Court Opinion

ID: 2718925
Source: CourtListenerOpinion
Date Created: 2014-08-19 18:07:23.762783+00
Date Added: 2024-06-11T15:32:54.952968
License: Public Domain

F t LLED
                                                                                                            130U E OF APPEALS
                                                                                                                 DR/ SON II

                                                                                                            2014 AUG 19   Ali 9: 35

                                                                                                                    F

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGrF-?                                                         T, CITY
                                                                                                                      :.,

                                                      DIVISION II

DAN' S TRUCKING, INC.,                                                               No. 44342 -2 -II

                                        Respondent,

           v.

KERR        CONTRACTORS,                INC.,      LIBERTY                      PUBLISHED OPINION
MUTUAL            GROUP,        INC.,    a/ k/ a    SAFECO
INSURANCE               COMPANY         OF      AMERICA,
bond nos. 6709272, 6709273, 5581430,

                                        Appellants.

STATE OF WASHINGTON, WASHINGTON
STATE DEPARTMENT OF
TRANSPORTATION,

                                         Defendants.

           BJORGEN, A.C. J. —       Kerr Contractors, Inc. and Liberty Mutual Insurance Group, Inc.,

a/ k/ a   Safeco Insurance      Company      of    America (Kerr), appeal a superior court order granting a

motion by Dan' s Trucking, Inc. to strike Kerr' s request for a trial de novo following an

arbitrator' s decision awarding Dan' s Trucking $6, 979. 57 in attorney fees. Kerr contends that the

trial court erred in granting the motion to strike because it was entitled to a trial de novo under

Mandatory        Arbitration Rule (MAR) 7. 1.           We hold that, because resolution of the parties'

attorney fees issue remained within mandatory arbitration, Kerr was entitled to a trial de novo on

that   issue    under   MAR 7. 1.   Accordingly, we reverse the trial court' s order granting Dan' s

Trucking' s      motion   to   strike and remand       for trial de   novo on   the attorney   fee issue.
No. 44342 -2 -II

                                                       FACTS

         The Washington State Department of Transportation awarded a contract to Kerr to make

improvements to State Route 14 in Clark County, Washington. Kerr subcontracted with Dan' s

Trucking to haul asphalt for the highway improvement project. A dispute arose between the

parties, and Dan' s Trucking filed a complaint against Kerr for breach of contract and negligence

in Thurston County Superior Court. The superior court transferred the case to mandatory

arbitration. Prior to the arbitration hearing, the parties settled Dan' s Trucking' s underlying

claims, but did not resolve the amount of attorney fees to be awarded to Dan' s Trucking. Kerr

memorialized      the   parties'   settlement agreement       in   an e -mail   that   stated, "   We received authority

from   our client   for the   following   offer:   1. Payment from Kerr to Dan' s of $3, 971. 38; and 2. Fees

in   an amount    to be determined     by the   arbitrator;   3. In   exchange     for dismissal." Clerk' s Papers

 CP) at 28. Kerr also sent the following e -mail to the arbitrator indicating that the parties had

settled their primary dispute:

         As I said in my voicemail to you yesterday, the parties have settled this matter,
         and therefore we need to cancel the arbitration hearing scheduled for tomorrow,
         6/ 28.
         However, as part of the settlement, the parties have agreed that you will decide
         the   amount of      attorney fees   awarded   to Dan'       s.   Our preference would be to brief
         the issue and then hold a telephonic hearing on the matter with you.

CP at 29. The arbitrator subsequently awarded $ 6, 979. 57 in attorney fees to Dan' s Trucking.

The form on which the arbitrator entered his arbitration award contained the following preprinted

language:

         Twenty days after the award has been filed with the clerk, if no party has sought a
         trial de novo, the prevailing party, on notice to all parties, may present to the
         Assigned Judge a judgment on the arbitration award for entry as final judgment in
         this case.

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No. 44342 -2 -II

CP at 21.

            After Kerr timely requested a trial de novo, Dan' s Trucking filed a motion in superior

court to strike Kerr' s request, asserting that Kerr was not entitled to a trial de novo under MAR .

