High court reaffirms that statute of limitations
defense not always assertable against claims brought by Washington state
by Andrew Bergh
Statutes of limitation admittedly serve the legitimate purpose of
protecting defendants from stale and fraudulent claims.
But let’s be honest. If you limit your practice to representing
plaintiffs, wouldn’t it be nice to never have to worry about a statute
of limitations defense? Interestingly, as shown by Carrera v.
Olmstead, __ Wn.2d __ (2017), this is one of the benefits enjoyed by
Washington state in third party claims brought by the Department of
Labor & Industries (“L&I”).
Carrera v. Olmstead arises from events that took place over eight
In the summer of 2009, 19-year-old Basilio Carrera started working as
a seasonal laborer for Brent Hartley Farms in Benton County. Initially,
his job was to sort and pack harvested onions. When the season began,
Carrera received a basic safety lecture from Sunheaven Farms LLC, a
contractor providing centralized administrative and operational support,
including workplace training safety and compliance, to Brent Hartley
Farms and other local farms.
For unclear reasons, on Aug. 14, 2009, Carrera was given a new job
inside his employer’s warehouse. His duties included sweeping the floor
with a hand broom and dumping the contents of his dust pan onto a nearby
conveyor belt. Although the conveyor belt was originally equipped with
side guards, someone had later removed them for unknown reasons. Before
starting his new job, Carrera never received any additional safety
training from Sunheaven, or any advice on how to work safely in close
proximity to the modified conveyor belt.
Carrera soon suffered a horrific injury. While sweeping in a crouched
position next to the conveyor belt, the machine caught his right hand or
sleeve, in the process severing his right hand and wrist from his
forearm. After doctors at Harborview Medical Center unsuccessfully tried
to reattach the limb, they medically amputated his right (and dominant)
hand at the forearm level. Almost five years later, the Department of
Labor & Industries classified Herrera as “totally and permanently
disabled” and awarded him a pension.
Following the accident Carrera hired Thomas Olmstead, a Kitsap County
lawyer, to represent his interests. Olmstead then made three mistakes.
First, he filed an action for damages against Brent Hartley Farms,
notwithstanding the employer’s statutory immunity from nonintentional
tort liability. Second, he failed to inform L&I about the filing of the
lawsuit as required by RCW 51.24.030(2). And third, he failed to name
Sunheaven as a defendant.
The superior court later dismissed Carrera’s claim against his
employer, presumably on the basis of its statutory immunity.
L&I – having only learned about Carrera’s claim after the order of
dismissal – quickly took matters into its own hands. After identifying
Sunheaven as a potentially liable third party, L&I first sent notice to
Carrera that it would pursue a third party claim if he did not. When
Carrera failed to respond within 60 days, this meant his tort claim was
statutorily assigned to L&I under RCW 51.24.050 – so the department then
brought a legal malpractice claim against Olmstead in Kitsap County
Superior Court. Later, L&I amended its complaint to add a third party
claim against Sunheaven. By this point in time, however, the three-year
statute of limitations applicable to tort claims (RCW 4.16.080) had long
Time for a short digression to discuss RCW 51.24.050, which sets
forth how amounts recovered by L&I in a third party claim should be
distributed. It’s essentially a four-part formula. First, the department
is paid its reasonable litigation expenses. Second, the injured worker
is paid 25 percent of the recovery. Third, the department is paid the
“compensation and benefits” already paid to the injured worker. And
fourth, any “remaining balance” is also paid to the injured worker.
In Carrera’s case, L&I calculated that its statutory lien for
Carrera’s past and future benefit payments was just over $788,000. The
department’s third party claim against Sunheaven sought to recover not
only this amount, however, but also Carrera’s noneconomic damages
(e.g., past and future pain and suffering). Given the severity of his
injuries, this is clearly not an insubstantial sum. (Besides the partial
amputation of his right arm, Carrera reportedly has ongoing pain and
discomfort, and also has been diagnosed with posttraumatic stress
Against this background, Sunheaven eventually moved for partial
summary judgment with the clear goal of limiting its potential exposure.
First of all, the defendant argued that since the statute of
limitations had run on Carrera’s tort claim, L&I’s attempt to recover
his noneconomic damages was likewise time barred. Second, while
conceding that damages were recoverable on the assigned claim, Sunheaven
contended that the department’s recovery was capped by the expected
amount of its lien – and therefore couldn’t exceed $788,000.
Although the trial court sided with Sunheaven, the Court of Appeals
reversed in a published opinion. For particulars, please see Carrera
v. Olmstead, 196 Wn. App. 240 (2016). Thereafter, our high court
In a nutshell, Sunheaven did itself no favors by seeking review. To
the contrary, writing two months ago for a unanimous court, Justice
Debra Stephens comprehensively explained how the trial court had erred
by granting Sunheaven’s motion for partial summary judgment.
According to Justice Stephens, the high court granted review to
address two questions:
Whether third party claims assigned to L&I under RCW 51.24.050
are exempt from the relevant statute of limitations.
