good morning parka special deputy prosecutor for pierce county i'd like to reserve five minutes for a bottle please please watch the clock and of course we know from the briefing that the central issue that we're hear about today is arbiter billet or more specifically who decides the issue of arbitron realty but absolutely critical to pierce county's position in this appeal is the fact that before the court today is a unique arbitration clause that arbitration clause is unique for two reasons the st is because the parties agreed that the arbitration clause would only apply in certain circumstances so it's narrowly drawn and the nd reason and really the more fundamental reason to our position on the appeal is the fact that this arbitration provision contains multiple conditions proceed and that are mandatory before that arbitration clause is ever even triggered it doesn't have the words condition press it is not in my contract it doesn't your honor and we concede that but it does it actually has some language suggesting that everything goes to arbitra but let me say we don't agree with you just assume we don't agree with you and we think this you know in our reading it probably should have gone to arbitration i think you raised the issue up front which is who should have made that determination and here the district co sent that question to the arbitrator right to decide who makes the determination of whether it was arbiter ball correct so if we agree with you and maybe i'm cutting to the chase too much i don't want to cut off your argument but that the district court should have made that do we send it back down to the district court and say listen you as a district court judge need to make the determination of whether this should be sent to arbitration and if the district court says yes it should go to that that the key here is who decides arbiter ability and that is what the district court found and what is what we believe to be in error the reason why we're talking about the federal laws you know substantive law an arbiter ability is because that antecedent agreement about who decides arbiter ability is also subject to the conditions proceed and just like the actual arbitration clause itself so your arbitration clause has proceed and it does use the words after if shall all in that section eight dollars which is the dispute resolution procedure and those conditions are required to be met the procedure that's doubt that's detailed in eight dollars of mortenson submitting a claim of the end of the claim having certain elements so it's the if it's the shall it's the after just because there is a claims process before you get to the point of arbitration doesn't mean there's a condition preceding relative to to the issues that we're talking about it seems to me  says all claims arising out of the work shall be resolved by arbitration it's all to see and then there's a definition of work is work means  construction service is required by the contract documents it includes but is not limited to label materials supplies equipment so forth so if you read the definition of work and you look at the issues that were involved here they certainly seem to  because you know whether you extend the time for doing work or there are disputes about work so all that relates to the work now i may be that if mourns and doesn't follow the claims procedure you've got an issue the question is who decides that that issue and whether that's a court whether that the arbitrator but because you've got all claims going  to arising out of the work going to arbitration it could be a good argument that the arbitrator then gets to decide because of the aaa provision the arbitrator good sides are better ability  is this a claim that can be arbitrated and maybe he would decide what she would decide i know because the claims process wasn't follow it's kind of like affirmative defense it's not it's not declaratory judgment it's where here you decide and the argument is these claims can be arbitrated before the arbitrator isn't that fair interpretation it's not your honor because of the capital c claim and that exact sentence that you just read so because it is has all capital c claims and in order to be a capital c claim mortenson had to follow the conditions proceeding that are contained in the eight point zero one because of that  that's the different interpretation that we do have so your point is there's a lower case c claims that would go to a district court judge and would not be subject to arbitration one hundred percent your honor it's difficult right because outside of the of this contract as lawyers we're used to hearing about claims being kind of like a dispute but in this contract and in the majority of construction contracts claim is a term of art it's a capital c you have to a contractor certified and so the and met the other eight requirements so those were capital c claims and we absolutely agree they move forward in the dispute resolution procedure and are subject to arbitration and that the whole federal substan ability applies to those capital c claims but there's this other subset which are the uncertified by the claims in this case were met a claims like how do we just a contract interpretation question yes i would say the nature of the dispute the declaratory relief that the county is seeking is a order by an arbitrator or a judge that because mortons and failed to certify their claim their submission was not a capital c claim and therefore was waived this is aren't as the the two questions that martin's and his asking for arbitration are not are contract interpretation issues or are they sending are they saying that uncertified claims are to be said to dispute resolution because i only saw there they basically attached the county's request for arbitration submission to the district court correct your honor and then i believe in that answer mortensen included additional disputes about the substance of the claims ok yeah so certified some are not certified but the declaratory relief i i wish in preparing for today i thought about it i should have called the declaratory relief the waiver issue in the briefing i think it would have been clearer to understand because it is our position that the waiver issue is the way this contract is set up that waiver issue is to be determined by a court so so in the claims procedure at the end it says if you don't  these claims are deemed to be a right is that why you're calling it the waiver issue it is but we see it in the middle it's not at the end right so there's you have to submit a capital c claim the county has to respond then if mortenson disagrees it goes on to arbitration in the middle of that if there is no capital c claim it is the county's position that it would be waived and that is a determination both the question and the question itself you need a district court or an arbitrator could not decide that question or say we're saying that it's not arbiter of all the waiver issues are the court could decide a correct why why can't why wouldn't the arbitrator this weather