Rimov v. Schultz

• Decision Date: 20 June 2011
• Docket Number: No. 64439–4–I.,64439–4–I.
• Citation: 253 P.3d 462,162 Wash.App. 274
• Court: Washington Court of Appeals
• Parties: Amy RIMOV, a single woman, Respondent,v.Mary SCHULTZ, a single woman, and Mary Schultz and Associates P.S., aka Mary Schultz Law P.S., Appellant.

162 Wash.App. 274

253 P.3d 462

Amy RIMOV, a single woman, Respondent,

v.Mary SCHULTZ, a single woman, and Mary Schultz and Associates P.S., aka Mary Schultz Law P.S., Appellant.

No. 64439–4–I.

Court of Appeals of Washington, Division 1.

June 20, 2011.

Mary E. Schultz, Mary Schultz Law P.S., Spokane, WA, Philip A. Talmadge, Peter Lohnes, Talmadge/Fitzpatrick, Tukwila, WA, for Appellant.Amy Rimov, Spokane, WA, Ross P. White, Matthew W. Daley, William M. Symmes, Witherspoon Kelley Davenport & Toole, Spokane, WA, for Respondent.APPELWICK, J.

[162 Wash.App. 277] ¶ 1 Rimov filed a complaint for damages and an equitable distribution of property accumulated during her relationship with Schultz. Schultz sought dismissal on the grounds that the complaint was barred by Washington's uniform arbitration act, chapter 7.04A RCW. The trial court denied the motion. Because the parties did not make an agreement to arbitrate, they did not trigger application of the arbitration statute. We affirm.

FACTS

¶ 2 Amy Rimov and Mary Schultz are attorneys in Spokane. Rimov worked as an associate in Schultz's law firm. Rimov and Schultz also had a personal relationship. During their relationship, Rimov and Schultz signed a written release of claims that purportedly resolved any disputes between them. In late 2007, the personal relationship ended. In February 2008, the professional relationship ended.

¶ 3 Rimov then asserted that the release was invalid and retained counsel to represent her in a potential claim against Schultz. Rimov and Schultz agreed to put the issue of the validity of the release before a retired superior court judge. Both parties submitted evidence, and on November 13, 2008, former Judge Mike Donohue issued a “DECISION ON NON–BINDING ARBITRATION,” concluding that the release was valid, binding, and enforceable.

¶ 4 Rimov filed a complaint, amended in August 2009, against Schultz alleging a meretricious relationship, seeking an equitable distribution of the property accumulated during their relationship, and raising additional claims related to her employment at Schultz's law firm.¹ Schultz filed a motion to dismiss under CR 12(b), arguing that the complaint was barred by Washington's uniform arbitration act (WUAA), chapter 7.04A RCW. Rimov responded that she did not agree to binding arbitration and characterized the process she and Schultz agreed to as a mock summary judgment sought for the purpose of fostering the parties' efforts at settlement. Each party submitted numerous declarations and other pieces of evidence in support of her pleadings.

¶ 5 The trial court denied Schultz's motion to dismiss, concluding that there was no agreement to arbitrate, and accordingly, that the WUAA was inapplicable. The court then denied Schultz's motion to reconsider. Schultz appeals.

DISCUSSION

I. Standard of Review

¶ 6 Whether dismissal was appropriate under CR 12(b)(6) is a question of law that this court reviews de novo. San Juan County v. No New Gas Tax, 160 Wash.2d 141, 164, 157 P.3d 831 (2007). Interpretation of a statute is a question of law reviewed de novo. Wachovia SBA Lending, Inc. v. Kraft, 165 Wash.2d 481, 488, 200 P.3d 683 (2009).

II. The Arguments

¶ 7 The trial court concluded no agreement to arbitrate existed between Schultz and Rimov. Schultz argues the parties entered into an arbitration agreement. She claims that nonbinding arbitration is not recognized as a matter of law under Godfrey v. Hartford Cas. Ins. Co., 142 Wash.2d 885, 16 P.3d 617 (2001), and that the procedure used here must be treated as a binding arbitration. She contends that post hoc recharacterization of an agreement to arbitrate as something else is precluded by Dahl v. Parquet & Colonial Hardwood Floor Co., 108 Wash.App. 403, 30 P.3d 537 (2001) and Barnett v. Hicks, 119 Wash.2d 151, 829 P.2d 1087 (1992). She finally argues that, because the parties agreed to arbitrate, Rimov's challenge to the arbitration agreement is precluded as untimely under RCW 7.04A.060 and that any appeal of the arbitrator's award is untimely under RCW 7.04A.230. She seeks reversal of the trial court's denial of her CR 12(b)(6) motion and remand with instructions to dismiss.

[162 Wash.App. 279] ¶ 8 Rimov argues the parties agreed to a nonbinding process, not to an arbitration, and that Godfrey does not prohibit such an agreement as a matter of law. Therefore, she argues the trial court should be affirmed.

