Court Opinion

ID: 4662080
Source: CourtListenerOpinion
Date Created: 2021-02-23 12:20:28.55552+00
Date Added: 2024-06-11T08:02:18.319372
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 VICEROY GROUP, LLC, a                      No. 80573-8-I
 Washington limited liability               (consolidated with 80710-2-I)
 company, and JEFFREY
 WYSONG, an individual,                     DIVISION ONE

                      Respondents,          UNPUBLISHED OPINION

               v.

 TOK, LLC, a Washington limited
 liability company, and SAMUEL
 BURKE, an individual,

                      Appellants.

      SMITH, J. — This case arises from an arbitration dispute between the co-

owners of a cannabis retail store. Samuel Burke was the sole owner of Tok LLC,

an entity that was granted a cannabis retail license in Seattle. The Washington

State Liquor Control Board (LCB) issued a decision approving Tok’s request to

allow Jeffrey Wysong’s company, Viceroy Group LLC, to become a co-owner of

Tok. After a dispute between Burke and Wysong, but before Viceroy became a

co-owner of Tok, Burke appealed this decision to the LCB on behalf of Tok.

Viceroy asked the arbitrator whom the parties had used to resolve their earlier

dispute to intercede, and the arbitrator ordered Burke to withdraw his LCB

appeal. Burke appealed the arbitration awards to the superior court. The

superior court confirmed the arbitrator’s awards, denied Burke’s motion to vacate

the awards, denied Burke’s motion for reconsideration, and granted attorney fees

 Citations and pin cites are based on the Westlaw online version of the cited material.
No. 80573-8-I/2

to Viceroy. Burke appealed to this court, and Viceroy moved to disqualify Burke

and Tok’s counsel. Viceroy also requests attorney fees on appeal.

       We deny Viceroy’s motion to disqualify because it would not be equitable

to disqualify counsel at this late stage. However, because Burke did not

establish that the arbitrator exceeded their authority, either by deciding issues

outside the scope of their jurisdiction or by committing an error of law, we affirm

the trial court’s orders confirming the arbitration awards and grant Viceroy

attorney fees on appeal.

                                       FACTS

       In July 2014, after winning a spot in Seattle’s lottery for the issuance of

cannabis retail licenses, Burke formed Tok to operate a cannabis retail store. In

2015, Burke began negotiations with Wysong to sell a 50 percent interest in Tok

contingent on the LCB approving Tok for a retail license. To acquire the interest

in Tok, Wysong formed Viceroy Group with Wysong as its sole member.

       Burke and Viceroy entered into two agreements: the Sale of LLC Interest

and Option Agreement (Sale Agreement) and the Tok Operating Agreement

(Operating Agreement). The Operating Agreement specified that Burke and

Viceroy would be 50-50 owners of Tok and that Burke and Wysong would be the

company’s original managers. It gave managers the power to “[o]btain[ ] and

maintain[ ] all necessary governmental permits and approvals,” “[r]etain[ ] and

coordinat[e] the services of all attorneys . . . as may be reasonably necessary or

appropriate,” and “[p]erform[ ] all other day-to-day business functions and

exercis[e] all other administrative rights” to carry out Tok’s business in

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No. 80573-8-I/3

accordance with the agreement. However, it also required both managers to

agree before retaining attorneys if the expected attorney fees were over $5,000

in a year and before doing “any act in contravention of” the Operating

Agreement.

       Both the Sale Agreement and the Operating Agreement were drafted by

Wysong’s attorney and contain identical arbitration clauses that provide:

       All disputes concerning this Agreement shall be settled by binding
       arbitration, before one arbitrator . . . The arbitrator is authorized to grant
       injunctive relief and/or specific performance in addition to monetary relief.
       The arbitrator hereby is instructed to interpret and enforce this Agreement
       in strict accordance with its terms, and in accordance with Washington
       law.

The agreements also provided that following the issuance of an award from the

arbitrator, the “unsuccessful party . . . shall pay to the successful party all costs

and expenses, including, without limitation, reasonable attorneys’ fees.”

       After entering into the agreements, Burke retained a lawyer who reviewed

them. The lawyer informed Burke that the Sale Agreement violated

Washington’s cannabis regulations,1 because it did not require Wysong to be

vetted by the LCB before becoming an owner of Tok. Burke was concerned that

violation of the regulations put Tok’s eligibility for a cannabis retail license in

jeopardy.

