Opinion
No. 57714-0-I.
May 21, 2007.
Appeal from a judgment of the Superior Court for King County, No. 03-2-39332-1, Richard A. Jones, J., entered February 3, 2006.
Reversed and remanded by unpublished opinion per Schindler, A.C.J., concurred in by Coleman and Grosse, JJ.
Under the plain language of the King County Local Rules for Mandatory Arbitration Rules, the arbitrator has the exclusive authority to award attorney fees. We reverse the trial court's decision to award attorney fees and costs to Rothschild Construction, L.L.C. after a mandatory arbitration.
FACTS
On April 9, 2003, Gloria Ureta and Rothschild Construction, L.L.C. (Rothschild) entered into a time and materials contract for a number of repair and remodeling projects at Ureta's house. In the contract, Rothschild gives an estimate of $21,200 as the total cost for the work. By June 10, only half the projects were complete and Ureta had paid Rothschild approximately $18,000. On July 11, Ureta terminated the contract with Rothschild claiming the cost far exceeded the estimate in the contract and poor workmanship. Ureta refused to pay Rothschild's invoices totaling $9307.75 for June 17 and July 24.
Ureta hired another contractor to complete the work.
On August 11, 2003, Rothschild sued Ureta in Seattle District Court alleging breach of contract for failure to pay. On October 24, 2003, Ureta sued Rothschild and Rothschild's bonding company, Colonial American Casualty Surety Company, in King County Superior Court for breach of contract, civil conspiracy, and violation of the Washington Consumer Protection Act (CPA). In November 2003, Rothschild agreed to consolidate its district court action against Ureta with Ureta's superior court action.
On December 19, 2003, Rothschild wrote Ureta demanding payment of $8500 in exchange for full settlement of the lawsuit. The letter also states that "[t]he settlement demand is submitted pursuant to provisions of RCW 4.84.250."
On May 21, 2004, Ureta filed a motion seeking permission to file a statement of arbitrability. On August 17, Rothschild filed a counterclaim and an answer to Ureta's complaint. In the counterclaim, Rothschild alleged it was entitled to recover damages for $9307.75 or, in the alternative, was entitled to damages under a quantum meruit theory. In November 2004, the court transferred the case to mandatory arbitration. Arbitration was scheduled for June 8, 2005.
On August 13, 2004, Colonial American filed an answer and affirmative defenses.
On May 27, 2005, the court granted Rothschild's motion for partial summary judgment and dismissed Ureta's civil conspiracy and CPA claims, but denied dismissal of the breach of contract claim. The court also ruled that "[t]he amount of Rothschild Construction, L.L.C.'s claim against Gloria Ureta is $9,307.75" and that "Rothschild's claim is liquidated." On Ureta's motion for reconsideration of the summary judgment decision, the court ruled that Ureta had the right to seek recovery for a number of costs on her breach of contract claim including storage costs, hotel expenses, and re-keying the locks.
After the summary judgment decision, Ureta attempted to accept Rothschild's December 2003 offer to settle for $8500. Rothschild rejected Ureta's attempt to accept the offer as untimely.
Prior to the arbitration, Rothschild submitted the trial court's orders on summary judgment to the arbitrator. In the letter to the arbitrator, Rothschild stated that it had prevailed on its counterclaim against Ureta, that it would request interest on the liquidated amount owed, and would request attorney fees under RCW 4.84.250. In response, Ureta agreed that the summary judgment order limited the damages she could recover on her breach of contract claim. But Ureta disagreed with Rothschild's position that the court ruled in Rothschild's favor on the counterclaim.
At the beginning of the arbitration, the arbitrator unsuccessfully sought to clarify the trial court's decision on Rothschild's counterclaim. Rather than continue the arbitration, the parties agreed to proceed on Ureta's breach of contract claim for storage costs, hotel expenses, and re-keying the locks. On October 5, 2005, the arbitrator issued an arbitration award of $100 on the breach of contract claim. Neither party filed a request for a trial de novo and Rothschild did not submit a request for an award of attorney fee to the arbitrator.
On November 9, 2005, Rothschild filed a motion to clarify the May 27 summary judgment order. On December 2, the court modified the order to state that "Rothschild's claim for Summary Judgment against Gloria Ureta in the amount of $9,307.75 is [granted]."
On January 13, 2006, Rothschild filed a motion to confirm the arbitration award, enter judgment, and award attorney fees to Rothschild as the prevailing party under RCW 4.84.250. Ureta opposed Rothschild's request to award attorney fees arguing the superior court did not have jurisdiction under the Mandatory Arbitration Rules and the King County Local Mandatory Arbitration Rules. The court confirmed the arbitration award, dismissed Ureta's claims against Rothschild with prejudice, and granted Rothschild's request for attorney fees in the amount of $23,138. Ureta appeals the trial court's decision to award attorney fees to Rothschild.
ANALYSIS
Ureta contends the trial court erred in awarding attorney fees to Rothschild because under the Mandatory Arbitration Rules (the MAR), the King County Local Mandatory Arbitration Rules (KCLMAR) and Trusley v. Statler, 69 Wn. App. 462, 849 P.2d 1234 (1993), only the arbitrator has the authority to award attorney fees following mandatory arbitration.
