Williams v. Tilaye

• Decision Date: 08 March 2012
• Docket Number: No. 85570–6.,85570–6.
• Citation: 272 P.3d 235,174 Wash.2d 57
• Parties: Patrick A. WILLIAMS and Andrea Harris, his wife, and Andrea Harris as guardian for Elena–Genevieve Harris, a minor child, and Joshua Harris, a minor child, Petitioners, v. Fesseha K. TILAYE and Jane Doe Tilaye, his wife, and the marital community composed thereof, and Mamuye A. Ayeleka, d.b.a. Orange Cab 485 and Jane Doe Ayeleka, his wife, and the marital community composed thereof, Respondents.
• Court: Washington Supreme Court

174 Wash.2d 57

272 P.3d 235

Patrick A. WILLIAMS and Andrea Harris, his wife, and Andrea Harris as guardian for Elena–Genevieve Harris, a minor child, and Joshua Harris, a minor child, Petitioners,

v.Fesseha K. TILAYE and Jane Doe Tilaye, his wife, and the marital community composed thereof, and Mamuye A. Ayeleka, d.b.a. Orange Cab 485 and Jane Doe Ayeleka, his wife, and the marital community composed thereof, Respondents.

No. 85570–6.

Supreme Court of Washington, En Banc.

Argued Oct. 25, 2011.Decided March 8, 2012.

Patrick Joon Kang, Premier Law Group, Bellevue, WA, Riley Lovejoy, Jason Ellis Anderson, Attorneys at Law, Seattle, WA, for Petitioners.

Philip Randolph Meade, Merrick Hofstedt & Lindsey, PS, Howard Mark Goodfriend, Smith Goodfriend, PS, Seattle, WA, for Respondents.

CHAMBERS, J.

[174 Wash.2d 58] ¶ 1 This case involves two different statutory schemes awarding attorney fees. One scheme, RCW 7.06.050–.060, discourages frivolous appeals from mandatory arbitration. It does so by providing a penalty for parties that appeal a mandatory arbitration decision by requesting a trial de novo and do no better at the trial de novo than in arbitration. The other scheme, RCW 4.84.250–.300, encourages parties to settle before going to court in cases where the amount in controversy is $10,000 or less. It does so in part by allowing a plaintiff to recover attorney fees if the plaintiff makes an offer of settlement at least 10 days before the initial trial, the offer is rejected, and the plaintiff recovers more than was offered. The question is whether the second scheme may be invoked for the first time 10 days before a trial de novo, rather than 10 days before the arbitration hearing, by a plaintiff that appeals an arbitration decision.

¶ 2 Here, after receiving no award in mandatory arbitration, plaintiffs Patrick Williams and Andrea Harris requested a trial de novo. Before the trial de novo, but after the arbitration decision, they each made offers of settlement for less than $10,000, which were not accepted by the defendants. After success at the trial de novo, the plaintiffs applied for and received prevailing party attorney fees under RCW 4.84.250. Harris and Williams argue that although they offered to settle for under $10,000 after the mandatory arbitration, RCW 4.84.250–.300 allows them to recover attorney fees as long as they made their offers 10 days before the trial de novo. We disagree. We affirm the Court of Appeals and hold that RCW 4.84.250–.300, which is designed to encourage prompt settlement of small claims, applies only to a plaintiff that seeks recovery of $10,000 or less and makes an offer of settlement 10 days before the initial hearing whether it is a trial or an arbitration.

FACTS

¶ 3 On December 25, 2005, a cab driven by Fesseha Tilaye collided with the car in which Harris and Williams were traveling. Harris and Williams contended that while both vehicles were southbound on Interstate 5, Tilaye had overcorrected, lost control, and caused the collision. Before taking any legal action, they offered to settle any claims of liability for over $20,000 each. When the offers were refused, Harris and Williams filed suit in superior court. The case then proceeded to mandatory arbitration. Harris and Williams lost and received no award at arbitration. Their lawyer declined to appeal by requesting a trial de novo and withdrew from the case. Because of the posture of their case, Harris and Williams had some difficulty obtaining new counsel, but eventually found an attorney willing to represent them. Before the trial de novo, Harris offered to settle her claims for $9,000. Williams offered to settle for $3,900. Both offers were refused, and the case proceeded to a three day de novo bench trial. The trial judge awarded Harris $20,512 and Williams $7,482.

¶ 4 Harris and Williams sought attorney fees under RCW 4.84.250. The statutory scheme in RCW 4.84.250–.300 allows reasonable attorney fees to a plaintiff in an action for $10,000 or less if the plaintiff offers to settle at least 10 days before trial, the offer is rejected, and the plaintiff recovers more at trial than was offered. See RCW 4.84.250–.300. The trial court found that because Harris and Williams had made offers of settlement for under $10,000 before the trial de novo, and they had recovered more at trial than they had offered, they were entitled to attorney fees under RCW 4.84.250. The court awarded Harris $49,847.50 and Williams $25,722.00 in reasonable attorney fees and costs. The Court of Appeals reversed the trial court's award of fees, reasoning that when the attorney fees scheme in RCW 4.84.250–.300 is applied to mandatory arbitration, the arbitration is equivalent to the original trial, and the trial de novo is equivalent to an appeal. Williams v. Tilaye, noted at 158 Wash.App. 1001, 2010 WL 3835228, at *2–3. Since Harris and Williams did not make any offer of settlement prior to arbitration, the Court of Appeals held they did not successfully invoke the statutory scheme and were therefore not entitled to attorney fees under RCW 4.84.250. Id. Harris and Williams appealed, and we accepted review. Williams v. Tilaye, 171 Wash.2d 1019, 253 P.3d 393 (2011).

