Crossroads Mgmt. v. Ridgway
| Docket Number | 101329-9 |
| Decision Date | 21 December 2023 |
| Parties | CROSSROADS MANAGEMENT, LLC, Plaintiff, v. LACY K. RIDGWAY (formerly Lacy Caldwell) and MATTHEW RIDGWAY, husband and wife, Respondents, v. CARL and SUZAN LEWIS, husband and wife, Petitioners. |
| Court | Washington Supreme Court |
1
CROSSROADS MANAGEMENT, LLC, Plaintiff,
v.
LACY K. RIDGWAY (formerly Lacy Caldwell) and MATTHEW RIDGWAY, husband and wife, Respondents,
CARL and SUZAN LEWIS, husband and wife, Petitioners.
No. 101329-9
Supreme Court of Washington, En Banc
December 21, 2023
STEPHENS, J.
This case asks us to address important procedural aspects of the Superior Court Civil Arbitration Rules (SCCARs) and how those rules impact a litigant's ability to appeal a prearbitration order granting partial summary judgment. Carl and Suzan Lewis sued their landlords, Lacy and Matthew Ridgway, for violating the Residential Landlord-Tenant Act of 1973 (RLTA), ch. 59.18 RCW, including by intentionally withholding a portion of their security deposit. If proved, this claim would entitle the Lewises to a return of their full security deposit plus double damages and attorney fees and costs. The Ridgways moved for partial
summary judgment on the Lewises' "intentionally withholding" claim, which the trial court granted. This left only the Lewises' claim for a return of the principal sum of their deposit.
After failed settlement negotiations, the parties proceeded to arbitration pursuant to the SCCARs. The arbitrator awarded the Lewises the entirety of their security deposit and awarded attorney fees to the Ridgways under the small claims statute, RCW 4.84.250-.300. Seeking to appeal the order granting partial summary judgment and the fee award, the Lewises sought a trial de novo. They filed their trial de novo request, using an outdated court form that did not provide a line for parties to personally sign the request as required under the court rules and the arbitration statute. The trial court permitted the trial de novo despite the Lewises' lack of compliance, but the Court of Appeals reversed, reasoning that the statute and the SCCARs require strict compliance. The Court of Appeals did not reach the merits of the Lewises' appeal, holding the trial de novo was a nullity and remanding for the trial court to enter judgment on the arbitration award and assess attorney fees and costs. We granted review.
We affirm the Court of Appeals and hold that the Lewises failed to properly request a trial de novo because they did not personally sign the request as required by the court rule and the arbitration statute. Because the sole means to appeal following an adverse arbitration award is through a trial de novo, the Lewises cannot
independently appeal the adverse summary judgment order. We reverse the lower courts' attorney fees awards, which failed to consider all of the statutory grounds under which fees may be awarded, and remand to the trial court for further consideration of both parties' fee requests.
FACTS AND PROCEDURAL HISTORY
In May 2015, the Lewises moved into a house owned by the Ridgways and managed by Crossroads Management. As a condition for renting the property, the Lewises paid a $1,695 refundable security deposit. The Lewises and an agent of Crossroads, Calvin Smith, conducted a walk-through of the property and recorded the property's condition on a checklist. When the Lewises vacated the property in May 2018, Smith and the Lewises did a move-out walk-through. The Ridgways did not attend. Smith and the Lewises signed a move-out checklist, indicating that the property was in the same condition as it had been at move-in. Smith informed the Lewises that they would be refunded their full security deposit.
Four days later, the Ridgways visited the property and found substantial damage that Smith had not documented on the move-out checklist. The Ridgways instructed Crossroads to deduct the repair costs from the Lewises' security deposit. Crossroads complied over Smith's objection. After repairing the damage, the Ridgways e-mailed Crossroads invoices and receipts for repairs totaling $1,526.01. Crossroads mailed the statement of damages and a deposit refund check of $158.99
to the Lewises on June 12, 2018-exactly 21 days after the Lewises left the property. The Lewises immediately returned the check to Crossroads, disputing the charges listed in the damage statement.
Crossroads filed an interpleader action and deposited $1,695 from its trust account into the court's registry. The Lewises answered the interpleader and filed a cross claim against the Ridgways, alleging the Ridgways violated RCW 59.18.280 by intentionally sending "an improper explanation and itemization of charges against the deposit to justify the improper partial refund." Clerk's Papers (CP) at 45. That statute requires a landlord to provide a tenant "a full and specific" damage statement "together with the payment of any refund due the tenant" pursuant to the lease agreement within 21 days[1] after the tenant moves out. RCW 59.18.280. If the landlord fails to do so, the tenant is entitled to their full deposit and, in some circumstances, double damages. Id. The Lewises sought to recover their full deposit as well as $3,390 in punitive damages pursuant to RCW 59.18.280, and reasonable attorney fees and costs pursuant to chapter 59.18 RCW and RCW 4.84.250-.300.