       In November 2015, the LCB issued a license to Tok, enabling the

company to open its retail store. However, the parties were still disputing the

validity of the agreements. In February 2016, Burke submitted a demand for

       1
       See WAC 314-55-120 (requiring board approval prior to ownership
changes).

                                               3
No. 80573-8-I/4

arbitration asking the arbitrator to rule on the validity and enforceability of the

agreements. Burke and Wysong stipulated that the arbitrator “need not rule on

the issue of whether or not Mr. Wysong can be vetted and approved by the LCB”

and that the LCB could “make that determination on its own” if the arbitrator

determined that the agreements were enforceable.

       After a three-day hearing in June 2017, the arbitrator concluded that the

agreements were valid and enforceable. The arbitrator noted the parties’

stipulation “that the vetting and approval of Wysong and Viceroy LLC is not part

of this arbitration and will be determined by what the [LCB] ultimately decides.”

The arbitrator determined that as prospective LLC members, Wysong and

Viceroy were effectively partners of Burke and Tok and “therefore owe[d] each

other fiduciary duties consistent with the terms of the LLC agreements once

implemented.” They ordered the parties to cooperate in good faith to submit an

application to the LCB to approve Wysong and Viceroy as owners and to

reasonably cooperate during the vetting process. Finally, they retained

jurisdiction “to the extent necessary to complete the [dispute’s] adjudication.”

       Burke submitted the change in ownership form in January 2018.

However, Burke had learned information during discovery for the arbitration

process that suggested Wysong had violated LCB regulations, and after the LCB

began its investigation of Wysong and Viceroy, he provided this information to

the LCB investigator. The information Burke provided led the investigator to

determine that Wysong had previously violated Washington’s cannabis

regulations by misrepresenting his personal criminal history, finances, and

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No. 80573-8-I/5

ownership interest in another company to LCB. Despite these determinations, on

November 27, 2018, the LCB approved the application, which allowed Viceroy

and Wysong to become co-owners of the cannabis business. Concerned by the

effect that Wysong’s misrepresentations could have on Tok’s license, Burke, on

behalf of Tok, appealed the LCB decision on December 12, 2018. On January

14, 2019, he submitted a request to the Office of Administrative Hearings (OAH)

for a hearing to pursue the LCB appeal.

       On January 17, 2019, unaware of Burke’s appeal, Viceroy paid Burke the

full amount owed and became a 50 percent owner of Tok. Burke’s appeal

proceeded and after several months, Viceroy discovered the appeal and moved

to intervene in the proceedings before the Office of Administrative Hearings.

Viceroy also asked the arbitrator to prohibit Tok from taking any further action in

the appeal without Wysong’s permission and to require Tok’s counsel to

withdraw, as well as to produce financial information about the counsel’s work on

the appeal.

       In awards dated July 26 and 30, 2019, the arbitrator mostly granted

Viceroy’s requests, ordering Burke to immediately withdraw Tok’s LCB appeal,

authorizing Wysong to do so if Burke did not, and declaring the LCB appeal to be

“voided.” The arbitrator also ordered that Burke provide Viceroy with billing and

payment records for legal services incurred during the appeal and make no

further payments for legal services for the appeal. The arbitrator denied

Viceroy’s request to disqualify Burke’s counsel, noting that if Viceroy wished to

pursue this relief, “further briefing [was] required to establish [the] Arbitrator’s

                                               5
No. 80573-8-I/6

authority to order such relief.”

       Viceroy filed a motion to clarify the July awards, which the arbitrator

granted on September 20, 2019. The arbitrator wrote a letter, which was “not

intended to amend the relief previously granted” and explained in more depth

their reasoning for the award. Burke filed a motion in superior court to vacate the

July 2019 awards and the September 2019 letter, which he characterized as a

modification of the award. Viceroy, meanwhile, filed a motion to confirm the

arbitration awards. The superior court confirmed the awards and denied Burke’s

motion. Burke filed a motion to reconsider, which the superior court denied.

Burke appeals.

