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

The Court of Appeals, Division II issued a published opinion on August 19, 2014 in Dan’s Trucking, Inc. v. Kerr Contractors, Inc., Cause No. 44342-2-II, which analyzes a request for a trial de novo following an arbitrator’s ruling awarding attorney fees. There, the Washington Department of Transportation awarded Kerr Contractors, Inc. a contract to improve State Route 14 in Clark County. Kerr subcontracted with Dan’s Trucking to haul asphalt for the project. When a dispute arose between Kerr and Dan’s Trucking, Dan’s Trucking sued for breach of contract and negligence in Thurston County Superior Court. The trial court transferred the case to mandatory arbitration. Prior to the arbitration hearing, the parties settled the 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 email and notified the arbitrator. The arbitrator awarded nearly $7k in attorney fees to Dan’s Trucking. The form on which the arbitrator entered his award stated, among other things: “. . . if no party has sought a trial de novo, the prevailing party . . . may present . . . a judgment on the arbitration award for entry as final judgment in this case.” After Kerr requested a trial de novo, Dan’s Trucking filed a motion to strike the request, asserting that Kerr was not entitled to a trial de novo under MAR 7.1 because the parties had privately settled their dispute. Dan’s Trucking further asserted that the arbitrator was acting as a private arbitrator under the Uniform Arbitration Act (“UAA”), chapter 7.04 RCW, when he decided the attorney fee request rather than as an arbitrator under MAR 3.2. The trial court granted the motion and Kerr (along with Liberty Mutual Ins. Group, Inc.) appealed.

To resolve the question of whether the trial court erred in granting the motion to strike, the Court of Appeals considered whether the arbitrator’s award of fees was governed by the UAA or by chapter 7.06 RCW as implemented by the MARs. The Court held that the fee award was governed by the MARs and the trial court thus erred by granting the motion to strike. In doing so, the Court first noted the distinctions between the MARs and the UAA and then analyzed the parties’ settlement agreement according to well-settled contract principles. The Court explained that MAR 7.1 and MAR 3.2(a)(8) leave no doubt that in an arbitration begun under the MARs, the arbitrator had authority to decide whether to award attorney fees to Dan’s Trucking. The final question, then, was whether the parties intended to convert the arbitration of attorney fees from one under the MARs to one under the UAA. Reviewing the ambiguous settlement agreement, the Court concluded that the parties did not intend to convert their MAR arbitration into one under the UAA. Accordingly, Dan’s Trucking’s suit remained within mandatory arbitration when the arbitrator resolved the issue of attorney fees and Kerr was therefore entitled to a trial de novo on that issue under MAR 7.1. The Court declined to award attorney fees on appeal to Kerr despite Kerr’s success because Kerr did not provide an appropriate basis for such an award.

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