whatever you call a capital c claim has been been made where the process has been follow i know you say you can look at the facts in a simple so sense you can look at the facts of the simple therefore there's a waiver when judge judge should be able to enforce that but no matter how simple the issue the question is who gets to decide and it's quite possible isn't it that when you have dispute about the claims whether the sea claim has been properly filed or whether the county has properly responded even though that may sound simple on these complicated procedural issue the reason your honor why it would not be arbiter bill is because it's not a capital c claim who decides who decides where there's a capital c clay court a court of law would decide that because we are not yet it's the conditions perceive an issue because we don't have the conditions proceeding that the arbitration clause is not triggered do you want to say i do thank thank your honour's may please the court michael grace for i mean mortenson company i think the court has honed in on the issue here st of all it is not a condition precedent there is no use of the term condition precedent in the contract and in fact the way the claims provision is written it demonstrates just as a matter of contract drafting that there are nine elements under eight a one c that a claimant is required to put in the calling the language says claim shall contain these are elements of the claim goes in the claim number nine is what the county is contesting that morton did not properly certify st of all let me make very clear mortenson absolutely did certify the claims mortenson certified the claims by delegating that something of a question here is who who should be making that determination i appreciate that and my explanation of that goes to who should make that determination to a's st of all the contract unequivocally incorporates triple a rules aaa construction industry so st of all there's a clear case law brenin oracle that states when that is incorporated rule are nine in the construction industry rules which is in the record says that the arbitrator has that power well in both of those cases that is it you know any dispute here the only thing that the parties by contract agreed to resolve by arbitration is the all catalyse claims arising out of the work so  broader arbitration then and we have to find that they did not your honor we disagree that it's ambiguous and we also disagree that it's not a broad all encompassing arbitration provision provision we understand the argument that the county makes that this is only for capital c claims that erroneous and in fact the county has conceded otherwise and it's reply brief what what you know to see states is that no independent legal action relating to or arising from the work shall be maintained judge oliver honed in on that and i think it's absolutely key here you can't read alone eight o two b which refers to claims and i'll note also judge nelson that you know to be does not use capital c claims it uses lower case well and that so that begs the question are there actually lower c maybe there are no differences i mean any claim that arises out of the contract has to go through for example you couldn't you couldn't bring a claim a claim could not be brought under this contract even if it were otherwise viable if it didn't go through the claims process it's it doesn't become a claim it can't be actionable right we disagree we  k that public owners as a matter of course have an overly narrow reading of what const what a contract requires as far as being so you do agree that there could be lower case c claims that don't have to go through the claims process no well go i'm so sorry i thought you were going to make a final point which means it goes to court no i do not agree that it would go to court there are all sorts of issues arising out of or relating to the work that wouldn't be a capital c claim but still would follow in your opinion your operation provision because of the broad all encompassing language and a like to go back to your question judge  because there also is a supreme court case that i think is important here and that's the bread i'm sorry the the how some verses dean witter case and that case is important because it takes a more a little bit more nuanced approach to one not only can we have incorporation by reference but nd if the issues that a party is raise raising such as waiver such as whether a condition precedent has been met grow out of the dispute and bear on the final disposition those defenses are presumptively not for the judge but for the arbitrator and that's how some verses dean witter reynolds excuse me citing wiley and sons versus livingston so not only do we have a clear incorporation of the aaa rules which says we go to the arbitrator to decide this question but we also have an alternative basis that this court can also look to which says because the waiver defense the condition precedent offense that language is expressly used in house i'm because those issues are integral e related wrapped up in the question we go to the arbitrary integral a related to why that the question of the the substance of the issue the claim that the question that the opposing side argues is that unt there is a claim then the arbitration doesn't arise and their argument is there is a claim which is a separate section of the agreement so claims arising out of the work shall be resolved by arbitration so in that contacts i would think that you could reasonably interpret that to mean no independent legal action relating to rising from the claims arising out of the work which is what this section is about i'm just concerned about the ambiguity because of the supreme court's stern warning that beyond  contract interpretation principles there's a federal contract interpretation principle that says if there's ambiguity we have to assume the the parties did not agree to arbitrate well that that particular type of and again i disagree that there's an ambiguity because the entire argument that a capital c claim is a condition precedent to arbitration st of all is not supported by the plain language of the contract the term condition precedent simply is not does the word have to be is in order for some contractual agreement to have to take place for system there are alternative ways to state it but none of those that you don't think i was or are back here as the section relating to claims in the claims process it's just talks generically the claim shelby file and then it goes on if a claim is less than fifty adjudicated claim pursuant to the procedures or anything like that that's necessary before you go to arbitration it's a capital c but it's but it's every step of the way it's just what you file a claim and then the response is to a claim so is there anything anything significant about the capital c that would prevent it from from being our be traded that would prevent the claim from being our black no i mean i think if i'm understanding your honor is correct question correctly your honor is pointing