                                       ANALYSIS

       On appeal, Burke contends that the trial court erred in confirming the

arbitrator’s awards and denying the motions to vacate and to reconsider. Viceroy

moves for the disqualification of Burke’s attorney, asks us to affirm the trial court,

and requests attorney fees. We deny Viceroy’s motion for disqualification

because Viceroy’s delay in pursuing this relief would make disqualification at this

stage inequitable. Furthermore, because Burke has not met his statutory burden

to justify vacating the arbitration awards, we affirm the trial court and award

Viceroy attorney fees on appeal.

                                   Motion To Disqualify

       Viceroy asks this court to disqualify Burke and Tok’s counsel, Nathan

Paine. Viceroy contends that Paine’s actions in representing both Burke and Tok

in this case and in the LCB appeal violate several of the Washington Rules of

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No. 80573-8-I/7

Professional Conduct.2 Specifically, Viceroy alleges that Paine’s representation

of Tok is hindered by his representation of Burke, preventing Paine from meeting

his duties to Viceroy as a 50 percent owner of Tok. While Viceroy raises

legitimate issues concerning Paine’s representation, because Viceroy did not

pursue the issue during arbitration and did not raise it below, we deny the motion.

       Under RAP 7.3, this court “has the authority to . . . perform all acts

necessary or appropriate to secure the fair and orderly review of a case.” This

can include inquiring into violations of the Rules of Professional Conduct. In re

Marriage of Wixom, 182 Wn. App. 881, 897-98, 332 P.3d 1063 (2014). However,

the court should “‘not allow a litigant to delay filing a motion to disqualify in order

to use the motion later as a tool to deprive his opponent of counsel of his choice

after substantial preparation of a case has been completed.’” First Small Bus.

Inv. Co. of Cal. v. Intercapital Corp. of Or., 108 Wn.2d 324, 337, 738 P.2d 263

(1987) (quoting Central Milk Producers Coop. v. Sentry Food Stores, Inc., 573

F.2d 988, 992 (8th Cir. 1978)). Accordingly, where the parties have had “reason

to know of the existence of the basis for the potential disqualification for several

years before they filed their disqualification motion,” the court may properly

conclude that they waived that issue. Small Bus., 108 Wn.2d at 337.

       Here, Paine’s advocacy is directly at odds with Viceroy’s interests and

seems to create at least a significant risk that his representation of Tok would be

materially limited by his responsibilities to Burke, which creates a concurrent

       2Viceroy contends that Paine’s conduct implicates RPCs 2.1, 1.7, 1.13(g),
1.15A, and 1.8(f).

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No. 80573-8-I/8

conflict of interest under RPC 1.7(a)(2). Although this is concerning, we decline

to disqualify Paine at this point because doing so would not “secure the fair and

orderly review” of this case. RAP 7.3.

       Since at least February 2016, Paine has represented Burke and Tok in the

arbitration against Viceroy and Wysong. Viceroy knew this and has known since

at least March 2019 that Paine was representing Tok in the LCB appeal. Viceroy

asked the arbitrator to disqualify Paine, and the arbitrator denied the request

without prejudice, inviting Viceroy to provide further briefing if it wished to pursue

the issue. Viceroy did not provide further briefing and also did not raise the issue

before the superior court. Furthermore, our commissioner granted a stay of the

LCB appeal against Viceroy’s wishes, noting their expectation that this case

could be resolved expeditiously, therefore minimizing the time period of the stay.

Granting Viceroy’s motion now would prevent the case from being resolved

expeditiously. Under these circumstances, we exercise our discretion to deny

the motion. Small Bus., 108 Wn.2d at 337 (“A failure to act promptly in filing a

motion for disqualification may warrant denial of a motion.”).

       Viceroy disagrees and contends that it raises this issue now because it

learned new facts after the superior court’s confirmation, including that counsel

for Tok was purportedly holding a large amount of Tok’s funds in trust. Tok

heavily disputes these facts and provides declarations to show their falsity.

Given that the appellate court is not ordinarily a trier of fact,3 we decline to

address this issue and decline to grant Viceroy’s motion.

       3   See, e.g., RAP 9.11 (limiting admission of new evidence on review).

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No. 80573-8-I/9

                           Review of Arbitrator’s Awards

       Burke contends that the arbitrator exceeded their power by deciding

issues that the parties had not agreed to arbitrate and by erring in their

application of the law, and that the awards should be vacated under

RCW 7.04A.230(1)(d) and (e). Accordingly, Burke asks us to reverse the

superior court’s orders confirming the awards and awarding attorney fees,

denying the motion to vacate, and denying the motion to reconsider. Because a

court must confirm an award if it denies a motion to vacate, we need only

address whether the motion to vacate was properly denied, and if so, we may

conclude that the court was correct to confirm the award. RCW 7.04A.230(4) (“If

a motion to vacate an award is denied and a motion to modify or correct the

award is not pending, the court shall confirm the award.”). Because Burke did

not meet his burden to show that the arbitrator exceeded the scope of their

authority, we disagree with Burke and affirm the superior court.

