Dan's Trucking, Inc. v. Kerr Contractors, Inc.

• Decision Date: 19 August 2014
• Docket Number: No. 44342–2–II.,44342–2–II.
• Citation: 332 P.3d 1154
• Court: Washington Court of Appeals
• Parties: DAN'S TRUCKING, INC., Respondent, v. KERR CONTRACTORS, INC., Liberty Mutual Group, Inc., a/k/a Safeco Insurance Company of America, bond nos. 6709272, 6709273, 5581430, Appellants. State of Washington, Washington State Department of Transportation, Defendants.

332 P.3d 1154

DAN'S TRUCKING, INC., Respondent,

v. KERR CONTRACTORS, INC., Liberty Mutual Group, Inc., a/k/a Safeco Insurance Company of America, bond nos. 6709272, 6709273, 5581430, Appellants.State of Washington, Washington State Department of Transportation, Defendants.

No. 44342–2–II.

Court of Appeals of Washington,

Division 2.

Aug. 19, 2014.

Joseph a Yazbeck Jr., Yazbeck Cloran & Bowser PC, Portland, OR, for Appellant.

Benjamin D. Cushman, Cushman Law Offices PS, Olympia, WA, for Respondent.

BJORGEN, A.C.J.

¶ 1 Kerr Contractors, Inc. and Liberty Mutual Insurance Group, Inc., a/k/a Safeco Insurance Company of America (Kerr), appeal a superior court order granting a motion by Dan's Trucking, Inc. to strike Kerr's request for a trial de novo following an arbitrator's decision awarding Dan's Trucking $6,979.57 in attorney fees. Kerr contends that the trial court erred in granting the motion to strike because it was entitled to a trial de novo under Mandatory Arbitration Rule (MAR) 7.1. We hold that, because resolution of the parties' attorney fees issue remained within mandatory arbitration, Kerr was entitled to a trial de novo on that issue under MAR 7.1. Accordingly, we reverse the trial court's order granting Dan's Trucking's motion to strike and remand for trial de novo on the attorney fee issue.

FACTS

¶ 2 The Washington State Department of Transportation awarded a contract to Kerr to make improvements to State Route 14 in Clark County, Washington. Kerr subcontracted with Dan's Trucking to haul asphalt for the highway improvement project. A dispute arose between the parties, and Dan's Trucking filed a complaint against Kerr for breach of contract and negligence in Thurston County Superior Court. The superior court transferred the case to mandatory arbitration. Prior to the arbitration hearing, the parties settled Dan's Trucking's underlying claims, but did not resolve the amount of attorney fees to be awarded to Dan's Trucking. Kerr memorialized the parties' settlement agreement in an e-mail that stated, “We received authority from our client for the following offer: 1. Payment from Kerr to Dan's of $3,971.38; and 2. Fees in an amount to be determined by the arbitrator; 3. In exchange for dismissal.” Clerk's Papers (CP) at 28. Kerr also sent the following e-mail to the arbitrator indicating that the parties had settled their primary dispute:

As I said in my voicemail to you yesterday, the parties have settled this matter, and therefore we need to cancel the arbitration hearing scheduled for tomorrow, 6/28.

However, as part of the settlement, the parties have agreed that you will decide the amount of attorney fees awarded to Dan's. Our preference would be to brief the issue and then hold a telephonic hearing on the matter with you.

CP at 29. The arbitrator subsequently awarded $6,979.57 in attorney fees to Dan's Trucking. The form on which the arbitrator entered his arbitration award contained the following preprinted language:

Twenty days after the award has been filed with the clerk, if no party has sought a trial de novo, the prevailing party, on notice to all parties, may present to the Assigned Judge a judgment on the arbitration award for entry as final judgment in this case.

CP at 21.

¶ 3 After Kerr timely requested a trial de novo, Dan's Trucking filed a motion in superior court to strike Kerr's request, asserting that Kerr was not entitled to a trial de novo under MAR. 7.1 because the parties had privately settled their dispute. The motion farther asserted that the arbitrator was acting as a private arbitrator under the Uniform Arbitration Act (UAA), chapter 7.04A RCW, when he decided the amount of attorney fees to be awarded to Dan's Trucking, rather than as an arbitrator under MAR 3.2. Following a hearing, the trial court entered an order granting Dan's Trucking's motion to strike Kerr's request for a trial de novo. The trial court later entered a judgment against Kerr awarding Dan's Trucking $6,979.57 in attorney fees, the amount determined appropriate through arbitration, as well as $11,663.17 in supplemental attorney fees. Kerr timely appeals.

ANALYSIS

I. Request for a Trial de Novo

¶ 4 The issue raised by this appeal is whether the trial court erred in granting Dan's Trucking's motion to strike Kerr's request for a trial de novo. Our resolution of this issue turns on whether the arbitrator's award of attorney fees to Dan's Trucking was governed by the UAA or by chapter 7.06 RCW as implemented by the MARs. If under the UAA, the trial court properly granted Dan's Trucking's motion to strike Kerr's request for a trial de novo. If under chapter 7.06 RCW as implemented by the MARs, the trial court erred because Kerr was entitled to a trial de novo under MAR 7.1. We hold that the MARs governed the arbitrator's attorney fee determination and, therefore, the trial court erred by granting Dan's Trucking's motion to strike Kerr's request for a trial de novo.

