Court Opinion

ID: 4152445
Source: CourtListenerOpinion
Date Created: 2017-03-14 22:18:03.699909+00
Date Added: 2024-06-11T14:30:10.443305
License: Public Domain

Filed
                                                                                          Washington State
                                                                                          Court of Appeals
                                                                                           Division Two

                                                                                           March 14, 2017

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                          DIVISION II
 MARVIN OLSEN and YONG IM OLSEN,                                      No. 48654-7-II
 husband and wife,

                        Appellants,

        v.                                                     UNPUBLISHED OPINION

 H. GARY WALLIS and MONIQUE A.
 WALLIS, individually and the marital
 community comprised thereof,

                        Respondents.

       MAXA, A.C.J. – Marvin Olsen and Yong Im Olsen (collectively Olsen) appeal the

superior court’s confirmation of an arbitration award and entry of judgment following a

stipulated arbitration of a property dispute between Olsen and Gary Wallis and Monique Wallis

(collectively Wallis). Olsen contests the partitioning of the parties’ jointly owned property and

the division of rental revenue from the property. Olsen argues that the superior court erred in

confirming the arbitration award because the arbitrator’s ruling was erroneous, reflected the

arbitrator’s partiality, and was arbitrary and capricious in violation of substantive due process.

       We hold that (1) the superior court did not err in following the statutory mandate to enter

an order confirming the arbitration award and entering final judgment on that award, (2) there
No. 48654-7-II

was no basis for vacating the arbitration award because there was no legal error that appeared on

the face of the award and there was no evidence that the arbitrator was partial, and (3) Olsen has

not shown an arbitrary and capricious action that deprived him of a constitutional right.

Accordingly, we affirm the superior court’s order confirming the arbitration award and the

judgment on that award.

                                              FACTS

       Olsen and Wallis formed a law partnership sometime before 1978. In 1978, Olsen

contracted with Wallis to sell him a one-half interest in both an office building that functioned as

their law office and a separate residential rental property. Wallis fulfilled his obligation under

the contract in 1992.

       Sometime before 1992, Olsen obtained a private loan for $100,000 in exchange for a

mortgage on the office building. The parties jointly made mortgage payments until 1999.

       In 1999, Olsen began having issues with the bar association that culminated in his

disbarment in 2000. At that point, Olsen vacated the office building, stopped making payments

on the loan, and stopped paying expenses associated with the properties. Wallis continued

making the loan payments and paid off the loan in 2003. Wallis also paid all expenses on the

properties.

       Olsen filed this lawsuit in December 2012, requesting the reasonable rental value of his

share of the office building, half of the rent received from the rental property, judgment for half

of the properties’ value by way of partition, prejudgment interest on amounts due, and reasonable

attorney fees. In a counterclaim, Wallis asserted that Olsen had abandoned the properties and

that Wallis had adversely possessed the properties.

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No. 48654-7-II

       In October 2014, Olsen and Wallis stipulated that “[a]ll aspects of this matter shall be

submitted to binding arbitration, subject to appeal only for fraud or violation of constitutionally

protected issues of denial of due process.” Clerk’s Papers at 13. The arbitration took place on

August 25, 2015.

       The arbitrator issued an arbitration award dated September 8, making the following

rulings:

       1. The arbitrator awarded Wallis title to the office building effective the date of the

arbitration decision.

       2. Olsen and Wallis remained tenants in common of the office building until Olsen was

ousted in December 2012, and therefore Olsen was not entitled to reasonable rental value until

that time. The arbitrator awarded Olsen $500 per month in rent from December 2012 through

September 2015.

       3. Olsen and Wallis remained tenants in common of the rental property until Olsen was

ousted in December 2012, and therefore Olsen was not entitled to receive a share of rental

payments until that time. The arbitrator awarded Olsen $425 per month in rent from December

2012 through September 2015, less expenses incurred during that time.

       4. The arbitrator ruled that Olsen and Wallis would continue to be tenants in common of

the rental property, sharing equally in rents and expenses, and would share equally in any

proceeds if the property was sold.

       5. The arbitrator did not award attorney fees to either party.

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No. 48654-7-II

        Olsen filed a motion for modification/clarification of the arbitration award with the

arbitrator, making various arguments. In response, the arbitrator issued an order clarifying

certain issues.

        Wallis filed a motion in superior court to confirm the arbitration award and to enter

judgment. Olsen objected to confirming the arbitration award. But Olsen did not file a motion

to modify or vacate the award.

