
house position with Tri-State Construction, he sued to recover unpaid bonuses.
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Finally, Karstetter relies on a California Supreme Court case, General
Dynamics Corp. v. Superior Court of San Bernardino County.19 In General
Dynamics, the California Supreme Court held that an attorney employed as in-
house counsel could bring a contract claim against a client-employer for breach
of a "good cause" termination provision.20 We do not find this decision helpful
because the California Supreme Court has limited a client's unfettered right to
discharge its attorney in a way that our Supreme Court has not.
In General Dynamics, the court limited a client's right to fire an attorney
without liability for future damages to contingent fee personal injury cases.21 The
Washington Supreme Court has not similarly limited the client's termination
rights. In Kimball v. Public Utilities District No. 1 of Douglas County,22 our
Supreme Court applied Washington's rule to a professional services contract
between a law firm and a public utility for complex legal services related to a
large hydroelectric dam project. The court held that the public utilities district
could terminate the law firm at any time with or without cause and was liable for
Chism, 193 Wash. App. at 835. The jury awarded Chism $750,000 in unpaid
earned bonuses. Chism, 193 Wash. App. at 836. The trial court, however, ordered
Chism to disgorge a portion of the award because it found Chism had committed
numerous RPC violations. Chism, 193 Wash. App. at 837. We reversed the trial
court because we found no Supreme Court precedent for the order. Chism, 193
Wash. App. at 858-60.
197 Cal. 4th 1164, 876 P.2d 487, 32 Cal. Rptr. 2d 1(1994).
29 General Dynamics, 876 P.2d at 496.
21 General Dynamics, 876 P.2d at 494-495.
2264 Wash. 2d 252, 391 P.2d 205 (1964).
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No. 75671-1-1 / 11
the reasonable value of services provided up to the time of termination.23 The
court's use of Washington's rule in Kimball informs our decision here. Because
we are obliged to follow the decisions of our Supreme Court, we decline
Karstetter's invitation to follow General Dynamics.24
We note that Karstetter does not base his contract claim on an allegation
that the Guild fired him for an illegal or improper reason. He makes that
allegation in the context of his wrongful discharge claim only, which we address
next.
Wrongful Discharge Claim
The Guild asserts that the trial court should have dismissed Karstetter's
wrongful discharge claim because Karstetter did not adequately plead it. We
agree.
Other jurisdictions have split on whether an attorney-employee may bring
a wrongful discharge claim against his client-employer.25 We need not decide
Kimball, 64 Wash. 2d at 257.
23
24General Dynamics also held that in-house counsel may bring a
retaliation claim against a client-employer. General Dynamics, 876 P.2d at 502-
03. We do not intend this decision to comment on the merits of that issue.
25 Compare General Dynamics, 876 P.2d at 502 (explaining the
circumstances where in-house counsel may bring a retaliation claim) and
Burkhart v. Semitool, Inc., 2000 MT 201, 11 41, 300 Mont. 480, 5 P.3d 1031
(relying on General Dynamics to hold that right to discharge an attorney without
consequences did not apply to an attorney-client relationship where the attorney
is an employee of the client) with Balla v. Gambro, Inc., 145 III. 2d 492, 584
N.E.2d 104, 110, 164 III. Dec. 892 (1991) (declining to extend the tort of
retaliatory discharge to in-house counsel and holding that the rule that a client
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No. 75671-1-1 / 12
this question here, however, because Karstetter failed to plead all elements of his
wrongful discharge claim.
A wrongful discharge in violation of a public policy claim has four
elements:
(1) The plaintiffs must prove the existence of a clear public
policy (the clarity element).
(2) The plaintiffs must prove that discouraging the conduct in
which they engaged would jeopardize the public policy (the
jeopardy element).
(3) The plaintiffs must prove that the public-policy-linked
conduct caused the dismissal (the causation element).
(4) The defendant must not be able to offer an overriding
justification for the dismissal (the absence of justification
element).126]
"To establish jeopardy, the plaintiff must show that he 'engaged in particular
conduct, and the conduct directly relates to the public policy, or was necessary
for the effective enforcement Of the public policy.'"27 He must also show "how the
threat of discharge will discourage others from engaging in desirable conduct"
may discharge his attorney at any time, with or without cause, applies equally to
in-house counsel as it does to outside counsel).
26 Gardner v. Loomis Armored, Inc., 128 Wash. 2d 931, 941, 913 P.2d 377
(1996)(citations omitted).
27 Rose v. Anderson Hay & Grain Co., 184 Wash. 2d 268, 290, 358 P.3d
1139(2015)(quoting Gardner, 128 Wash. 2d at 945).
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and "that other means of promoting the public policy are inadequate."28 Our
Supreme Court has noted the four areas where a clear public policy exists:
(1) where the discharge was a result of refusing to commit an illegal
act; (2) where the discharge resulted due to the employee
performing a public duty or obligation; (3) where the termination
resulted because the employee exercised a legal right or privilege;
and (4) where the discharge was premised on employee
"whistleblowing" activity.[291
Karstetter relies on the fourth of these recognized public policies—
protection from discharge for "whistleblowing"—but does not adequately allege
that he was engaged in this protected activity. Whistleblowing occurs when an
employee reports employer misconduct in an attempt to remedy that
misconduct.3° Karstetter's complaint states,
On March 4, 2016, Mr. Karstetter was contacted by the King
County Ombudsman's Office regarding a whistleblower complaint
involving parking reimbursement to two Guild members. The Guild
Vice President directed Mr. Karstetter to cooperate fully with the
Ombudsman. Pursuant to the King County Code, Mr. Karstetter
was compelled to produce certain documentation under threat of
Superior Court action for compelled compliance.
In other words, Karstetter alleges that he provided information to the investigator
of a whistleblowing complaint but was not a whistleblower himself. Karstetter
does not show that he reported any misconduct to remedy that misconduct or
28 Rose, 184 Wash. 2d at 290.
29 Dicomes v. State, 113 Wash. 2d 612, 618, 782 P.2d 1002(1989)(citations
omitted).
39 Dicomes, 113 Wash. 2d at 618-19.
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No. 75671-1-1 / 14
that his actions were motivated by a desire to further the public good.31 To the
contrary, Karstetter alleges that he helped with the investigation because the
King County Code and the threat of superior court action compelled him to.
Thus, the whistleblower protection contemplated by Washington courts does not
apply to Karstetter.
Because Karstetter's complaint fails to allege facts showing that he
engaged in public-policy-linked conduct, the trial court should have dismissed the
wrongful discharge claim.
Attorney Fees
Karstetter requests attorney fees and costs under RAP 18.1 and
RCW 49.48.030. RCW 49.48.030 permits a person to recover attorney fees if
that person "is successful in recovering judgment for wages or salary owed to
him or her." As Karstetter does not prevail in this appeal, we deny his request for
attorney fees.
CONCLUSION
Because the termination provision of the Guild contract is unenforceable
and Karstetter did not plead all facts necessary to maintain his wrongful
discharge claim, the trial court should have dismissed Karstetter's breach of
See Rickman v. Premera Blue Cross, 184 Wash. 2d 300, 313, 358 P.3d
31
1153(2015).
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No. 75671-1-1/ 15
contract and wrongful discharge claims.32 We reverse, remand, and direct the
trial court to dismiss those claims.
WE CONCUR:
&0
32 Because the record before us is sufficiently complete to permit a full
decision on the merits of the issues presented, we deny Karstetter's motion to
supplement the record.
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