                                Standard of Review

       Our courts encourage arbitration as a simpler, faster, and less expensive

alternative to litigation. Mainline Rock & Ballast, Inc. v. Barnes, Inc., 8 Wn. App.

2d 594, 608, 439 P.3d 662, review denied, 193 Wn.2d 1033 (2019). To prevent

parties from frustrating this goal by relitigating arbitration awards, we afford

significant deference to arbitrators. Boyd v. Davis, 127 Wn.2d 256, 262-63, 897

P.2d 1239 (1995). We will vacate or modify an award only if it violates one of the

statutory grounds listed in RCW 7.04A.230(1)(a)-(f). None of these grounds

involve evaluating the evidence underlying the case. See RCW 7.04A.230(1)(a)-

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No. 80573-8-I/10

(f). Accordingly, we do not evaluate the merits of the case or reexamine the

evidence. Broom v. Morgan Stanley DW Inc., 169 Wn.2d 231, 239, 236 P.3d

182 (2010).

       When considering whether to vacate an award because the “arbitrator

exceeded the arbitrator’s powers,” under RCW 7.04A.230(1)(d), we consider

whether the arbitrator decided a nonarbitrable issue or whether there is an error

of law on the face of the award. Agnew v. Lacey Co-Ply, 33 Wn. App. 283, 288,

654 P.2d 712 (1982); Broom, 169 Wn.2d at 239-40. “The facial legal error

standard is a very narrow ground for vacating an arbitral award, and courts may

not search the arbitral proceedings for any legal error.” Mainline, 8 Wn. App. 2d

at 609. The party seeking to vacate the award bears the burden of establishing

the error and establishing prejudice resulting from the error. Mainline, 8 Wn.

App. 2d at 609; Expert Drywall, Inc. v. Ellis-Don Const., Inc., 86 Wn. App. 884,

888, 939 P.2d 1258 (1997).

                           Review of July 2019 Awards

       Burke contends that the arbitrator’s July 2019 awards—ordering Burke to

withdraw his LCB appeal, to disclose financial information to Viceroy, and to

discontinue paying counsel with Tok funds—should be vacated because they

exceed the arbitrator’s authority and decide issues outside of the scope of the

parties’ agreements. We address Burke’s contentions in turn, applying the

deferential standard described above.

       Burke first contends that the arbitrator exceeded the limits on their

authority under both RCW 7.04A.230(1)(d) and (e) by failing to strictly interpret

                                            10
No. 80573-8-I/11

and enforce the terms of the agreements. To address this issue, we “look to the

contract to identify the issues the parties agreed to arbitrate and, therefore, the

scope of the arbitrator’s authority.” Morrell v. Webush Morgan Sec., Inc., 143

Wn. App. 473, 485 n.4, 178 P.3d 387 (2008).

       The arbitration clause in this case provided that “[a]ll disputes concerning

this Agreement” would be settled by an arbitrator, who would “interpret and

enforce this Agreement in strict accordance with its terms, and in accordance

with Washington law.”4 This dispute fell within the scope of the arbitration clause,

because Burke’s appeal of the LCB decision could potentially undermine the

validity of the agreements between the parties, and Viceroy’s position was that

the LCB appeal violated these agreements. The arbitrator also noted their

“tentative conclusion” that “Burke’s secret pursuit of the appeal was

undertaken . . . to thwart the outcome of the arbitration,” i.e., the arbitrator’s

conclusion that the agreements were enforceable. Finally, the arbitrator was

subject to the American Arbitration Association (AAA) Commercial Arbitration

Rules, which provide that “[t]he arbitrator shall have the power to rule on [their]

own jurisdiction, including any objections with respect to the existence, scope, or

validity of the arbitration agreement or to the arbitrability of any claim or

counterclaim.”5 Accordingly, we conclude that the arbitrator had authority to

address the subject matter of this dispute.