7. 1 because the parties had privately settled their dispute. The motion further asserted that the

arbitrator was        acting   as a private arbitrator under              the Uniform Arbitration Act (UAA),          chapter

7. 04A RCW, when he decided the amount of attorney fees to be awarded to Dan' s Trucking,

rather than as an arbitrator under MAR 3. 2. Following a hearing, the trial court entered an order

granting Dan' s Trucking' s motion to strike Kerr' s request for a trial de novo. The trial court

later entered a judgment against Kerr awarding Dan' s Trucking $6, 979. 57 in attorney fees, the

amount       determined      appropriate       through    arbitration, as well as $           11, 663. 17 in supplemental

attorney fees. Kerr timely appeals.

                                                               ANALYSIS

                                              I. REQUEST FOR A TRIAL DE NOVO

            The issue raised by this appeal is whether the trial court erred in granting Dan' s

Trucking' s         motion   to   strike   Kerr' s   request   for   a   trial   de   novo.   Our resolution of this issue turns

on whether the arbitrator' s award of attorney fees to Dan' s Trucking was governed by the UAA

or by chapter 7. 06 RCW as implemented by the MARs. If under the UAA, the trial court

properly granted Dan' s Trucking' s motion to strike Kerr' s request for a trial de novo. If under

chapter 7. 06 RCW as implemented by the MARs, the trial court erred because Kerr was entitled

to   a   trial de   novo under      MAR 7. 1.        We hold that the MARs governed the arbitrator' s attorney fee

determination and, therefore, the trial court erred by granting Dan' s Trucking' s motion to strike

Kerr' s request for a trial de novo.

                                                                         3
No. 44342 -2 -II

          The application of court rules to a set of facts is a question of law that we review de novo.

Russell v. Maas, 166 Wash. App. 885, 889, 272 P.3d 273, review denied, 174 Wash. 2d 1016 ( 2012).

As with other court rules, we interpret the MARs " as though they were drafted by the

Legislature."         Wiley   v.   Rehak, 143 Wash. 2d 339, 343, 20 P.3d 404 ( 2001).               Thus, we construe the

MARs consistently with their purpose " to reduce congestion in the courts and delays in hearing

civil cases."     Perkins Coie         v.   Williams, 84 Wn.      App.   733, 737, 929 P.2d 1215 ( 1997);        Wiley, 143
Wash. 2d     at   343.   We also give effect to the plain meaning of a court rule, as " discerned from

reading the rule as a whole, harmonizing its provisions, and using related rules to help identify

the legislative intent        embodied       in the   rule."   State v. Chhom, 162 Wash. 2d 451, 458, 173 P.3d 234

 2007).

          Chapter 7. 06 RCW, as implemented by the MARs, requires the mandatory arbitration of

certain civil claims. RCW 7. 06. 010 -.030; MAR 1. 2. In Thurston County, mandatory arbitration

proceedings       apply to     civil "[ c]   laims   valued    up to $ 50, 000,   exclusive of   interest   and costs."   MAR

1. 2; Thurston County Local MAR 1. 2. The MARs do not apply to arbitration by private

agreement or under other statutes, unless                 the   parties so stipulate.   MAR 1. 1; MAR 8. 1.         MAR 7. 1

provides that an aggrieved party to a mandatory arbitration decision may request a trial de novo

in the superior court.

          With exceptions not relevant to our circumstances, the UAA governs private agreements

to   arbitrate   disputes. RCW 7. 04A.030.               The UAA does not apply to arbitration under the MARs.

                                                                    4
No. 44342 -2 -II

RCW 7. 04A. 030( 3).        RCW 7. 04A.230 governs judicial review of contractually agreed arbitration
                                                                                              1
awards under        the UAA    and   does   not contain a right   to   a   trial de   novo.

           Kerr and Dan' s Trucking agree that they entered into mandatory arbitration under the

MARs, and that they settled their primary dispute prior to the arbitrator issuing a decision. The

parties disagree, however, whether the unresolved attorney fees issue remained within mandatory

arbitration or whether their settlement provided for private arbitration of the unresolved attorney

fees issue under the UAA.

