Saleemi v. Doctor's Assocs., Inc.

Decision Date24 January 2012
Docket NumberNo. 40351–0–II.,40351–0–II.
Citation269 P.3d 350,166 Wash.App. 81
CourtWashington Court of Appeals
PartiesWaqas SALEEMI, a single man, and Farooq Sharyar, a single man, Respondents, v. DOCTOR'S ASSOCIATES, INC., a Florida corporation, Appellants.

OPINION TEXT STARTS HERE

Gary Howard Branfeld, Smith Alling PS, Tacoma, WA, for Appellants.

Todd Scott Baran, Todd S. Baran, PC, Portland, OR, Douglas Duane Sulkosky, Attorney at Law, Tacoma, WA, for Respondents.

JOHANSON, J.

[166 Wash.App. 83] ¶ 1 Doctor's Associates, Inc. (DAI) entered into three franchise agreements with Waqas Saleemi and Farooq Sharyar (Saleemi). Each agreement required the parties to arbitrate their disputes in Connecticut, under Connecticut substantive law, and included a damages-limitation provision. After a dispute arose, DAI filed for arbitration in Connecticut and Saleemi filed a civil lawsuit against DAI in Washington. When DAI moved to compel arbitration under the terms of the agreements, the trial court struck the arbitration site (venue), choice of law, and damages-limitation provisions and ordered the parties to arbitrate the dispute in Washington, under Washington law, without any damages limitation. DAI did not move for discretionary review of the trial court's order. After the arbitrator found in Saleemi's favor, Saleemi moved in the superior court to confirm the arbitration award, and DAI moved to vacate the award. The superior court denied DAI's motion to vacate the arbitration award in full and confirmed the arbitration award.1 DAI appeals, arguing that, although the trial court did not err in compelling arbitration generally, it (1) exceeded its authority when it determined that the venue, choice of law, and damages-limitation provisions were unenforceable; (2) erred in finding that the venue, choice of law, and damages-limitation provisions were unconscionable; (3) erred in failing to award DAI attorney fees and costs; (4) erred in confirming the arbitrator's award; and (5) erred in awarding Saleemi “post arbitration award” attorney fees. Br. of Appellant at 2. Although we remand to the superior court to award attorney fees and costs to DAI on the motion to compel, because DAI does not establish prejudice, we affirm the order on the motion to compel and the order confirming the arbitrator's award.

FACTS
I. Franchise Agreements, Alleged Breach, and Lawsuit

¶ 2 DAI franchises Subway sandwich shops. On March 2, 2004, June 14, 2006, and June 21, 2006, DAI and Saleemi entered into franchise agreements for three Subway stores in Pierce County. Each of these agreements required binding arbitration in Connecticut and contained choice of law, attorney fee, and damages-limitation provisions.

[166 Wash.App. 85] ¶ 3 In June 2008, DAI attempted to terminate the franchise agreements after it obtained information leading it to believe that Saleemi had violated the noncompetition clause in the franchise agreements. On August 20, DAI demanded arbitration in Bridgeport, Connecticut.

¶ 4 On August 28, Saleemi filed a civil complaint against DAI in Pierce County Superior Court, alleging that Saleemi had cured the default and that DAI's attempt to terminate the agreements without an opportunity to cure violated RCW 19.100.180(2)(j).2 Saleemi asked the superior court to “restrain[ ] DAI from “arbitrating this matter and from arbitrating the matter in the [s]tate of Connecticut.” Clerk's Papers (CP) at 2.

II. Trial Court Order Compelling Arbitration in Washington, Under Washington Law, Without Damages Limitation

¶ 5 In its answer, DAI asserted that the superior court “lack[ed] appropriate jurisdiction over the parties because the Agreements required arbitration, challenged the superior court's venue, and asked the superior court to dismiss Saleemi's complaint and award attorney fees and costs. CP at 6. But DAI also asserted a “counterclaim,” asking the superior court to enter an order compelling arbitration and arguing that the agreements' arbitration clauses required binding arbitration in Bridgeport, Connecticut and that [v]enue” was not in Washington State. CP at 6. DAI also requested attorney fees under the agreements because Saleemi had “failed and refused to engage in arbitration.” CP at 7. In its motion to compel arbitration, DAI asserted:

It is undisputed that the Agreements provide that the laws of the [S]tate of Connecticut shall govern the interpretation and enforcement of the Agreements. The Agreements do provide for the application of the Franchise Investment Protection Act [ (FIPA) ] of this state. However, there is nothing in that statute which restricts the use of a choice of forum or an arbitration clause. Therefore, the Washington FIPA still provides no basis for this lawsuit.

CP at 11. Saleemi opposed the motion to compel.3

¶ 6 At the motion hearing, the superior court stated that its “biggest concern” was the venue provision, noting that it was particularly concerned because the “alleged non-compete issue” occurred in Washington, and it might be a hardship for Saleemi to face arbitration in Connecticut when all the witnesses were in Washington. Verbatim Transcript of Proceedings (VTP) (Sept. 19, 2008) at 5, 7. Although DAI acknowledged that the venue provision was severable and stated that it would proceed with arbitration in Washington if the superior court ordered such arbitration, DAI continued to argue that the superior court should find that Saleemi was required to arbitrate the matter in Connecticut.4 DAI also stated that Washington's FIPA would apply even if the arbitration took place under the terms of the agreements.