DISCUSSION

I. Standard of Review

¶ 5 Resolution of this case requires interpreting, and if possible harmonizing, two statutes granting reasonable attorney fees under certain circumstances. Statutory interpretation is a question of law reviewed de novo. State v. Wentz, 149 Wash.2d 342, 346, 68 P.3d 282 (2003). Interpreting statutes requires the court to discern and implement the legislature's intent. State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003).

II. Attorney Fees for Claims of $10,000 or Less in RCW 4.84.250–.300

¶ 6 Generally, each party in a civil action must bear its own attorney fees. Cosmopolitan Eng'g Grp., Inc. v. Ondeo Degremont, Inc., 159 Wash.2d 292, 296, 149 P.3d 666 (2006). RCW 4.84.250 is an exception to this general rule; it allows reasonable attorney fees to a prevailing party in any action where $10,000 or less is claimed by the pleading party, exclusive of costs.¹ RCW 4.84.250. To be a prevailing party under the statute a plaintiff must (1) seek recovery of $10,000 or less, (2) make an offer of settlement at least 10 days before trial, and (3) recover as much or more than it offered in settlement. RCW 4.84.250, .260. Alternatively, the defendant can be the prevailing party if either the plaintiff recovers nothing or the defendant makes an offer 10 days or more before trial and the plaintiff recovers as much or less than that offer. RCW 4.84.270. Finally, under RCW 4.84.290, “the prevailing party on appeal shall be considered the prevailing party for the purpose of applying the provisions of RCW 4.84.250.” These statutes have multiple purposes of encouraging out-of-court settlements, penalizing parties who unjustifiably bring or resist small claims, and enabling a party to pursue a meritorious small claim without seeing the award diminished by legal fees. Beckmann v. Spokane Transit Auth., 107 Wash.2d 785, 788, 733 P.2d 960 (1987) (citing Valley v. Hand, 38 Wash.App. 170, 684 P.2d 1341 (1984); Northside Auto Serv., Inc. v. Consumers United Ins. Co., 25 Wash.App. 486, 492, 607 P.2d 890 (1980)).

III. Attorney Fees in Mandatory Arbitration under RCW 7.06.060

¶ 7 The mandatory arbitration scheme is another exception to the general rule that each party bears its own attorney fees; it also provides for reasonable attorney fees under certain circumstances. Mandatory arbitration was established by the legislature in 1979.² Laws of 1979, ch. 103, § § 1–10. Mandatory arbitration is authorized by the legislature at the option of each county and applies to claims where the claimant limits the amount claimed to $50,000 or less.³ After the arbitrator files a decision, either party may request a “trial de novo.” RCW 7.06.050(1). If a party requests a trial de novo, but fails at trial to improve upon its arbitration award, the court will assess costs, reasonable attorney fees, and expert witness expenses against that party. RCW 7.06.060(1), (2). Between arbitration and a trial de novo, the party not requesting a trial de novo can make an offer of compromise. RCW 7.06.050(1)(a). If the offer of compromise is refused, the offer replaces any arbitration award for the purposes of determining whether the party who requested a trial de novo improved its position. RCW 7.06.050(1)(b). Importantly, under this attorney fees scheme, only a party requesting a trial de novo is at risk of having reasonable attorney fees assessed against it. The purpose of the rule awarding attorney fees in this context is to discourage meritless appeals of arbitration awards. Wiley v. Rehak, 143 Wash.2d 339, 348, 20 P.3d 404 (2001) (quoting Perkins Coie v. Williams, 84 Wash.App. 733, 737–38, 929 P.2d 1215 (1997)).

IV. Analysis

¶ 8 We interpret statutes so as to give effect to the legislature's intent. J.P., 149 Wash.2d at 450, 69 P.3d 318. To determine the intent of the legislature in adopting legislation, we read a statutory provision in context with the whole statutory scheme and related statutes. See Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 11–12, 43 P.3d 4 (2002).

¶ 9 The statutes providing for attorney fees for small claims and for mandatory arbitration were adopted at different times and for different reasons. As we have said, the former is to discourage those who unjustifiably bring or resist claims for small amounts while the latter is to discourage unwarranted appeals from mandatory arbitration. Mandatory arbitration is intended to provide a relatively expedient procedure to resolve claims where the plaintiff is willing to limit the amount claimed. Mandatory arbitrations are processed under the supervision of the superior court with discovery, hearings on the merits, and a procedure to reduce the arbitrator's award to judgment. See MAR 1.3, 4.2, 5.1, 6.3. If...