Whether Washington’s Industrial Insurance Act (chapter 51.24 RCW)
authorizes L&I to seek damages beyond the amount necessary to
reimburse the Fund (i.e., the pool of employers’ contributions
collected and used by L&I to pay benefits to injured workers).
At the outset, the opinion in Carrera provides a concise but
thorough overview as to how the Act removes most workplace injury claims
from Washington’s “common law tort regime,” while preserving third party
liability. Though beyond the scope of this column, this section of the
opinion is must reading for those who want a quick primer in this area
of the law.
With regard to the first issue, Justice Stephens observed how
statutes of limitation historically haven’t been applied to states
without their explicit consent. This reflects the view, she continued,
“that when government executes its duties to protect the public, the
concerns associated with stale claims are outweighed by public policy
In Washington, the relevant statute is RCW 4.16.160. On the one hand,
this law states that the limitation periods prescribed in chapter 4.16
RCW apply to actions brought by most governmental entities in the same
manner they apply to actions brought by private parties. In the case of
Washington state, however, the statute contains a huge proviso that
“there shall be no limitation to actions brought in the name or for the
benefit of the [S]tate.”
So when is an action brought for the “benefit” of the State? Good
question. Under well-established precedent, observed the Carrera
court, an action is for the benefit of the State when the State acts in
its “sovereign” – as opposed to “proprietary” – capacity. There is an
exception to this general rule, however, when the State is a “mere
formal plaintiff” – e.g., where the State is a plaintiff “merely to form
a conduit [between private litigants].” In that situation, a statute of
limitations defense may be asserted because the State instead acts in a
Predictably, this was the tack taken by the defense. Under
Sunheaven’s view of the world, the third party action brought by L&I
fell into the “proprietary” category because Carrera stood to benefit
from the suit.
But our high court respectfully disagreed.
To determine whether an action is sovereign versus proprietary, said
the justices, one “must look to the ‘character or nature’ of the
action” (emphasis original). As long as the lawsuit’s purpose, at least
in part, is to benefit the State or protect the public, the State is
necessarily acting in its sovereign capacity. On this basis, the
Carrera court concluded as follows:
In sum, L&I’s RCW 51.24.050 claim against Sunheaven is for the
shared benefit of Carrera and the State. The State benefits from
reimbursing the Fund, enforcing workplace safety laws, and deterring
future negligence. Because the public stands to gain some benefit
from L&I’s third party action, the action is “for the benefit. . .
.of the state” under RCW 4.16.160, regardless of personal benefit to
Carrera. We hold that Sunheaven may not assert the statute of
limitations as an affirmative defense to L&I’s third party action.
Having determined that a statute of limitations defense was
unavailable as a matter of law, Justice Stephens next focused on the
issue relating to damages. Sunheaven’s argument was essentially twofold.
First, that L&I could only recover economic damages in a third
party action brought under RCW 51.24.050. And second, that L&I’s
recovery should be capped at an amount equivalent to L&I’s total lien,
which in Carrera’s case was $788,000.
Sunheaven lost on both counts.
First of all, the Carrera court said Sunheaven had incorrectly
interpreted RCW 51.24.050. Under RCW 51.24.030, which authorizes an
injured worker to bring a third party action, “recovery” is broadly
defined to “include all damages except loss of consortium.” Although
RCW 51.24.050, which only relates to third party actions assigned to
L&I, contains no like definition, this distinction was inconsequential:
There is no alternative definition of “recovery” in RCW 51.24.050,
nor is there any indication in the text that the act of assignment
constrains the single cause of action. The statutory language is
unambiguous: L&I may recover all damages except loss of consortium.
As for the argument that L&I’s recovery should be capped by the
amount of L&I’s total lien, Justice Stephens concluded that this would
“illogical.” She elaborated as follows:
Simply put, RCW 51.24.050(4) divides L&I’s recovery into two
categories of recovery it can keep (legal fees and benefits paid)
and two categories it cannot keep (25 percent of the initial award
and any “remaining balance”). If L&I were not authorized to recover
funds it cannot keep, there would be no reason for the legislature
to instruct L&I how to dispose of that recovery. Furthermore, the
legislature explicitly authorized L&I to reimburse the Fund when
either the worker or the State recovers damages from a third party.
[Citation omitted.] By capping L&I’s recovery at the lien amount
(i.e., the exact amount required to fully replenish the Fund) before
costs and the worker’s 25 percent are deducted, Sunheaven’s
interpretation would guarantee that the Fund would never be fully
reimbursed. This interpretation is unsupported by the statue and
contrary to legislative intent – we decline to adopt it.
While the legal disputes in Carrera v. Olmstead primarily
concern L&I and Sunheaven, let’s not forget that Basilio Carrera – now
27 years old – remains the named plaintiff. Should L&I ultimately
prevail on its assigned third party claim and recover all (or even most)
of his economic and noneconomic damages, Carrera – at minimum – will
receive his 25 percent share of the award as mandated by RCW 51.24.050.
All in all, not a bad outcome for an injured worker whose tort claim
would be time barred if pursued solely by him.
WSTLA EAGLE member, former prosecutor and insurance defense attorney, now limits his
practice to plaintiff's personal injury cases, including professional
liability and insurance bad faith.
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