       4  (Emphasis added.)
       5  Am. Arbitration Ass’n, Commercial Arbitration Rules and Mediation
Procedures R-7(a) at 13 (Oct. 1, 2013),
https://adr.org/sites/default/files/Commercial%20Rules.pdf
[https://perma.cc/G5RH-BXRY].

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No. 80573-8-I/12

       Relatedly, Burke contends that the arbitrator exceeded their authority by

deciding an issue that the parties had already stipulated to and which was

therefore “beyond the scope of his charge.” However, the parties stipulated only

that the arbitrator “need not rule on the issue of whether or not Mr. Wysong can

be vetted and approved by the LCB. The parties have agreed that the LCB can

make that determination on its own.”6 In accordance with this stipulation, and

contrary to Burke’s contention, the arbitrator noted that the LCB had already

made their determination to approve Wysong. The arbitrator did not rule on

whether Wysong could be approved by the LCB. Instead, the arbitrator

addressed whether Burke could appeal the decision on behalf of Tok, without

informing Wysong, when Viceroy was already a member of Tok and Wysong was

a manager. This limited scope of the arbitrator’s decision is evidenced by the

fact that the arbitrator did not make any determinations on behalf of the LCB and

instead only limited Burke’s actions with respect to the appeal. Accordingly, we

conclude that the arbitrator did not decide an issue already addressed by the

parties’ stipulation and therefore did not exceed their authority in this respect.

       Next, Burke contends the arbitrator exceeded their authority by

reasserting jurisdiction over a new dispute after their jurisdiction had been

extinguished. Burke cites the common law doctrine of functus officio, which

       6  Burke relies on the arbitrator’s characterization of the stipulation, which
stated that “the vetting and approval of Wysong and Viceroy LLC is not part of
this arbitration and will be determined by what the [LCB] ultimately decides.”
However, even if this were the language of the stipulation, which it is not, the
arbitrator’s decision still focuses on Burke’s actions in the appeal in relation to his
contractual duties and does not direct the LCB to reach a certain outcome.

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No. 80573-8-I/13

provides that “‘once an arbitrator has made and published a final award[,] his

authority is exhausted and he . . . can do nothing more in regard to the subject

matter of the arbitration.’” Int’l Bhd. of Teamsters, Local 631 v. Silver State

Disposal Serv., Inc., 109 F.3d 1409, 1411 (9th Cir. 1997) (quoting McClatchy

Newspapers v. Ctr. Valley Typographical Union No. 46, 686 F.2d 731, 734 (9th

Cir. 1982)). Similarly, the AAA rules provide that “[t]he arbitrator is not

empowered to redetermine the merits of any claim already decided.”7

       Here, however, the arbitrator did not redetermine the merits of a final

award. Their early awards finding the agreements to be enforceable noted that

the arbitrator would “retain[ ] jurisdiction to the extent necessary to complete the

adjudication” of the dispute for the purposes of ensuring Viceroy received the

benefit of its bargain, specifically in the context of profit distributions. In their

award on June 24, 2019, the arbitrator noted that “[r]espondents’ petition for

attorneys’ fees and costs shall be deferred until the case is fully resolved.”

Burke’s contention that this award fully resolved the issues before the arbitrator,

except for attorney fees, is inconsistent with the arbitrator’s statement.

Moreover, even if the arbitrator had fully resolved the issues before them,

Viceroy would still have the right under the arbitration clause to arbitrate its claim

that Burke’s LCB appeal was a new violation of the agreements. Accordingly, we

conclude that the arbitrator’s decision did not redetermine the merits of a final

award and therefore did not exceed their authority.

       Burke next contends that the arbitrator exceeded their authority by

       7   Commercial Arbitration Rules and Mediation Procedures R-50, at 28.

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No. 80573-8-I/14

“voiding” the OAH appeal, thereby interfering with the authority of an independent

tribunal. He contends that an act cannot be voided merely because it breaches

an agreement. However, the arbitrator’s award does not interfere with the OAH’s

authority. The award states, “Burke’s actions on behalf of Tok to appeal the

[LCB] approval of Viceroy/Wysong . . . are hereby voided. Burke shall direct the

[LCB] that Tok’s appeal is withdrawn and if he fails to do so and verify doing so

immediately upon receipt of this award and order, then Viceroy/Wysong is

authorized” to do so.8 The language of the award illustrates that the arbitrator

was not in fact directing the OAH to do anything. Instead, the award only

affected Burke’s actions. In context, it does not appear that the term “voided” is

intended to have any legal meaning outside of the arbitrator’s order for Burke to

withdraw the appeal. The parties’ agreement empowered the arbitrator to “grant

injunctive relief and/or specific performance in addition to monetary relief.”