[166 Wash.App. 87] ¶ 7 On September 19, 2008, without hearing any argument related to the choice of law provision or the damages limitation, the superior court found the venue clause unconscionable and ordered “that the disputes between the parties shall be arbitrated in Washington under Washington law, with no limitation on remedies.” 5 CP at 218. The superior court did not enter any order (oral or written) regarding DAI's request for attorney fees in its motion to compel arbitration. DAI did not move for discretionary review of the September 19, 2008 order.

III. Arbitration Award and Motion to Vacate Arbitration Award

¶ 8 The parties proceeded to arbitration in Washington before an American Arbitration Association arbitrator. CP at 222. In his “interim award,” the arbitrator (1) found in Saleemi's favor; and (2) stated, Claimant DAI shall pay to respondents ‘compensatory damages' as that term is defined in section 17 of exhibit 52.6 They may choose either option.” CP at 290 (capitalization omitted). The arbitrator awarded Saleemi a total of $230,000 in “compensatory damages,” $161,536 in attorney fees, and $32,837.96 in costs. 7 CP at 222. Saleemi moved in the superior court to confirm the arbitration award; DAI opposed Saleemi's motion to confirm the arbitration award and moved to vacate the award, arguing that the superior court's September 2008 order was improper.

¶ 9 On January 22, 2010, the superior court heard argument on both of these motions. DAI argued that the superior court had exceeded its authority when it decided that the venue, choice of law, and damages-limitation provisions were unconscionable. DAI asserted that the validity of these three provisions was a question for the arbitrator in Connecticut and that the superior court lacked the authority to address them.

¶ 10 In response, the superior court asked DAI why it had proceeded to arbitration rather than moving for discretionary review of the 2008 order. 8 DAI explained:

We looked at that particular issue at the time, to be frank. We looked at the statute ..., and we came to the conclusion that the likelihood of the Court taking it back at that particular point was not very great and the costs and expenses at that particular point in time, who knew, the cost and expenses of taking the appeal would not be a wise allocation. We thought we would get a decision, a different decision, but it would have been a discretionary review. So that alone is not grounds. I've cited to the case law in that particular area and that's not a final order.

....

...<... so that the particular reason for it.> We made a decision for economic reasons at that time that we thought we could take this particular shot. It's not like we didn't raise all of these issues in the first go-round. We did. Every issue that I am raising now is in the briefs that we submitted, originally.

So what we have now is mainly the benefit of new case law that has come down since the Court's original determination in September of 2008 that clearly directs that the trial court enter an order that does not weigh upon this particular process and leaves these matters for the arbitrator.

VRP (Jan. 22, 2010) at 7–8.

¶ 11 The superior court denied DAI's motion to vacate and granted Saleemi's motion to confirm the arbitration award. The superior court stated:

Well, I think you knew you had a tough row to hoe when you got here this morning, and I'm going to deny your motion to vacate. You know, I don't even need to hear from the plaintiffs in terms of this portion of it. I think there were other remedies in 2008. It is clear that the defense is unhappy with the result, so you're trying to get a second bite at the apple and it's not going to happen on my watch. Let the Court of Appeals sort that part of it out.

VRP (Jan. 22, 2010) at 9. Saleemi later moved for attorney fees related to confirming the arbitration award. The superior court awarded Saleemi $6,453.33 in attorney fees.

¶ 12 DAI appeals (1) the superior court's September 2008 order requiring arbitration in Washington, under Washington law, and without any damages limitations; 9 (2) the January 22, 2010 order denying DAI's motion to vacate the arbitrator's award in full; (3) the February 12, 2010 order confirming the arbitrator's award and final judgment; and (4) the March 19, 2010 order on motion for attorney fees. DAI's arguments, however, focus on whether the superior court's 200...

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6 cases
  • Saleemi v. Doctor's Assocs., Inc.
    • United States
    • Washington Supreme Court
    • January 17, 2013
    ...even if the trial judge's order was incorrect, DAI had not shown prejudice and was not entitled to relief. Saleemi v. Doctor's Assocs., Inc., 166 Wash.App. 81, 98, 269 P.3d 350 (2012). We accepted review. Saleemi v. Doctor's Assocs., Inc., 174 Wash.2d 1001, 278 P.3d 1111 (2012).ANALYSIS ¶ 1......
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    ...with approval Division Two's rejection of the proposition that such failure waives a later challenge in Saleemi v. Doctor's Assocs., Inc., 166 Wn. App. 81, 91, 269 P.3d 350 (2012)). Here, the trial court correctly compelled arbitration. Under both federal and state law, a request to compel ......
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    ...the opportunity "[a]t the proper time" to challenge whether the parties' disputes were arbitrable); cf. Saleemi v. Doctor's Assocs., Inc., 166 Wn. App. 81, 91-92, 269 P.3d 350 (2012) (recognizing that the trial court's nonfinal orders where arbitration is compelled are reviewable following ......
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