out correctly i think that if we look at this from a time perspective in a procedural perspective when you start an eight on one day you already have a capital c client that's before any of any of these other elements or are satisfied that that mortenson excuse me pierce county claims are a condition precedent to arbitration and again the way that this contract is written the way that the term capital c claim is used it's used throughout the process if if one was required to have satisfied all nine elements before a claim comes into existence then you don't even start it doesn't even get you out of the gate the way that the county interpret claim so you're saying if a claim is waived it's still a claim it's an environment of defense to the substantive underlying claim is one reason nd is that when when courts are looking at delegation of authority to arbitrators to decide a particular issue one of the things that has the supreme court has cited for example in a securities case were delegating this to a securities arbitrator they know securities issues the labor case were delegating it to a labor they know labor issues this is a construction industry case it's delegated to construction industry rules of the aaa and we will get a construction industry panel or the structure i mean that's a good as a policy are going to be you still have to put language  claim have to be certify the principal was the contractor as opposed to by the subcontractor and so the there's nothing in the arbitration agreement that's as questions of contract interpretation address these issues within the martin since response so what do we do with respect to those issues of contract interpretation well st of all your honor i disagree that that is the way mortenson responded but i don't think we can escape the fact and go back to the very st procedural action in this dispute which is the county demanded arbitration of this issue which now they say should not go to the arbitrator you can't get away from that in response to that question i don't know that we need to used the words declaratory relief it's just a question of contract interpretation no your honor the arbitrator does have authority to determine that question but how the arbitrator determines that is what mortenson was identifying the arbitrator they could certainly bring a motion for summary judgment in arbitration raise it as an affirmative defense in the arbitration process it is an issue that we will get to at some point in the arbitration  not declaratory judgment that's not how this works it's an issue that's tied up in the substance of the claim we need to present this as part of the entire claims here's our counter claims here's all the claims for relief that you have wrongfully denied let's get to the point here work but his work another limiting factor because this is all claims arising out of the work and then work has a specific definition could you have a claim that related to work and a capital c claim that related to  work and a capital c claim that didn't relate to capital w work and if that's the case then doesn't that support the idea that the district court should be deciding these threshold questions of what should go to arbitration or not no you're out of that the term work is is defined so broadly i mean as to to mean that issues that i don't have the exact definition well is the construction and service is it required by their contract documents construction and service is required by the so it's long as it falls within the contract it's always going to be under the word but there could be and here all the claims relate to contract documents absolutely they all all relate with i think that answers my question for purposes of this case but presumably you could have claims that didn't relate to the contract documents perhaps but that's not an issue here it's not if there's nothing at issue that does not relate to the thank you so a couple points and follow up to mr grace the st being that the county does not agree that claim for purposes of eight point zero one way that any request a capital c claim we know that the death due to the definition of a claim which we haven't talked about here yet today which is at one dollar half of the contract e r fifty three dollars and that provides  definition of the capital c claim to be a request for again it's narrow just cover story different subject areas change change order work so changes in scope requests for additional compensation by the contractor and requests for additional time by the contractor so if it's regarding one of those three subject matters and if it meets the requirements as more fully set forth in part eight meaning the eight requirements in eight  c including the multiple things but including the certification what about the language that opposing counsel focuses on no independent legal action relating to arising from the workshop you maintain which suggests that any claim or see claim or a claim arising from work is subject to the arbitration provisions we don't read read it that way and we don't think that's a reasonable interpretation of this clause we read it instead that that sentence relates to the st sentence in that section eight dollars see that does specify all claims arising out of the work so what that sentence is referring to is the fact that outside that still confines it to the capital c claim that's not a separate arbitration provision that applies to anything in the contract we've talked a little bit about well about the fact that our contract does not have the phrase condition precedent in it and so therefore there is an argument made that that means we don't have conditions preceding and we disagree with that again it's the words it's if it's shall it after the court similarly the they didn't use the magic words condition precedent in style instead the arbitration clause there said the parties shall submit the matter to arbitration after mediation and the court said well that was a condition proceeding so mediation was a condition precedent to the triggering of the arbitration clause because the parties had not mediated the arbitration provision was never triggered so that is our position here in that those condition proceedings were not met met and so the arbitration clause was not triggered we know that because of the words we also know that because of the way that this contract is set up in other words eight dollars which is the arbitration clause finally resolved pursuant to the contract it doesn't have any language like that and they're all kinds of references to claims throughout this document any claim of the contract or a owner for damages sh dean wave is any claim in a lot of different places where the word claim is used and it wouldn't be it's not a consistent usage other than the fact that we're talking about the thing that should be submitted and responded to isn't that correct all claims are right you work all claims that have been properly resolved it doesn't say that and it's the use of the of the capitol there which is telling us that there's a difference