Despite the arbitrator’s characterization that they were “voiding” the appeal, they

merely granted the relief permitted by the arbitration clause. Accordingly, the

order did not exceed the arbitrator’s power.

       Burke disagrees and contends that the termination of the appeal “presents

an unacceptable risk of cancellation of Tok’s cannabis license.” While this

contention is relevant to the merits of the arbitrator’s decision, it does not affect

the validity of the arbitrator’s decision, which is the question before us.

Accordingly, we conclude that the arbitrator was acting within the scope of their

authority in ordering Burke to withdraw the appeal.

       8   (Capitalization omitted.)

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No. 80573-8-I/15

       Burke next contends that the arbitrator made several errors of law,

apparent on the face of the awards, and that we must therefore vacate the

awards. We disagree and discuss each assigned error in turn.

       Burke points to the arbitrator’s passing reference to Burke’s “fiduciary

obligation to deal openly and honestly with his co-member/manager” as a facial

error of law on the basis that Burke had no such fiduciary duty. Under

RCW 25.15.038(1)(a), LLC managers only have the fiduciary duties of care and

loyalty with respect to the company and its members. The duty of care requires

“refraining from engaging in grossly negligent or reckless conduct, intentional

misconduct, or a knowing violation of law in the conduct and winding up of the

limited liability company’s activities.” RCW 25.15.038(3)(a). Furthermore,

RCW 25.15.038(6) provides that “the . . . manager’s duties may be modified,

expanded, restricted, or eliminated by the provisions of a limited liability company

agreement.”

       Here, there is no facial error of law because there are multiple possible

legitimate bases for the arbitrator’s statement. The arbitrator may have

concluded that Burke had violated his duty of care by not being open and honest

about the appeal and therefore failing to comply with a term of the Operating

Agreement requiring collaboration between the managers.9 Alternatively, the

arbitrator may have concluded that the Operating Agreement expanded Burke’s

fiduciary duties. Because the facial legal error standard is a “very narrow ground

       9
      For instance, one provision of the Operating Agreement requires the
managers to agree before spending more than $5,000 on legal fees.

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No. 80573-8-I/16

for vacating an arbitral order,” and we “may not search the arbitral proceedings”

to determine whether there is a legal error, we will not reverse on these grounds

where there are tenable grounds for the arbitrator’s statement. Mainline, 8 Wn.

App. 2d at 609. Accordingly, the arbitrator’s passing reference to fiduciary duties

does not establish that they misapplied the law.

       Burke next contends that the arbitrator erred by applying the ultra vires

doctrine to the dispute, despite common law actions not applying to LLCs.10

However, in context it appears that the arbitrator did not mean to apply ultra vires

as a legal doctrine. Ultra vires is generally invoked by courts to void contracts,

commonly in the context of government contracts. See Adamson v. Port of

Bellingham, 192 Wn. App. 921, 926, 374 P.3d 170 (2016) (“When public officials

enter into contracts that are outside the scope of their authority, the contracts are

void and unenforceable under the ultra vires doctrine.”). Here, as discussed

above, the arbitrator did not actually void anything. Instead, it appears most

likely that the arbitrator was simply using the dictionary definition of ultra vires:

“beyond the scope or in excess of legal power or authority.” W EBSTER’S THIRD

NEW INTERNATIONAL DICTIONARY 2480 (2002). The arbitrator’s subsequent

explanation of the award supports this interpretation: “[b]y stating that Burke’s

actions were ‘ultra-vires’ the intention was to indicate that the continuation of the

[LCB] appeal was not in accordance with the TOK LLC operating agreement.”

Accordingly, we conclude that Burke did not meet his burden to show that this

       10See Chadwick Farms Owners Ass’n v. FHC, LLC, 166 Wn.2d 178, 206
n.12, 207 P.3d 1251 (2009) (“Because an LLC is a creature of statute, accrued
actions arising with respect to an LLC cannot spring from the common law.”).