           We interpret settlement agreements in the same manner in which we interpret other

contracts.       Mut. of Enumclaw Ins. Co.       v.   USF Ins. Co., 164 Wash. 2d 411, 424 n.9, 191 P.3d 866

    2008). "    In doing so, we attempt to determine the intent of the parties by focusing on their

objective manifestations as expressed            in the [ settlement]       agreement."           McGuire v. Bates, 169

1
    RCW 7. 04A.230 provides in part:
               1) Upon motion of a party to the arbitration proceeding, the court shall vacate an
           award if:
               a) The award was procured by corruption, fraud, or other undue means;
               b) There was:
               i) Evident partiality by an arbitrator appointed as a neutral;
               ii) Corruption by an arbitrator; or
               iii) Misconduct by an arbitrator prejudicing the rights of a party to the arbitration
           proceeding;
               c) An arbitrator refused to postpone the hearing upon showing of sufficient cause
           for postponement, refused to consider evidence material to the controversy, or
           otherwise conducted the hearing contrary to RCW 7. 04A. 150, so as to prejudice
           substantially the rights of a party to the arbitration proceeding;
               d) An arbitrator exceeded the arbitrator's powers;
            e) There was no agreement to arbitrate, unless the person participated in the
           arbitration proceeding without raising the objection under RCW 7. 04A. 150( 3) not
           later than the commencement of the arbitration hearing; or
            f) The arbitration was conducted without proper notice of the initiation of an
           arbitration as required in RCW 7. 04A.090 so as to prejudice substantially the
           rights of a party to the arbitration proceeding.

                                                             5
No. 44342 -2 -II

Wn.2d 185, 189, 234 P.3d 205 ( 2010).                   When determining the intent of contracting parties, we

apply the " context rule" adopted by our Supreme Court in Berg v. Hudesman, 115 Wash. 2d 657,

667, 801 P.2d 222 ( 1990).               Under the Berg context rule:

             the intent of the parties to a particular agreement may be discovered not only from
             the actual language of the agreement, but also from " viewing the contract as a
             whole, the subject matter and objective of the contract, all the circumstances
             surrounding the making of the contract, the subsequent acts and conduct of the
             parties     to   the   contract,     and the reasonableness of respective interpretations
             advocated by the parties."

Scott   Galvanizing, Inc.           v.   Nw. EnviroServices, Inc., 120 Wash. 2d 573, 580 -81, 844 P.2d 428

 1993) ( quoting          Berg, 115 Wash. 2d     at   663); Stender   v.    Twin   City Foods,   Inc., 82 Wash. 2d 250, 254,

510 P.2d 221 ( 1973)).

              A contract provision is ambiguous when its terms are uncertain or when its terms are

capable of        being    understood as      having     more   than   one   meaning."       Mayer v. Pierce County Med.

Bureau, Inc., 80 Wn.            App.      416, 421, 909 P.2d 1323 ( 1995).              We construe any ambiguity in the

settlement agreement against                the drafter, here Kerr. Rouse           v.   Glascam Builders, Inc., 101 Wash. 2d
127, 135, 677 P.2d 125 ( 1984).                Additionally, the " strong public policy favoring finality of

arbitration dictates that any ambiguity with respect to which statute the parties have invoked —
                  042

chapter      7.         or chapter   7. 06 — be   resolved in favor of binding arbitration under chapter 7. 04."

Dahl    v.   Parquet & Colonial Hardwood Floor Co., Inc.,                      108 Wash. App. 403, 412, 30 P.3d 537

 2001).

2 Chapter 7. 04 RCW was replaced by chapter 7. 04A RCW. See Laws of 2005, ch. 433.
                                                                   6
No. 44342 -2 -II

         The parties' settlement agreement, as drafted by Kerr, stated that the terms of the parties'

settlement were " 1. Payment from Kerr to Dan' s of $ 971. 38; and 2. Fees in an amount to be
                                                     3,

determined    by the   arbitrator;    3. In   exchange     for dismissal." CP at 28. The parties disagree

whether these terms constituted a full settlement of their claims with an associated agreement to

privately resolve the attorney fees issue through the UAA or, instead, merely constituted a partial

settlement of their claims with the attorney fees issue remaining within mandatory arbitration.

We hold that the parties' intent, as discerned from all the circumstances surrounding the creation

of the settlement terms and from the subsequent conduct of the parties, was to settle Dan' s

Trucking' s underlying claims, while leaving the attorney fees issue within mandatory arbitration.

Berg, 115 Wash. 2d at 663.