Before answering the cross claim, the Ridgways offered the Lewises the full amount of their deposit in exchange for dismissal. The Lewises did not respond to this settlement offer. About a month later, the Ridgways sent another settlement
offer pursuant to RCW 4.84.250-.300 in the principal amount of $1,800. The Lewises rejected this offer, noting it failed to include attorney fees and costs. A day later, the Ridgways offered $2,800 to settle the case, which expressly included $1,000 in attorney fees and costs. The Lewises again rejected the offer.
After negotiations failed, the Ridgways answered the cross claim and moved for partial summary judgment. They argued no issue of material fact existed as to their compliance with RCW 59.18.280 because Crossroads had mailed the damage statement and refund check within the required 21-day period. The Lewises countered that the statute mandates something more than just a timely response and that a question of fact existed as to whether the Ridgways intended to wrongly withhold their deposit for damages.
The court granted the Ridgways' motion, dismissed the statutory claim, and capped the Lewises' damages at the amount of their security deposit. After unsuccessfully moving for interlocutory discretionary review of the summary judgment order, the Lewises submitted the case to arbitration pursuant to the SCCARs and the parties arbitrated the case in July 2020. The arbitrator entered an award in favor of the Lewises in the amount of $1,695-the maximum amount of their damages consistent with the summary judgment order. The Ridgways moved for attorney fees and costs under the small claims statute, which authorizes such an award to a defendant who offers more in settlement than the plaintiff ultimately
recovers. RCW 4.84.270. Because the Lewises' could not recover more in damages than $1,695 and the Ridgways' settlement offer exceeded that amount, the arbitrator awarded the Ridgways $14,386 in attorney fees and costs.
Unhappy with the fee award and wishing to appeal the partial summary judgment order, the Lewises requested a trial de novo pursuant to SCCAR 7.1. They filed online, as required by local court rule, and used the county's form to request the trial de novo. Unfortunately, the county had not updated its form to comply with a 2019 amendment to SCCAR 7.1 requiring an aggrieved party to personally sign the trial de novo request. The outdated form provided a space only for an attorney's signature, and the Lewises did not personally sign the trial de novo request.
The Ridgways moved to strike the trial de novo request because it lacked the Lewises' signatures. The trial court denied the motion, noting a problem with the county's online filing system as well as the impacts of COVID-19 and finding "that Defendant made timely effort to file in good faith and that inability to load [the] signature was not [Defendant's] fault." CP at 674. The court "found that there was substantial compliance" with the rule. Verbatim Rep. of Zoom Proc. (VRZP) at 4 (Sept. 25, 2020). The Ridgways sought reconsideration, arguing that the Lewises were not required to use the county's form and that the SCCARs require strict compliance. The trial court denied the motion, and the parties proceeded to a trial
de novo. The Lewises again prevailed on their sole claim for return of their security deposit.
Both parties then moved for attorney fees and costs under various statutes. The Ridgways sought attorney fees and costs under RCW 7.06.060, which authorizes fees "against a party who appeals the [arbitration] award and fails to improve his or her position on the trial de novo." See also SCCAR 7.3 ("The court shall assess costs and reasonable attorney fees against a party who appeals the award and fails to improve the party's position on the trial de novo."). They also requested attorney fees incurred during arbitration under RCW 4.84.250-.300. The Lewises requested attorney fees and costs under RCW 59.18.280(2), which authorizes such an award for the prevailing party "in any action brought by the tenant to recover" a security deposit. They claimed to be the prevailing party because they recovered the full amount of their security deposit.
The trial court affirmed the arbitrator's award of fees and costs to the Ridgways and awarded an additional $12,890.50 in fees to the Ridgways for the trial de novo pursuant to RCW 7.06.060, plus $455.92 in costs. VRZP at 16 (Mar. 26, 2021). In total, the Ridgways received $27,732.42 in attorney fees and costs. The Lewises were awarded $1,695.00, the principal sum of their security deposit in addition to $200.00 in statutory attorney fees and $509.95 in costs.
Both parties appealed. The Court of Appeals reversed the trial court's order denying the motion to strike the trial de...
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