        The superior court entered an order confirming the arbitration award. The court also

entered a final judgment quieting title to the office building property in favor of Wallis, awarding

Olsen judgment against Wallis for $29,107.70, and addressing other matters. Olsen appeals the

order confirming the arbitration award and the judgment.

                                           ANALYSIS

A.      WASHINGTON ARBITRATION ACT

        Washington’s arbitration act, chapter 7.04A RCW, governs the arbitration process and

enforcement of arbitration awards.

        Once an arbitration is complete, RCW 7.04A.190 requires an arbitrator to make a record

of an award and give notice of that award to each party to the arbitration proceeding. Following

an award, RCW 7.04A.220 allows either party to modify, correct, vacate, or confirm the award.

Either party may file a motion under RCW 7.04A.200 for the arbitrator to modify or correct the

award. Either party also may file a motion with the superior court within 90 days to vacate the

award under RCW 7.04A.230 or to modify or correct the award under RCW 7.04A.240. Those

statues provide specific grounds for modifying, correcting, or vacating arbitration awards.

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No. 48654-7-II

       Under RCW 7.04A.220, a party may file a motion with the superior court for an order

confirming the award. RCW 7.04A.220 provides that the court shall issue a confirming order

unless the award is modified or corrected under RCW 7.04A.200 or .240, or vacated under RCW

7.04A.230. Further, once the superior court enters an order confirming the arbitration award,

RCW 7.04A.250(1) provides that the court shall enter a judgment on the award.

       RCW 7.04A.280(1) states that parties may appeal orders confirming, modifying,

correcting, or vacating an arbitration award and a final judgment on the award. The appellate

court’s review is limited to the same standards applicable in the court that confirmed, vacated,

modified, or corrected the award. Salewski v. Pilchuck Veterinary Hosp., Inc., 189 Wash. App.
898, 903, 359 P.3d 884 (2015), review denied, 185 Wash. 2d 1006 (2016).

B.     APPEAL OF CONFIRMATION ORDER AND JUDGMENT

       Olsen assigns error to the superior court’s order confirming the arbitration award and its

entry of a final judgment. Because Olsen did not file a motion to modify, correct, or vacate the

arbitration award in the superior court, we hold that the superior court did not err in confirming

the award or entering judgment.

       RCW 7.04A.220 states that the superior court “shall issue” an order confirming an

arbitration award unless the court modifies, corrects, or vacates the award. (Emphasis added.)

The term “shall” indicates a mandatory duty. Kenneth W. Brooks Trust A. v. Pac. Media, LLC,

111 Wash. App. 393, 398, 44 P.3d 938 (2002). Under this plain statutory language, the superior

court must confirm the arbitration award unless it modifies, corrects, or vacates the award. Id. at

398-99. In addition, RCW 7.04A.230(4) provides that the superior court “shall confirm the

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No. 48654-7-II

award” if a motion to vacate the arbitration award is denied and no motion to modify or correct

the award is pending. (Emphasis added.)

       Similarly, RCW 7.04A.250(1) states that the superior court “shall enter a judgment in

conformity” with the order confirming the arbitration award. (Emphasis added.) This means

that if the superior court confirms the arbitration award, it must enter a judgment consistent with

that award. Kenneth W. Brooks Trust A., 111 Wash. App. at 399. “If the court does not modify,

vacate, or correct the award, the court exercises a mere ministerial duty to reduce the award to

judgment.” Price v. Farmers Ins. Co. of Wash., 133 Wash. 2d 490, 497, 946 P.2d 388 (1997).

       The language of RCW 7.04A.220 and RCW 7.04A.250(1) makes it clear that the superior

court generally has no discretion regarding confirmation of an arbitration award and entry of

judgment if a party does not file a motion to modify, correct, or vacate the award.1 Here, Olsen

objected to Wallis’s motion to confirm the arbitration award, but he did not file a motion to

modify, correct, or vacate the award.

       Our review of an order confirming an arbitration award is limited to the same standards

applicable to the confirming court. Salewski, 189 Wash. App. at 903. Therefore, we hold that the

superior court did not err in following the statutory mandate and entering an order confirming the

arbitration award and entering final judgment on that award.

1
  The only other basis for declining to confirm an arbitration award identified in the case law is if
the superior court lacks jurisdiction. Kenneth W. Brooks Trust A., 111 Wash. App. at 398-99. For
example, a superior court has no jurisdiction to confirm a void arbitration award. Davidson v.
Hensen, 85 Wash. App. 187, 192 n.3, 933 P.2d 1050 (1997), aff’d, 135 Wash. 2d 112, 954 P.2d 1327
(1998). But, Olsen does not argue that the superior court had no jurisdiction to confirm the
arbitration award.