          MAR 7. 1 contemplates that resolution of a party' s request for attorney fees is within the

purview of    mandatory      arbitration,     stating in   part, "   Any request for a trial de novo must be filed

    within   20 days   after   the   arbitrator files   proof of service of the     later   of: ( 1)    the award or (2) a

decision   on a   timely   request for costs or     attorney fees." ( Emphasis        added.)          Even more to the

point,   MAR 3. 2( a)( 8)   states   that   an arbitrator   has the authority to "[ a] ward costs and attorney

fees   as authorized   by law." These provisions leave no doubt that in the arbitration begun under

the MARs, the arbitrator had authority to decide whether to award attorney fees.

          The remaining question, then, is whether the parties intended to convert the arbitration of

attorney fees from one under the MARs to one under the UAA. The parties' agreement, as

expressed in the e -mail from Kerr to the arbitrator and in the settlement agreement was that the

arbitrator would decide the amount of attorney fees awarded to Dan' s Trucking. These

statements could conceivably be read as either the conversion of arbitration to a private

                                                               7
No. 44342 - -II
          2

proceeding under the UAA or as an acknowledgment that the arbitrator would exercise his

authority under the MARs to decide attorney fees. In context, though, it is not reasonable to read

these brief notations of agreement to effect both a shift from one set of rules to another and a

waiver of a trial de novo, when they said nothing about the UAA, the MARs, or a trial de novo.

A more plausible reading is that these notations were merely an attempt to be clear as to who

would decide the matter of attorney fees. Further, Thurston County' s Local MAR 4. 4( a)

provides that to effectuate a settlement of a claim assigned to mandatory arbitration, the parties

must   first " notify the     court and arbitrator       promptly          of the settlement." (   Emphasis in original)

There is no evidence in the record that the parties promptly notified the trial court of its

settlement before the arbitrator decided the issue of attorney fees.

           While we continue to adhere to the interpretive rules that ambiguities should be resolved

against the drafter and in favor of binding arbitration, these rules do not compel strained readings

of the parties' intent. The most reasonable interpretation of the parties' expressions of agreement

to continue arbitration with the assigned arbitrator, and the absence of notice under Thurston

County Local MAR 4.4( a), is that they did not intend to convert the MAR arbitration to one

under the UAA. Accordingly, Dan' s Trucking' s suit remained within mandatory arbitration

when the arbitrator resolved the issue of attorney fees, and Kerr was entitled to a trial de novo on

that   issue   under   MAR 7. 1.       For these reasons, we reverse the trial court' s grant of the motion by

Dan'   s   Trucking    to   strike   Kerr'   s request   for   a   trial   de   novo.
No. 44342 -2 -II

                                     II. ATTORNEY FEES ON APPEAL

         RAP 18. 1 provides that we may award attorney fees on appeal where authorized by

applicable law. Kerr requests such attorney fees under former RCW 39. 08. 030 ( 2009) 3 and
RCW 60. 28. 021. Former RCW 39. 08. 030( 1) provides in relevant part:

           I] n any suit or action brought against such surety or sureties by any such person
         or corporation to recover for any of the items hereinbefore specified, the claimant
         shall be entitled to recover in addition to all other costs, attorney' s fees in such
         sum as the court shall adjudge reasonable.

This provision authorizes the award of attorney fees to a claimant " in an action brought against a

performance bond where the surety contests a right to recover, denies the allegations in a

complaint, and seeks    dismissal   of an action."   Campbell Crane &   Rigging Servs., Inc. v.

Dynamic Intl AK, Inc., 145 Wn.       App.   718, 727, 186 P.3d 1193 ( 2008).   RCW 39. 08. 030 does

not contain any language authorizing the award of attorney fees to a prime contractor who

contests a subcontractor claimant' s suit. Similarly, RCW 60. 28. 021 does not contain any

language authorizing the award of attorney fees to Kerr under these circumstances.

         Accordingly, we deny Kerr' s request for attorney fees on appeal. Dan' s Trucking also

requests attorney fees on appeal. Because Kerr prevailed on appeal, we deny Dan' s Trucking' s

request.

3 Former RCW 39. 08. 030 was revised in 2013, but this revision does not affect the subsection
cited.

                                                      9
No. 44342 -2 -II

                                           CONCLUSION

        We reverse the trial court' s order granting Dan' s Trucking' s motion to strike and remand

for trial de novo on the attorney fee issue.

We concur:

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