Opinion
No. 26894-2-III.
March 17, 2009.
Appeal from a judgment of the Superior Court for Spokane County, No. 06-2-04072-9, Salvatore F. Cozza, J., entered February 8, 2008.
Affirmed by unpublished opinion per Sweeney, J., concurred in by Brown and Korsmo, JJ.
UNPUBLISHED OPINION
This is a dispute over attorney fees. The appellants lost a mandatory arbitration and failed to improve their position at a trial de novo. The trial court then ordered the appellants to pay the respondents' attorney fees. The appellants argue that they should not have to pay attorney fees because the underlying arbitration award was "tainted" when the respondents filed their response to an offer of judgment and thereby violated the court rule prohibiting filing of offers of judgment. We see no reason in law or logic to set aside the award of fees. We therefore affirm the award of fees and award fees on appeal.
FACTS
James and Kathryn Bowens sued Rick's Custom Woodworking, a partnership between John and Richard Eyre (collectively, the Eyres), for breaching a contract to remodel their kitchen. The Bowenses prayed for a money judgment of $7,407. And so the superior court set the case for mandatory arbitration because the claim was less than $50,000. Spokane County Superior Court LMAR 1.2.
The Eyres served the Bowenses with an offer of judgment before the arbitration proceeding. The Bowenses made a counteroffer that rejected the Eyres' offer. And they filed that counteroffer with the court. The Eyres informed the arbitrator on the morning of the arbitration hearing that the Bowenses had violated CR 68 (the offer of judgment rule) by filing an offer of settlement in the public court file. The Eyres gave the arbitrator their motion to strike the Bowenses' counteroffer and the memorandum supporting it. The arbitrator reviewed the motion but not the memorandum. He stated that he had not seen the offer or reviewed the court file. He then told the Eyres that their motion was untimely and proceeded with the arbitration hearing. The arbitrator awarded the Bowenses $7,400.
The Eyres requested a trial de novo. The superior court sealed the arbitration award, the counteroffer, and documents regarding the motion to seal the counteroffer. A jury returned a verdict in favor of the Bowenses in the amount of $8,500.
The Bowenses then moved for attorney fees pursuant to both the arbitration rules (MAR 7.3) and state statute (chapter 4.84 RCW). The Eyres argued that the Bowenses were not entitled to attorney fees because they tainted the arbitration process by improperly filing their counteroffer.
The court ruled that MAR 7.3 controlled, entered judgment for the Bowenses, and awarded them attorney fees.
The Eyres appeal the attorney fees award.
DISCUSSION
Award of Fees Following Trial De Novo
The parties identify the standard of review as abuse of discretion. It is not. That standard applies generally to whether the amount of a fee awarded was proper. See, e.g., Boeing Co. v. Heidy, 147 Wn.2d 78, 90, 51 P.3d 793 (2002). The issue here is whether the Bowenses were entitled to fees at all. That is a question of law and, accordingly, our review is de novo. Hutson v. Costco Wholesale Corp., 119 Wn. App. 332, 334, 80 P.3d 615 (2003).
Attorney fees must be based on some statute, contract, or recognized ground in equity. Cosmopolitan Eng'g Group, Inc. v. Ondeo Degremont, Inc., 159 Wn.2d 292, 297, 149 P.3d 666 (2006). The trial court here ordered the Eyres to pay the Bowenses' attorney fees pursuant to MAR 7.3.
MAR 7.3 provides that "[t]he court shall assess costs and reasonable attorney fees against a party who appeals the [arbitration] award and fails to improve the party's position on the trial de novo." The court must award attorney fees if the party requesting trial de novo fails to improve its position from the arbitration award. Wiley v. Rehak, 143 Wn.2d 339, 348, 20 P.3d 404 (2001).
The Eyres argue that MAR 7.3 does not authorize attorney fees here because the arbitration award is void and, therefore, could not establish the "position" needed to determine whether fees are mandated. The Eyres contend that the arbitration and its award are void because the Bowenses filed their counteroffer and the arbitrator refused to postpone the arbitration hearing until the court could seal the counteroffer. Neither the federal cases cited by the Eyres nor Washington's mandatory arbitration rules support their position.