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No. 48654-7-II

C.     VACATION OF ARBITRATION AWARD

       Olsen apparently argues that the superior court should have vacated the arbitration award

even though he did not move for vacation. We hold that there is no statutory basis for vacation.

       1.      Statutory Grounds for Vacation

       RCW 7.04A.230(1) states that the superior court shall vacate the arbitration award if one

of six grounds are present: (a) the award was procured through corruption, fraud, or other undue

means; (b) the arbitrator showed evident partiality or engaged in corruption or misconduct; (c)

the arbitrator refused to postpone the hearing if there was sufficient cause, refused to consider

material evidence, or otherwise conducted the hearing in violation of procedures set forth in

RCW 7.04A.150; (d) the arbitrator exceeded his or her powers; (e) there was no agreement to

arbitrate; or (f) the arbitration was conducted without proper notice.

       Our review is limited to determining whether one of the statutory grounds for vacation

exists. Salewski, 189 Wash. App. at 903-04. And the party seeking to vacate the award has the

burden of showing that a statutory ground applies. Id. at 904.

       2.      Merits of Arbitration Award

       Olsen argues that the superior court should not have confirmed the arbitration award

because the arbitrator committed several substantive errors: (1) partitioning the office building

property by transferring sole ownership to Wallis, (2) leaving the parties as co-owners of the

rental property, (3) denying him a share of rent from the rental property from 2000 to 2012, (4)

denying him prejudgment interest on past-due rent, and (5) not awarding him attorney fees.

       Public policy in Washington strongly favors the finality of arbitration awards. S&S

Constr., Inc. v. ADC Props., LLC, 151 Wash. App. 247, 254, 211 P.3d 415 (2009). Superior courts

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No. 48654-7-II

considering a motion to modify, correct, or vacate an award and appellate courts on appeal

generally do not address the merits of arbitration awards. Davidson v. Hensen, 135 Wash. 2d 112,

119, 954 P.2d 1327 (1998). When reviewing an arbitration award, superior courts and appellate

courts do not conduct a trial de novo, do not consider the merits of the case, and do not

reexamine the evidence. Broom v. Morgan Stanley DW, Inc., 169 Wash. 2d 231, 239, 236 P.3d 182

(2010).

          One statutory ground that potentially allows an inquiry into the merits of an arbitration

award is stated in RCW 7.04A.230(1)(d), which allows an award to be vacated where an

arbitrator has “exceeded the arbitrator’s powers.” Under this provision, an arbitration award can

be vacated if a legal error appears on the face of the award. Broom, 169 Wash. 2d at 240.2

          This facial legal error standard is a “very narrow” means of vacating an award. Salewski,
189 Wash. App. at 904. The court in Salewski explained the scope of the facial legal error

standard:

          [The facial legal error standard] does not extend to a potential legal error that
          depends on the consideration of the specific evidence offered or to an indirect
          sufficiency of the evidence challenge. Courts are not permitted to conduct a trial
          de novo when reviewing the award, they do not look to the merits of the case, and
          they do not reexamine evidence. The error should be recognizable from the
          language of the award, as, for instance, where the arbitrator identifies a portion of
          the award as punitive damages in a jurisdiction that does not allow punitive
          damages. Where a final award sets forth the arbitrator’s reasoning along with the
          actual dollar amounts awarded, any issue of law evident in the reasoning may also
          be considered as part of the face of the award.

Id. (quotation marks and citations omitted); see also Broom, 169 Wash. 2d at 237-40.

2
    Broom involved a previous version this statutory ground, former RCW 7.04.160(4).

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No. 48654-7-II

        Here, Olsen essentially is asking us to address the merits of the arbitration award. He

argues at length that the award was incorrect, unfair, and arbitrary and capricious. But he does

not show that the award contained legal errors on its face.

        Further, the arbitrator’s memorandum decision, award, and decision modifying the award

did not include any legal reasoning regarding his award of the office building property to Wallis,

leaving Olsen and Wallis as co-owners of the rental property, and denying Olsen an award of

prejudgment interest and attorney fees. The arbitrator did cite cases to support his conclusion

that a tenant in common is not entitled to rent from the other tenant in common unless ousted

from the property, but Olsen does not challenge that legal determination.

        The arbitration award here was based on the specific facts of this case. On the basis of

those facts, the arbitrator devised what he considered to be an equitable solution to the parties’

dispute. The arbitration statutes seek to avoid judicial intervention in a fact-based arbitration

award. See Westmark Props., Inc. v. McGuire, 53 Wash. App. 400, 402, 766 P.2d 1146 (1989)

(stating that the purpose of arbitration is to avoid the courts, “not to serve as a prelude to

litigation”).

