Jurisdiction: It's in the Rules-Ask the Arbitrator for Your Fees, not Wash. St. Ct. (Web)

In Ureta v. Rothschild Construction LLC, No. 57714-0-I (May 21, 2007)(available at http://www.courts.wa.gov/opinions/pdf/57714-0.unp.doc.pdf ), a Washington state appellate court reversed a ruling awarding attorney fees to a respondent construction company.

The respondent did not ask the arbitrator for costs or fees under state and county mandatory arbitration rules; the appeals court held that the rules place fees determinations with arbitrators, not courts.

Petitioner Gloria Ureta entered into a repairs and remodeling contract for her home with Rothschild. When half the contract projects were complete, and Ureta already had paid $18,000, after a $21,000 total estimate. Ureta terminated the contract because of the excessive costs, and claiming poor workmanship.

In August 2003, a month after termination, Rothschild sued Ureta in Seattle District Court for a breach of contract. On Oct. 24, 2003, Ureta sued Rothschild, as well as the contractor’s bonding company, in Kings County (Wash.) Superior Court for breach of contract, civil conspiracy, and violation of the Washington Consumer Protection Act. The actions were consolidated.

In November 2004, the court transferred the case to mandatory arbitration.

Only Ureta's breach of contract claim went to arbitration, and the others were dismissed. The arbitrator awarded Rothschild $100 in October 2005. Neither party attempted to appeal the arbitrator's decision, and Rothschild did not submit a request for an award of attorney fees.

On Jan. 13, 2006, Rothschild filed a court motion to confirm the award, as well as a request to award attorney fees under Washington statute 4.84.250.

Ureta countered that the court did not have jurisdiction to award attorney fees to Rothschild under the state’s Mandatory Arbitration Rules and the King County Local Mandatory Arbitration Rules.

The trial court ruled that it had the jurisdiction to award attorney fees, and granted Rothschild’s request for more than $23,000 in fees.

In its reversal, the Division One Court of Appeals notes that the MAR gives the trial court jurisdiction in mandatory arbitration cases except for “the authority expressly given to the arbitrator by these rules.” MAR 1.3(a). Section 6.2(b) of the King County rules mandates that the parties must file a motion for attorney fees with the arbitrator within seven days of filing the award.

MAR 3.2 also gives the arbitrator the authority to act as circumscribed by the local county rules. Thus, the appeals court reasons that since Rothschild didn’t ask the arbitrator for attorney fees, and the state and local rules give the responsibility of awarding attorney fees to the arbitrator, the trial court does not have the jurisdiction to make this award.

The appeals court reversed the trial court decision to award attorney fees and remanded the case.

--Robert A. Irwin, CPR Intern