Interpretation and construction of a court rule is a question of law we review de novo. Nevers v. Fireside, Inc., 133 Wn.2d 804, 809, 947 P.2d 721 (1997). Courts "interpret the mandatory arbitration rules as though they were drafted by the legislature, and construe these rules consistently with their purpose." Malted Mousse, Inc. v. Steinmetz, 150 Wn.2d 518, 525, 79 P.3d 1154 (2003). We also review the application of a court rule or the application of law to the facts de novo. Wiley v. Rehak, 143 Wn.2d 339, 343, 20 P.3d 404 (2001).
A primary goal of mandatory arbitration is to "`reduce congestion in the courts and delays in hearing civil cases.'" Nevers v. Fireside, Inc., 133 Wn.2d 804, 815, 947 P.2d 721 (1997). Former RCW 7.06.020(1) authorized mandatory arbitration for claims of $35,000 or less. The MAR and the KCLMAR are designed to implement mandatory arbitration under chapter 7.06 RCW and provide a simplified and economical procedure for the prompt and equitable resolution of disputes. MAR 1.1; KCLMAR 1.1. Courts require strict compliance with the requirements of the MAR when necessary to effectuate the legislative intent of RCW 7.06. See e.g., Nevers, 133 Wn.2d at 811. See also Wiley v. Rehak, 143 Wn.2d 339 (2001); Roberts v. Johnson, 137 Wn.2d 84, 969 P.2d 446 (1999). Rothschild does not contend that either the MAR or the KCLMAR are ambiguous. Where the language in a court rule is unambiguous, "we give it its plain meaning." Simmerly v. McKee, 120 Wn. App. 217, 221, 84 P.3d 919, rev. denied, 152 Wn.2d 1003 (2004).
Former RCW 7.06.020(1) provides:
All civil actions, except for appeals from municipal or district courts, which are at issue in the superior court in counties which have authorized arbitration, where the sole relief sought is a money judgment, and where no party asserts a claim in excess of fifteen thousand dollars, or if approved by the superior court of a county by two-thirds or greater vote of the judges thereof, up to thirty-five thousand dollars, exclusive of interest and costs, are subject to mandatory arbitration.
The MAR provides that the superior court retains jurisdiction in mandatory arbitration cases except for "the authority expressly given to the arbitrator by these rules." MAR 1.3(a). Under MAR 3.2(8), the court retains jurisdiction to decide "[m]otions for involuntary dismissal, motions to change or add parties to the case, and motions for summary judgment. . . ." Under MAR 6.1, the arbitrator has the authority to determine all other issues raised by the pleadings, including damages. MAR 3.2(8) also expressly gives the arbitrator the authority to perform other acts as authorized by the superior court in local rules. In KCLMAR 3.2(c), the King County Superior Court delegates its authority to "[a]ward attorney's fees as authorized by these rules, by contract or by law" to the arbitrator. KCLMAR 6.2(b) requires parties to submit a motion for attorney fees to the arbitrator within seven calendar days of filing the award.
KCLMAR 6.2(b) provides:
Attorney Fees. Any motion for actual attorney fees, whether pursuant to contract, statute, or recognized ground in equity, must be presented to the arbitrator, as follows:
(1) Any motion for an award of attorney fees must be submitted to the arbitrator and served on opposing counsel and the arbitration department within seven calendar days of filing of the award. There shall be no extension of this time.
(2) Any response to the motion for fees must be submitted to the arbitrator and served upon opposing counsel within seven calendar days after receipt of the motion.
(3) The arbitrator shall render a decision on the motion, in writing, within 14 days after the motion is made.
(4) The decision shall be filed and served on all parties and the arbitration department.
(5) A decision on attorney fees shall not extend the time for appeal of the original decision.
MAR 6.3 also provides that if neither party seeks a trial de novo within 20 days after the arbitrator files his award, the prevailing party "shall present to the court a judgment on the award of arbitration for entry as the final judgment."
In sum, the provisions of MAR 3.2 clearly give the arbitrator the authority to act as authorized by the local rules. The court in KCLMAR expressly delegated its authority to award attorney fees in mandatory arbitration cases to the arbitrator. And, unless a party files a request for a trial de novo, MAR 6.3 and MAR 7.1 limit the trial court's authority to entering judgment on the arbitration award. Malted Mousse, 150 Wn.2d at 529, (the "sole way to appeal an erroneous ruling from mandatory arbitration is the trial de novo").
Our conclusion that the superior court did not have the authority to award attorney fees is also consistent with this court's decision in Trusley v. Statler, 69 Wn. App. 462, 849 P.2d 1234 (1993). In Trusley, the arbitrator dismissed a breach of contract lawsuit against the defendants but denied the attorney fees request for a frivolous action under RCW 4.84.185. The defendants then filed a motion in superior court to confirm the award and asked the court to award fees under RCW 4.84.250. The court awarded attorney fees to the defendants and entered judgment on the award. On appeal, this court concluded that by adopting a Local Mandatory Arbitration Rule (LMAR) (which is identical to KCLMAR 3.2(c)), the Yakima County Superior Court delegated the authority to award attorney fees in mandatory arbitration to the arbitrator. Trusley, 69 Wn. App. at 464. The court held that because attorney fees were not a part of the arbitration award under the MAR and the LMAR, the court did not have jurisdiction to award fees.
