Court Opinion

ID: 1043421
Source: CourtListenerOpinion
Date Created: 2013-10-07 20:40:57.451126+00
Date Added: 2024-06-11T09:47:51.983124
License: Public Domain

FILcD
                                                         COURT OF APPEALS OiV
                                                          5TAT£ OF WASHINGTON

                                                         20I3OCT -7 m 9= U7

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

SUNNY GAUTAM and SUMAN
GAUTAM, husband and wife and their            No. 69406-5-1
marital community,
                                              DIVISION ONE
                     Respondents,

             v.

DONALD HICKS and JANE DOE                     PUBLISHED OPINION
HICKS, husband and wife and their
marital community,                            FILED: October 7, 2013

                     Appellants.
                                        J

       Becker, J. — A party who appeals the award in a mandatory arbitration

and fails to improve his position on trial de novo must pay the attorney fees

incurred by the nonappealing party. An offer of compromise by the

nonappealing party will replace the amount of the arbitrator's award for the

purpose of determining whether the appealing party has improved his position.

Here, the plaintiffs—a husband with a claim for personal injuries and a wife with a

claim for loss of consortium—offered to settle both claims for $32,000, a total

amount not delineated by claim. The jury awarded $30,000 to the husband and

nothing to the wife. Because the defendant improved his position relative to the

offer, he should not have been ordered to pay the husband's attorney fees. The

award is reversed.
No. 69406-5-1/2

       Sunny Gautam and Donald Hicks were involved in an automobile accident

on August 25, 2010. Sunny Gautam and his wife, Suman Gautam, sued Hicks

and his marital community. Sunny Gautam claimed damages for personal injury.

Suman Gautam's claim was for loss of consortium.

       The matter was transferred to mandatory arbitration. The arbitrator

addressed each claim separately. For Sunny's personal injuries, the arbitrator

awarded $28,136. For Suman's loss of consortium claim, the arbitrator awarded

$3,000. In total, the arbitrator awarded $31,136. Hicks filed a timely request for

trial de novo.

       "Up to thirty days prior to the actual date of a trial de novo, a nonappealing

party may serve upon the appealing party a written offer of compromise." RCW

7.06.050(1 )(a). The Gautams made an offer of compromise pursuant to RCW

7.06.050 to settle all claims for $32,000:

                 YOU AND EACH OF YOU ARE HEREBY NOTIFIED that
       pursuant to RCW 7.06.050, Plaintiff SUNNY GAUTAM and SUMAN
       GAUTAM hereby make an Offer of Compromise in the sum of
       Thirty Two Thousand Dollars ($32,000.00) for full and final
       settlement of all claims in this action. This amount is inclusive of
       costs and statutory attorney fees.

Hicks rejected the offer, and the case proceeded to trial de novo.

       The jury found Hicks liable for the accident and awarded Sunny $30,000 in

damages. The jury awarded nothing for Suman's loss of consortium claim. In

total, the jury awarded $30,000. The jury's award to Sunny ($30,000) was

greater than the arbitrator's award to Sunny ($28,136). However, the jury's total

award for both claims ($30,000) was less than what the Gautams offered to

accept to compromise both claims ($32,000).
No. 69406-5-1/3

      A trial court must assess attorney fees and costs against a party who

demands trial de novo and then fails to improve his position:

       The superior court shall assess costs and reasonable attorneys'
       fees against a party who appeals the award and fails to improve his
       or her position on the trial de novo.

RCW 7.06.060(1); MAR 7.3.

       Ifthe nonappealing party makes an offer of compromise that is not

accepted, the amount of the offer of compromise replaces the arbitration award

as the measure of improvement:

       In any case in which an offer of compromise is not accepted by the
       appealing party within ten calendar days after service thereof, for
       purposes of MAR 7.3, the amount of the offer of compromise shall
       replace the amount of the arbitrator's award for determining
       whether the party appealing the arbitrator's award has failed to
       improve that party's position on the trial de novo.

RCW 7.06.050(1 )(b) (emphasis added).

       The Gautams claimed that the court was obliged to assess fees and costs

against Hicks because the jury verdict of $30,000 did not improve Hicks' position

with respect to Sunny. They requested that fees and costs be assessed against

Hicks in the total amount of $85,727 (lodestar amount of $42,636 and a multiplier

of 2) for hours spent on Sunny's claim. They requested no fees and costs

related to Suman's claim.

       The trial court agreed that Sunny was entitled to an award of attorneyfees
and costs against Hicks. The total amount awarded was $49,947.40, calculated

with a multiplier of 1.5.

       Hicks appeals. He contends the trial court erroneously concluded that he

failed to improve his position.
No. 69406-5-1/4

      Our review is de novo because the result turns on interpretation of the

mandatory arbitration statutes. Basin Paving Co. v. Contractors Bonding & Ins.

Co., 123 Wn. App. 410, 414, 98 P.3d 109 (2004).

