Appeal from Superior Court of King County. Docket No: 93-2-26628-6. Date filed: 04/20/95.
Authored by Ann L. Ellington. Concurring: H. Joseph Coleman, Faye C. Kennedy.
The opinion of the court was delivered by: Ellington
ELLINGTON, J. -- Daniel Gottlieb and Karen Boyden (Owners) contracted with P&M Construction and architects Newton Associates for a remodel of their house. Disputes arose, and the parties proceeded to arbitration, which resulted in net awards to P&M and Newton. The court confirmed the arbitration award, granted Newton's request for fees, and awarded fees and prejudgment interest to P&M. Owners argue that the court erred by refusing to vacate the award and by granting fees and prejudgment interest. Because no basis existed to vacate the award, and the fees and interest were properly determined based on the award, we affirm.
After Owners refused to make certain payments for house remodeling work, P&M and Newton filed liens against their property. Newton took no action to enforce its lien, but P&M filed a foreclosure action, which the court stayed pending arbitration. The stay order reserved all issues regarding the validity of P&M's lien for later resolution by the court.
Newton agreed to participate in the arbitration. Owners sought $250,000 in damages from P&M and $150,000 from Newton. P&M sought an unpaid contract balance of $43,000, plus interest and fees. Newton sought approximately $12,000 for uncompensated services.
After a 13-day arbitration hearing, P&M and Newton were awarded $22,138.03 and $18,462.22, respectively. Owners received no net award and were ordered to pay 83 percent of the arbitration costs. P&M was ordered to pay the remaining 17 percent. The arbitrator reserved P&M's fee and prejudgment interest issues for resolution by the court after determination of the validity of P&M's lien. With regard to Newton, the arbitrator did not address the issue of fees, but found that of the 23 claims Owners asserted against Newton, 11 were frivolous.
Newton and P&M moved to confirm the award and sought attorney fees. P&M argued that it was entitled to fees under RCW 60.04.181(3). Newton argued that it was entitled to fees under RCW 4.84.185 and CR 11 for defending a largely frivolous suit. The court granted both motions, awarding approximately $30,000 each to Newton and P&M. Newton's award represented 45 percent of its fees, on the basis that 45 percent of Owners' case was frivolous, but the record does not reflect whether the award was premised on the frivolous action statute or on the court rule. P&M's award was premised on the lien statute.
As a preliminary matter, we address two motions that relate to the record on appeal. Owners claim on appeal that P&M's fee award should be vacated because P&M failed to join Seawall and its lien action was therefore defective for absence of a necessary party. In response, P&M seeks to supplement the record with evidence that Owners settled a lien dispute with Seawall Construction, Inc. more than eight months before P&M commenced its suit. We deny P&M's motion because the proposed evidence is not needed to resolve the fee issue. See RAP 9.11(a)(1).
Newton requests dismissal of the appeal or in the alternative asks that portions of Owners' brief be stricken and sanctions imposed, pointing out that Owners made numerous unsupported factual allegations and violated an order of this court by adding improper argument in an amended brief filed with permission of the court. The Rules of Appellate Procedure require factual allegations to be supported by evidence in the record. See Nelson v. McGoldrick, 127 Wash. 2d 124, 141, 896 P.2d 1258 (1995); RAP 10.3(a)(4). Owners' brief indeed contains numerous unsupported factual allegations as to what the arbitrator considered and why. The only citations for these allegations are the unsupported arguments Owners made in their briefings below. Owners' reply brief also contains pages of unsupported factual allegations. We strike all of the unsupported materials. Further, by order of this court, Owners were permitted to amend their opening brief to respond to P&M's proposed supplemental evidence regarding the Seawall settlement. Despite that order's explicit directive to confine the amendment to this issue, Owners added argument against Newton, which is hereby stricken. We do not find these violations so egregious as to require dismissal, but as will be discussed below, we impose sanctions for this conduct by way of an award of attorney fees to Newton.
We turn first to Owners' claim that the award should have been vacated because the arbitrator excluded certain evidence and thereby deprived them of a fair hearing. Court scrutiny of an arbitration award is very limited. See e.g., Boyd v. Davis, 127 Wash. 2d 256, 259-60, 897 P.2d 1239 (1995); Woodley v. Safeco Ins. Co., 84 Wash. App. 653, 659, 929 P.2d 1150 (1997). An award may be vacated only upon a showing of proper statutory grounds, and the party seeking vacation has the burden of making that showing. See RCW 7.04.160; Harris v. Grange. Ins. Ass'n, 73 Wash. App. 195, 198, 868 P.2d 201 (1994).
An arbitrator's evidentiary rulings will not be overturned absent a clear showing of abuse of discretion. Konkar Maritime Enter., S.A. v. Compagnie Belge D'Affretement, 668 F. Supp. 267, 273 (S.D.N.Y. 1987). Discretion is abused when a decision is manifestly unreasonable or based on untenable grounds. See Holbrook v. Weyerhaeuser Co., 118 Wash. 2d 306, 314-15, 822 P.2d 271 (1992). Even if discretion is abused, vacation of an award is appropriate only where "the court is satisfied that substantial rights of the parties were prejudiced[.]" RCW 7.04.160; accord Hoteles Condado Beach, La Chonca and Conv. Ctr. v. Local 901, 763 F.2d 34, 40 (1st Cir. 1985). The burden of showing such prejudice rests on the party seeking to vacate. Harris, 73 Wash. App. at 198.
Here, the excluded evidence consisted of voluminous materials described in Owners' brief as "inspection reports," "notes," "quotes," and "evidence . . . regarding the unauthorized substitution of [fiberboard]." (The record reveals the latter includes newspaper and magazine articles.) The award makes no reference to this evidence, and there is no transcript of the arbitration hearing.
Owners essentially argue that an arbitrator has no authority to reject offered exhibits. Owners are incorrect. An arbitrator is not bound to hear all the evidence tendered by the parties. Hoteles, 763 F.2d at 39; Konkar, 668 F. Supp. at 273. An arbitrator must, however, give each party an adequate ...