¶ 5 The application of court rules to a set of facts is a question of law that we review de novo. Russell v. Maas, 166 Wash.App. 885, 889, 272 P.3d 273, review denied,174 Wash.2d 1016, 281 P.3d 687 (2012). As With other court rules, we interpret the MARs “as though they were drafted by the Legislature.” Wiley v. Rehak, 143 Wash.2d 339, 343, 20 P.3d 404 (2001). Thus, we construe the MARs consistently with their purpose“to reduce congestion in the courts and delays in hearing civil cases.” Perkins Coie v. Williams, 84 Wash.App. 733, 737, 929 P.2d 1215 (1997); Wiley, 143 Wash.2d at 343, 20 P.3d 404. We also give effect to the plain meaning of a court rule, as “discerned from reading the rule as a whole, harmonizing its provisions, and using related rules to help identify the legislative intent embodied in the rule.” State v. Chhom, 162 Wash.2d 451, 458, 173 P.3d 234 (2007).

¶ 6 Chapter 7.06 RCW, as implemented by the MARs, requires the mandatory arbitration of certain civil claims. RCW 7.06.010–.030; MAR 1.2. In Thurston County, mandatory arbitration proceedings apply to civil “[c]laims valued up to $50,000, exclusive of interest and costs.” MAR 1.2; Thurston County Local MAR 1.2. The MARs do not apply to arbitration by private agreement or under other statutes, unless the parties so stipulate. MAR 1.1; MAR 8.1. MAR 7.1 provides that an aggrieved party to a mandatory arbitration decision may request a trial de novo in the superior court.

¶ 7 With exceptions not relevant to our circumstances, the UAA governs private agreements to arbitrate disputes. RCW 7.04A.030. The UAA does not apply to arbitration under the MARs. RCW 7.04A.030(3). RCW 7.04A.230 governs judicial review of contractually agreed arbitration awards under the UAA and does not contain a right to a trial de novo.¹

¶ 8 Kerr and Dan's Trucking agree that they entered into mandatory arbitration under the MARs, and that they settled their primary dispute prior to the arbitrator issuing a decision. The parties disagree, however, whether the unresolved attorney fees issue remained within mandatory arbitration or whether their settlement provided for private arbitration of the unresolved attorney fees issue under the UAA.

¶ 9 We interpret settlement agreements in the same manner in which we interpret other contracts. Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 164 Wash.2d 411, 424 n. 9, 191 P.3d 866 (2008). “In doing so, we attempt to determine the intent of the parties by focusing on their objective manifestations as expressed in the [settlement] agreement.” McGuire v. Bates, 169 Wash.2d 185, 189, 234 P.3d 205 (2010). When determining the intent of contracting parties, we apply the “context rule” adopted by our Supreme Court in Berg v. Hudesman, 115 Wash.2d 657, 667, 801 P.2d 222 (1990). Under the Berg context rule:

the intent of the parties to a particular agreement may be discovered not only from the actual language of the agreement, but also from “viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.”

Scott Galvanizing, Inc. v. Nw. EnviroServices, Inc., 120 Wash.2d 573, 580–81, 844 P.2d 428 (1993) (quoting Berg, 115 Wash.2d at 663, 801 P.2d 222); Stender v. Twin City Foods, Inc., 82 Wash.2d 250, 254, 510 P.2d 221 (1973).

¶ 10 “A contract provision is ambiguous when its terms are uncertain or when its terms are capable of being understood as having more than one meaning.” Mayer v. Pierce County Med. Bureau, Inc., 80 Wash.App. 416, 421, 909 P.2d 1323 (1995). We construe any ambiguity in the settlement agreement against the drafter, here Kerr. Rouse v. Glascam Builders, Inc., 101 Wash.2d 127, 135, 677 P.2d 125 (1984). Additionally, the “strong public policy favoring finality of arbitration dictates that any ambiguity with respect to which statute the parties have invoked—chapter 7.04 ² or chapter 7.06—be resolved in favor of binding arbitration under chapter 7.04.” Dahl v. Parquet & Colonial Hardwood Floor Co., Inc., 108 Wash.App. 403, 412, 30 P.3d 537 (2001).

¶ 11 The parties' settlement agreement, as drafted by Kerr, stated that the terms of the parties' settlement were “1. Payment from Kerr to Dan's of $3,971.38; and 2. Fees in an amount to be determined by the arbitrator; 3. In exchange for dismissal.” CP at 28. The parties disagree whether these terms constituted a full settlement of their claims with an associated agreement to privately resolve the attorney fees issue through the UAA or, instead, merely constituted a partial settlement of their claims with the attorney fees issue remaining within mandatory arbitration. We hold that the parties' intent, as discerned from all the circumstances surrounding the creation of the settlement terms and from the subsequent conduct of the parties, was to settle Dan's Trucking's underlying claims, while...