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Tuesday, April 7, 2020

Wash. SC rules statutory costs should be included in arbitration case; Dissent says no 'ordinary person' could understand the decision

By Elizabeth Alt | Apr 24, 2018

Law money 07

OLYMPIA, Wash. (Legal Newsline) – The Washington Supreme Court answered whether statutory costs should be included when comparing awards according to the Mandatory Arbitration Rule.

Finding that statutory costs should be included, the Supreme Court reversed April 12 the Court of Appeals' prior decision in a lawsuit for damages in a car accident. 

“We reaffirm the determination of whether a requesting party's position was improved should follow the reasoning of an ordinary person. Accordingly, we hold that statutory costs should be included,” Justice Susan Owens wrote the court opinion, with justices Mary Fairhurst, Charles Johnson, Debra L. Stephens, Steven Gonzales, Mary I. Yu and Sheryl Gordon McCloud concurring.

According to the opinion, James Bearden sued Dolphus McGill for damages after a car accident. In arbitration, Bearden was awarded $44,000 in compensatory damages and after appealing for statutory costs as the prevailing party, the arbitrator amended the award to include $1,187 in statutory costs.

McGill filed a petition for the trial court to review. The court awarded Bearden $42,500 in damages and $3,296.39 in costs. Bearden then filed for attorney fees, claiming that under the Mandatory Arbitration Rule, McGill “had not improved his position at trial because the trial award of $45,796.39 exceeded the arbitral award of $45,187.” The court sided with Bearden and changed the award to a total of $71,800.

The Mandatory Arbitration Rule states “If the party that requests a trial de novo after mandatory arbitration 'fails to improve' his or her position at the trial, then the opposing party may move for the requesting party to pay the reasonable attorney fees incurred as a result of the trial de novo,” according to the opinion.

McGill appealed the jury award. The Court of Appeals reversed the trial court decision, finding that the trial court had erroneously included trial costs in the comparison, stating “the proper comparison was between the common elements of the awards in both proceedings, including only 'those costs and fees litigated before both the arbitrator and trial court.'" 

The Supreme Court reviewed the case and remanded back to the Court of Appeals, who affirmed its previous ruling, stating that comparison should only include the damages portions of the award and not “statutory costs awarded in either proceeding.”

On its final review of the case, the Supreme Court majority states that this ruling coincides with how an ordinary person would understand it, and notes that “the legislative history supports including arbitration costs when considering whether the party's position improved.”

Justice Mary Yu wrote a separate brief opinion to concur and note that although the majority is correct, its explanation was a “mind-boggling” and “convoluted” way to explain a “simple conclusion.”

The dissenting opinion by Justice Charles Wiggins, joined by Justice Barbara Madsen, stated that the majority decision is not one that could be understood by an ordinary person, and encouraged the courts to adhere to the rules “understood by ordinary people” when determining if a party that requests a trial de novo has improved their position. 

“Only the arbitrator's award of damages and the damages awarded at the trial de novo should be compared…Including costs in this equation departs from our precedent, promotes uncertainty, and turns a meaningful measure into an arbitrary and inequitable determination.”

The Supreme Court of Washington case number 94320-6

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