      The trial court concluded that "plaintiff is not entitled to fees and costs

based on its offer of compromise. It was not specific as to claims or costs."

Instead of looking at the offer of compromise, the court compared the jury award

for Sunny's claim ($30,000) to the arbitrator's award for his claim ($28,136):

       Byfailing to return a jury verdict in its favor greater than Plaintiff's
       Arbitration Award and offer of compromiso ($28,146.10), Defendant
       failed to improve its position on Sunny Gautam's claim only.
       Pursuant to MAR 7.3 and RCW 7.06.060, Plaintiff is therefore
       entitled to his reasonable attorney's fees and costs on Sunny
       Gautam's claim only. Defendant prevailed on Suman Gautam's
       claim. She is not entitled to fees and costs.
              .. . Plaintiff is not entitled to fees and costs based on its offer
       of compromise. It was not specific as to claims or costs.

Conclusion of Law 1, Clerk's Papers at 152 (strikethrough by trial judge).

       This was error. The statute requires the court to look to the offer of

compromise to determine whether the appealing party has failed to

improve his or her position on trial de novo. RCW 7.06.050(1 )(b), .060(1).

The Gautams do not cite authority, and we have found none, that permits

a court to disregard an offer of compromise on the basis that it is not

"specific as to claims or costs." The Gautams could have made an offer of
compromise that specifically delineated one amountfor Sunny's personal
injury claim and anotherfor Suman's loss of consortium claim, butthey did
not do so. They offered to settle "all claims" for the single sum of $32,000.
No. 69406-5-1/5

       To justify the trial court's use of the arbitrator's award as a basis of

comparison, the Gautams describe their offer of compromise as if it had been

broken down between Sunny and Suman:

       Plaintiff attempted to reduce the Arbitration Award to an Offer of
       Compromise to provide Defendant with another opportunity to
       resolve this matter without a trial, though there was a difference of
       $11.10 between the two. The Offer of Compromise breakdown is:
       > $28,147.10 for Sunny Gautam's claim ($11.10 increase from
           Arb. Award);
       > $3,000 for Suman Gautam's loss of consortium claim; and
       > $852.90 for statutory fees and costs;
       > For a total of $32,000.00.

They made the same argument to the trial court.1 Their reply brief below
acknowledged that their offer of compromise did not give "an exact breakdown of

the claims," but they asserted it was "obvious" that they had simply reduced the

arbitration award to an offer of compromise.

       The assertion that the offer of compromise was broken down in the same

manner as the arbitration award is simply inaccurate. The arbitrator's award had

two components: one for Sunny and one for his wife. The offer of compromise

was global.

       By offering Hicks $32,000 total, the Gautams left Hicks no choice but to

accept or reject the sum of $32,000 for both claims. Hicks pointed this out to the

trial court in his opposition to the award of fees:

       Plaintiffs' decision to not segregate the claims in the offer should
       not, in retrospect, be the basis upon which to determine whether
       Defendant improved his position. When weighing whether or not to
       accept an Offer of Compromise, Defendant has to analyze whether
       he can better the global settlement proposal set forth by the
       Plaintiff, in this case, $32,000. Plaintiffs did not submit two
       separate offers (as was their right to do so) i.e. one for Suman

       1("Plaintiff intended to reduce the Arbitration Award to an Offer of Compromise.")
                                           5
No. 69406-5-1/6

       Gautam and one for Sunny Gautam. If this was done, Defendant
       could accurately gauge his risk of exposure on each claim
       individually and make an informed decision as to whether to accept
       Plaintiffs' proposal.

       We agree with Hicks' reasoning. The Gautams were in control of the

treatment of their claims. They could have made a separate offer of compromise

as to each claim. Ifthey had, the court could have compared the jury verdict on

each claim to the offer of compromise on each claim. Instead, the Gautams

presented Hicks with a single settlement offer to settle both claims. Because

husband and wife joined together to make a single offer, Hicks was entitled to

respond as if they were a single party.

      The statute requires the court to determine whether the appealing party

failed to improve his position. RCW 7.06.050. The rule "was meant to be

understood by ordinary people who, if asked whether their position had been

improved following a trial de novo, would certainly answer 'no' in the face of a

superior court judgment against them for more than the arbitrator awarded."

Cormar. Ltd. v. Sauro. 60 Wn. App. 622, 623, 806 P.2d 253, review denied, 117

Wn.2d 1004 (1991).

       Here, the appealing party was Hicks. If asked whether his position

improved after trial de novo, he would certainly answer "yes." If Hicks had

accepted the offer of compromise, he would have had to pay the Gautams

$32,000. By appealing and going through a trial de novo, he reduced his liability

to $30,000. Because Hicks improved his position relative to the offer of

compromise, there was no basis for an award of attorney fees and costs under

RCW 7.06.060.
No. 69406-5-1/7

      The award of attorney fees and costs is reversed.

                                         r^.J<^^)
WE CONCUR:

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