The Eyres assert that three federal cases stand for the proposition that a CR 68 violation renders further arbitration proceedings void until the violation is rectified. But the courts in the cases cited did not void an underlying arbitration or arbitration award. Kason v. Amphenol Corp., 132 F.R.D. 197 (N.D. Ill. 1990) (memorandum order striking a simultaneously tendered and filed offer of judgment from the court file at an undisclosed point in the litigation); Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291 (6th Cir. 1989) (federal district court's belated discovery of rejected offer of judgment, which it believed would have required plaintiff to pay defendant's attorney fees because the nominal damages she was awarded were less than the $750 rejected offer, was not an exceptional situation justifying vacation of judgment under federal rule CR 60(b)(6)); Nabors v. Texas Co., 32 F. Supp. 91 (W.D. La. 1940) (striking an unaccepted offer of judgment from the record and reserving the defendant's right to file the offer at the hearing for determining costs). These cases, at most, support the Eyres' allegation that the Bowenses violated CR 68 by filing their counteroffer. But, given the procedural history here, the important question is: so what?
CR 68 provides that a defendant may serve an offer of judgment on a plaintiff, but that the offer may not be filed unless and until the plaintiff accepts it. Evidence of a rejected offer may be admitted only for the purposes of determining costs. CR 68. The Bowenses concede that they improperly filed their counteroffer.
First, an arbitration award is not appealable. MAR 6.3; Cook v. Selland Constr., Inc., 81 Wn. App. 98, 912 P.2d 1088 (1996). The rule restricting our authority to review an arbitration award promotes the legislative purposes of finalizing disputes, alleviating court congestion, and reducing delay. Carpenter v. Elway, 97 Wn. App. 977, 984, 988 P.2d 1009 (1999).
Second, the Eyres may only challenge an arbitration award by (1) requesting a trial de novo (which they did), or (2) moving to vacate judgment under CR 60 if the arbitrator has entered judgment confirming the award (which they did not). MAR 6.3, 7.1(a).
The Eyres were dissatisfied with the arbitration award and proceeded with a trial de novo. A trial de novo proceeds "as though no arbitration proceeding has occurred." MAR 7.2(b). The trier of fact does not, indeed cannot, consider whether the arbitration was fair or not. See MAR 7.2(b). And it most certainly does not consider the parties' settlement negotiations. See CR 68 (rejected offer admissible only in a proceeding to determine costs). An arbitration award is sealed for the trial de novo. MAR 7.2(a). The trial de novo does not vacate or void the award. At a trial de novo, the jury merely hears all issues of law and facts anew without considering the arbitration award. MAR 7.2(b)(1); RCW 7.06.050. And that is what happened here. A jury heard the case against the Eyres and returned an $8,500 verdict for the Bowenses.
The Eyres did not wait for the court to enter judgment on the arbitration award and then move to vacate the judgment based on what they claim was an irregularity. MAR 6.3. They instead elected to proceed with a trial de novo, as was their right. MAR 7.1(a). We would, then, affirm the outcome here even were we to assume some irregularity in the underlying arbitration. The award is valid for purposes of determining whether the Bowenses are entitled to attorney fees under MAR 7.3.
The Eyres did not improve their position under MAR 7.3. The trial court, then, properly ordered them to pay the Bowenses' attorney fees. Hutson, 119 Wn. App. at 334-35.
Attorney Fees on Appeal
MAR 7.3 provides that if a party to a mandatory arbitration fails to achieve a better result by requesting a trial de novo and then fails to achieve a better result by appealing to the Court of Appeals, that party may be required to pay the opposing party's attorney fees for the appeal. Boyd v. Kulczyk, 115 Wn. App. 411, 417, 63 P.3d 156 (2003). Here, mandatory arbitration resulted in a $7,400 award for the Bowenses. The trial de novo, requested by the Eyres, resulted in an $8,500 verdict for the Bowenses. And we have affirmed the attorney fees award. The Eyres, then, failed to achieve a better result by trial de novo and by appeal. We, accordingly, award the Bowenses' attorney fees for this appeal. MAR 7.3.
We affirm the attorney fees award and award fees on appeal.
A majority of the panel has determined that this opinion will not be printed in the Washington Appellate Reports but it will be filed for public record pursuant to RCW 2.06.040.
BROWN, J. and KORSMO, J., concur.