¶ 9 The validity of an agreement to arbitrate must be challenged before the commencement of the arbitration hearing. RCW 7.04A.230(1)(e). The parties do not dispute that they entered into an agreement. If that agreement is an arbitration agreement, it is clear that a challenge to the agreement is untimely and any appeal of any decision of the arbitrator is untimely. Thus, if the parties agreed to arbitrate, Schultz is entitled to the relief sought. If the parties did not agree to arbitrate, Rimov is correct and the trial court should be affirmed.

III. The Law of Arbitration

¶ 10 Arbitration in Washington is a statutorily recognized special proceeding controlled by the WUAA.² Price v. Farmers Ins. Co., 133 Wash.2d 490, 495, 946 P.2d 388 (1997). Washington courts have expressed a public policy favoring arbitration. Godfrey, 142 Wash.2d at 892, 16 P.3d 617. The Supreme Court has recognized that, “ ‘[t]he very purpose of arbitration is to avoid the courts insofar as the resolution of the dispute is concerned .... arbitration is a substitute for, rather than a mere prelude to, litigation.’ ” Id. (emphasis omitted) (second alteration in original) (quoting Thorgaard Plumbing & Heating Co. v. King County, 71 Wash.2d 126, 131–32, 426 P.2d 828 (1967)). Accordingly, Washington courts confer substantial finality on decisions of arbitrators rendered in accordance with the parties' contract and the arbitration statute. Davidson v. Hensen, 135 Wash.2d 112, 118, 954 P.2d 1327 (1998); Carpenter v. Elway, 97 Wash.App. 977, 984, 988 P.2d 1009 (1999); see also Boyd v. Davis, 127 Wash.2d 256, 262, 897 P.2d 1239 (1995) (“Arbitration is attractive because it is a more expeditious and final alternative to litigation.”).³

¶ 11 “Arbitration traces its existence and jurisdiction first to the parties' contract and then to the arbitration statute itself.” Price, 133 Wash.2d at 496, 946 P.2d 388 (footnote omitted). Parties are free to decide if they want to arbitrate. Godfrey, 142 Wash.2d at 894, 16 P.3d 617. The parties may also decide the issues to be submitted to arbitration. Id. Once an issue is submitted to arbitration, the statute controls. Id.

¶ 12 But, not every nonjudicial process is binding, and not every nonjudicial process is arbitration. An agreement to a nonjudicial dispute resolution process, the result of which is not binding upon the participants and not enforceable in a court of law, is by definition not an arbitration under the statute.⁴ The court decides whether a controversy is subject to an agreement to arbitrate. RCW 7.04A.060(2).

IV. The Agreement

¶ 13 The WUAA defines “agreement to arbitrate” as an “agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement.” RCW 7.04A.060(1). “Record” is defined as “information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.” RCW 7.04A.010(7). Since there is a written record here, we review that record to determine whether the agreement of the parties fell within RCW 7.04.060(1) and triggered the arbitration statute.

A. The Express Agreement was to a Nonbinding Procedure

¶ 14 The 2007 settlement and release agreement did not contain an arbitration provision. The agreement to the proceeding before Judge Donohue was entered into later. A February 12, 2008 letter from Rimov's attorney, William Symmes, to Schultz's attorney, Robert Dunn, confirmed in writing discussions from a February 12 meeting between Symmes, Dunn and Schultz:

[T]he parties have agreed to go to a non-binding arbitration before Judge Donohue in a summary judgment fashion with no live witnesses with regard to the enforceability of the Settlement Agreement and Release.

(Emphasis added.) Dunn responded on February 14:

[T]here is an agreement to participate in a non-binding arbitration concerning the enforceability of the Release Agreement. Mary has agreed to advance 1/2 of the arbitrator's fees, with Ms. Rimov paying the other half.

(Emphasis added.) Symmes responded on February 15:

We have no disagreement on the arbitration.

These writings contain the parties' agreement regarding the dispute resolution procedure.

¶ 15 A contract exists when there is mutual assent to its essential terms. Weiss v. Lonnquist, 153 Wash.App. 502, 511, 224 P.3d 787 (2009). In determining the mutual intention of the contracting parties, the unexpressed, subjective intentions of the parties are irrelevant; the assent of the parties must be gleaned from their outward manifestations. ⁵ Id. When construing an agreement, we give effect to every word so as not to render any word superfluous. Nishikawa v. U.S. Eagle High, LLC, 138 Wash.App. 841, 849, 158 P.3d 1265 (2007).

¶ 16 In the agreement formed by the February 12 and 14 letters, each side explicitly stated that it agreed to nonbinding arbitration. We give “nonbinding” its ordinary meaning: not binding. The references to the proceeding as nonbinding signaled that the parties expressly intended not to have a binding arbitration.⁶ While each party referred to the proceeding at least once in their correspondence as an “arbitration” without the modifier “nonbinding,” these references were not in the words of agreement. Nor were they in a context suggesting modification of the original agreement. Whether convenient shorthand or inadvertence, these references do not overcome the express, repeated use of nonbinding as a modifier in the words of the agreement. The use of...