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No. 80573-8-I/17

was a facial error of law.

       Finally, we also reject Burke’s claim that the arbitrator erred in referring to

Burke’s duty of good faith and fair dealing. Specifically, Burke claims that the

arbitrator treated this duty as a “free-floating” duty, rather than connecting it to a

specific contractual term as required by Washington law. “There is in every

contract an implied duty of good faith and fair dealing. This duty obligates the

parties to cooperate with each other so that each may obtain the full benefit of

performance.” Badgett v. Sec. State Bank, 116 Wn.2d 563, 569, 807 P.2d 356

(1991). Burke is correct that the duty exists in relation to the terms of the

contract, that is, “it requires only that the parties perform in good faith the

obligations imposed by their agreement.” Badgett, 116 Wn.2d at 569. Here, the

arbitrator concluded that Burke likely pursued the LCB appeal in bad faith.

However, the arbitrator did not claim that the duty of good faith was free floating,

and we need not look to the agreements to speculate which specific terms the

duty was connected to. Because review for facial errors is limited to the face of

the award, and it is not a facial error to refer to a legitimate and existing duty,

Burke again failed to meet his burden to establish error.11

       Because Burke failed to meet his burden to show the arbitrator exceeded

their authority, either by deciding issues outside the scope of the parties’

       11 However, there are multiple provisions that might support the arbitrator’s
conclusion. These range from general requirements to not take acts in
contravention of the agreement, which provides that Viceroy and Burke are co-
owners, to specific requirements, such as “[m]anagers will not employ or permit
another to employ such funds or assets in any manner except for the exclusive
benefit of the Company.”

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No. 80573-8-I/18

agreement, violating the arbitral rules, or committing a facial error of law, we

affirm the trial court’s confirmation of the arbitrator’s awards.

               Review of September 2019 Letter Clarifying July Awards

        Burke also contends that the arbitrator’s September 2019 letter granting

Viceroy’s motion to clarify should be vacated and that the trial court erred by

denying Burke’s motion to reconsider on this basis. We disagree and affirm the

trial court.

        RCW 7.04A.200(1)(c) provides that a party may move for the arbitrator to

modify an award in order to clarify it. This motion must be made within 20 days

after the party receives notice of the award. RCW 7.04A.200(2). Such a

modification is subject to the same grounds for vacating as other arbitration

awards. RCW 7.04A.200(5).

        In this case, Viceroy’s motion for clarification came more than 20 days

after the entry of the arbitrator’s July awards, and so we agree that it would be

error for the arbitrator to modify their awards. However, the arbitrator specified

that the letter was “in response to the pending Motion to Clarify and is not

intended to amend the relief previously granted.” The mere fact that

RCW 7.04A.200 allows an arbitrator to modify an award in order to clarify it does

not mean that every clarification of an award is a modification. Indeed, the

arbitrator’s letter discussed the reasoning behind the prior awards but did not

change any provisions of the prior awards. Because the letter did not modify the

awards, we conclude that the arbitrator’s September letter was not a modification

and therefore not an award that must be vacated or confirmed. Accordingly, we

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No. 80573-8-I/19

affirm the superior court’s denial of the motion to reconsider.

                             Attorney Fees on Appeal

       As a final matter, Viceroy requests attorney fees on appeal. Because the

agreements mandate an award of attorney fees, we grant its request.

       Under RCW 4.84.330, where a contract provides that a party seeking to

enforce the provisions of the contract is entitled to reasonable attorney fees, the

court must award these fees. Singleton v. Frost, 108 Wn.2d 723, 729, 742 P.2d

1224 (1987) (“There is no authority to support an interpretation of RCW 4.84.330

other than as mandating an award of reasonable attorney’s fees to the prevailing

party where a contract so provides.”).

       Here, both the Sale Agreement and the Operating Agreement provide that

the “unsuccessful party to any arbitration proceeding or to any court action that is

permitted by this Agreement shall pay to the successful party all costs and

expenses, including, without limitation, reasonable attorneys’ fees.” Because

Viceroy and Wysong are the prevailing parties, they are entitled to attorney fees

on appeal.

       For the foregoing reasons, we deny Viceroy’s motion to disqualify Burke’s

attorney but affirm the trial court’s orders and grant reasonable attorney fees on

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No. 80573-8-I/20

appeal to Viceroy.

WE CONCUR:

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