        We hold that Olsen has failed to meet his burden of showing that the arbitration award

contained a legal error on its face. Accordingly, we hold that Olsen is not entitled to vacation of

the award under RCW 7.04A.230(1)(d) based on the arbitrator exceeding his authority.

        3.      Impartiality of Arbitrator

        Olsen appears to argue that the arbitrator was not impartial. He states that that “the

arbitrator was facially, grossly and fundamentally unfair,” and that the arbitrator had “sympathy

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No. 48654-7-II

for Mr. Wallis or some form of anger toward Mr. Olsen.” Br. of Appellant at 14. To the extent

that Olsen is making this argument, we reject it.

       Under RCW 7.04A.230(1)(b)(i), an arbitration award may be vacated if there has been

“[e]vident partiality by an arbitrator appointed as a neutral.” Courts have interpreted the

prohibition to require arbitrators to disclose relationships or circumstances that bear on the

arbitrator’s impartiality. S&S Constr., 151 Wash. App. at 258. We must ask whether the

arbitrator’s relationship to the parties “creates a reasonable inference of the presence of bias or

the absence of impartiality.” Id. If so, the complaining party must show that the nondisclosure

caused prejudice. Id.

       Here, Olsen does not argue that the arbitrator had an improper relationship with Wallis.

Instead, he essentially argues that we vacate the arbitration award because it is substantively

unfair. But as noted above, we generally do not review an arbitration award for its substance.

Broom, 169 Wash. 2d at 239. We reject any claim that the nature of the award itself demonstrated

that the arbitrator was partial. Because Olsen does not point to any other basis for claiming

improper partiality, we hold that Olsen is not entitled to vacation of the award under RCW

7.04A.230(1)(b)(i).

D.     CONSTITUTIONAL DUE PROCESS VIOLATION

       To the extent that Olsen argues that that arbitration award was arbitrary and capricious

and therefore violated his due process rights under the Washington Constitution, we disagree.

       The fact that an arbitration award is arbitrary and capricious is not one of the grounds for

vacating the award under RCW 7.04A.230(1). This argument again seems to be an attempt to

address the merits of the arbitration award, which as noted above generally is not allowed on

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No. 48654-7-II

appeal. Davidson, 135 Wash. 2d at 119. Because our review is limited to determining whether one

of the statutory grounds for vacation exist, Salewski, 189 Wash. App. at 903-04, we reject Olsen’s

due process argument on this basis.

       The parties’ stipulation allowed for an appeal on the basis of a denial of due process. But

even if this provision could vary the provisions of the arbitration act,3 Olsen has not

demonstrated how the arbitrator’s award violated due process. Olsen’s argument that the award

is arbitrary and capricious is stated in conclusory terms. And the one case Olsen cites, Sintra,

Inc. v. City of Seattle, concerned a 42 U.S.C. § 1983 claim for money damages against the City

of Seattle and is not on point. 131 Wash. 2d 640, 645, 935 P.2d 555 (1997). Accordingly, we

reject Olsen’s due process claim.

E.     ATTORNEY FEES ON APPEAL

       Olsen includes in his issues statement a question about whether reasonable attorney fees

should be awarded on appeal. Under RAP 18.1, a party may recover attorney fees if allowed

under the applicable law. To do so, the party must devote a section of its opening brief to

request attorney fees. RAP 18.1(b). RCW 7.04A.250 allows a prevailing party to request to

receive attorney fees and other litigation expenses. However, neither party dedicated a section of

their briefs or made any argument regarding attorney fees on appeal. We therefore decline to

award attorney fees to either party.

3
  Generally, once parties stipulate to arbitration they are subject to the provisions of the
arbitration act. RCW 7.04A.030. In addition, RCW 7.04A.040 prohibits parties to an arbitration
from waiving or varying the confirmation requirement or its exceptions set out in RCW
7.04A.220. See also Godfrey v. Hartford Cas. Ins. Co., 142 Wash. 2d 885, 896, 16 P.3d 617 (2001)
(“We have clearly indicated any efforts to alter the fundamental provisions of the [arbitration act]
by agreement are inoperative.”).

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No. 48654-7-II

                                         CONCLUSION

       We affirm the superior court’s confirmation of the arbitration award and the judgment on

that award.

       A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so

ordered.

                                                     MAXA, A.C.J.

 We concur:

LEE, J.

MELNICK, J.

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