Under RCW 4.84.250, where the amount pleaded is less than $10,000, a party who recovers more than the amount offered in settlement is entitled to attorney fees as the prevailing party.
The court in Trusley also expressly rejected the argument that the superior court retained the authority to rule on an attorney fee request that was not presented to the arbitrator following mandatory arbitration.
Here, Ms. Trusley [plaintiff] did not seek a trial de novo. In these circumstances, the Statlers [defendants] are limited to judgment on the arbitrator's award. See MAR 6.3 which provides that the prevailing party `shall present to the court a judgment on the award of arbitration for entry as the final judgment.' . . . Since the Statlers did not ask the arbitrator to exercise his delegated authority and award them attorney fees under RCW 4.84.250 for the arbitration hearing, fees were not part of the arbitration award. Consequently, they cannot become part of the final judgment. Both parties, by not asking for a trial de novo, accepted the arbitrator's award and may not alter it by requesting action by the Superior Court which would amend that award. The fee award was not proper.
Trusley, 69 Wn. App. at 464-465.
Here, as in Trusley, because Rothschild did not ask the arbitrator to award attorney fees under RCW 4.84.250, the trial court did not have the authority to do so. Under the MAR and KCLMAR, unless attorney fees are included in the arbitration award, the court cannot award attorney fees as part of the final judgment.
Without addressing the provisions of the MAR and the KCLMAR or Trusley, Rothschild cites Price v. Farmers' Ins. Co. of Washington, 133 Wn.2d 490, 946 P.2d 388 (1997) and Barnett v. Hicks, 119 Wn.2d 151, 829 P.2d 1087 (1992), to argue the arbitrator did not have the authority to award attorney fees because the parties agreed that the arbitrator would only decide three of Ureta's claims for damages. The arbitration award states that "[t]he parties agreed that the arbitrator was to hear and decide only three separate claims of damage made by plaintiff Gloria Ureta against the defendant Rothchild [sic] Construction, LLC." The award also states that the arbitrator was "not asked to consider any other claims by plaintiff or defendant. Further limiting the arbitrator's authority are decisions made by the Superior Court in this matter. Specifically, the Court's order entered on May 27, 2005 and amended on reconsideration found that the contract between Ureta and Rothchild Construction, LLC is a time and materials contract without a not-to-exceed amount."
Rothschild's reliance on Price and Barnett is misplaced. Price and Barnett concern private arbitration agreements under RCW 7.04 and not mandatory arbitration under RCW 7.06. Under RCW 7.04, an arbitrator's authority is governed by the parties' agreement. Price, 133 Wn.2d at 500 ("[a]rbitrators have no jurisdiction to determine any other issue absent agreement by the parties"); Barnett, 119 Wn.2d at 155 ("arbitrator's powers are governed by the agreement to arbitrate"). By contrast, under RCW 7.06, the arbitrator's authority is governed by the MAR and the court's local mandatory arbitration rules? not by the parties' agreement. Here, the parties' agreement to limit the damage claims cannot change the arbitrator's authority to award attorney fees as mandated by the KCLMAR. See, e.g., Trusley, 69 Wn. App. at 464 (rejecting the argument that because the parties did not present attorney fee request to arbitrator, the court retained authority).
Rothchild also argues that because the arbitrator issued the award on October 5, 2005, and the court did not clarify the summary judgment order until November 30, 2005, only the superior court had jurisdiction to decide attorney fees. But Rothchild fails to provide any authority to support its argument. Cowiche Canyon Conservatory v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992) (we will not consider an issue absent citation to legal authority). In any event, MAR 6.2 authorizes the arbitrator to file an amended award to address attorney fees.
Rothschild's reliance on MAR 1.3(a) to argue that the trial court retained jurisdiction is also misplaced and ignores KCLMAR 3.2(c) and KCLMAR 6.2(b). Under MAR 1.3(a), all issues shall be determined by the court "[e]xcept for the authority expressly given to the arbitrator by these rules. . . ." And here, the Court in KCLMAR 3.2(c) and KCLMAR 6.2(b) expressly authorize and require the arbitrator to award attorney fees in mandatory arbitration cases.
While Rothschild also claims that it is entitled to attorney fees under RCW 18.27.040, the contractors' registration statutes, the judgment entered by the court only states that "Rothschild Construction, LLC" is the judgment creditor and does not include Colonial American Casualty and Surety Company.
CONCLUSION
We conclude that under the MAR and KCLMAR, the trial court did not have the authority to award attorney fees to the prevailing party following mandatory arbitration under RCW 7.06. We reverse the decision to award attorney fees to Rothschild and remand.
Because Ureta fails to provide a legal basis entitling her to attorney fees, we deny Ureta's request for attorney fees on appeal.