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Bearden v. McGill

Court of Appeals of Washington, Division 1

February 21, 2017

JAMES BEARDEN, Respondent,
v.
DOLPHUS MCGILL, Appellant, NELLIE KNOX MCGILL, Defendant.

          LEACH, J.

         MAR 7.3 and RCW 7.06.060(1) require that a party who appeals an arbitration award and fails to improve its position at a trial de novo pay the costs and reasonable attorney fees incurred by the opposing party after the request for the trial.[1]The purpose of these provisions is to "encourage settlement and discourage meritless appeals."[2]

         Dolphus McGill appeals the trial court's award of $71, 800 in attorney fees to James Bearden. McGill claims that he improved his position at a trial de novo he requested. In an earlier opinion, [3] we agreed. We stated that a trial court should include in its MAR 7.3 analysis those costs that both the arbitrator and trial court awarded but exclude costs that arose only for trial. The Supreme Court granted review and remanded for us to reconsider our opinion in light of its intervening decision in Nelson v. Erickson.[4] Following the Supreme Court's approach, we contrast the jury verdict with the initial arbitration award to determine whether McGill improved his position at trial. Because that verdict was less than the arbitration award, we again conclude that McGill improved his position at trial. As in our earlier opinion, we reverse.

         FACTS

         Dolphus McGill caused injuries to James Bearden in a January 2011 automobile accident. Bearden sued, and the parties took part in mandatory arbitration. The arbitrator awarded Bearden $44, 000 in compensatory damages. He then amended the award to include $1, 187 in fees and costs for a total of $45, 187.

         McGill requested a trial de novo. The jury awarded Bearden $42, 500.00 in damages. The trial court then awarded Bearden $3, 296.39 in costs under RCW 4.84.010. The trial court awarded Bearden a $45, 796.39 judgment against McGill.

         Bearden then moved for attorney fees and costs under MAR 7.3, arguing that McGill failed to improve his position by appealing the arbitration award because with costs the trial court judgment against McGill, $45, 796.39, was greater than the $45, 187.00 amended arbitration award. McGill responded that costs should not factor into his "position" under MAR 7.3 and that he actually improved his position from owing $44, 000.00 in damages after arbitration to owing $42, 500.00 in damages after trial. The trial court agreed with Bearden and awarded him $71, 800.00 in attorney fees.

         McGill appealed, and this court reversed. The Supreme Court granted Bearden's petition for review and remanded to this court for reconsideration in light of its intervening opinion in Nelson.

         STANDARD OF REVIEW

         This court reviews de novo the application of a court rule and whether a statute authorizes an award of attorney fees.[5]

         ANALYSIS

         In our earlier opinion in this case, we held that "to determine if a party improved its position at a trial de novo, the superior court should compare the aggregate success on claims actually litigated between the parties at both the arbitration and the trial de novo."[6]We said that this required the trial court to "compar[e] every element of monetary relief the arbitrator considered with the trial court's award for those same elements."[7] On remand, McGill contends that our analysis was correct. Bearden contends that the Nelson decision requires that we compare the total amended arbitration award and trial judgment, including costs, and thus conclude that McGill did not improve his position.

         Although we revise our earlier analysis in light of Nelson, we again conclude that McGill improved his position at trial. The Nelson court based its analysis almost entirely on Niccum v. Enquist.[8] We therefore confine our analysis to these two decisions.

         Like this case, Niccum involved an automobile collision that went to arbitration.[9]After the arbitrator awarded the plaintiff $24, 496.00 in compensatory damages, the defendant requested a trial de novo.[10] The plaintiff ultimately made an offer of compromise to accept "an award of $17, 350.00 including costs and statutory attorney fees."[11] The jury awarded the plaintiff $16, 650.00 in compensatory damages.[12]

         The plaintiff then requested an award of costs and attorney fees under MAR 7.3 because the defendant had not improved his position at trial. The plaintiff argued that the court should subtract the amount of costs, $1, 016.28, included in his $17, 350.00 settlement offer to decide if the defendant had improved his position. Because the result, $16, 333.72, was less than the $16, 650.00 verdict, the defendant had failed to improve his position.[13]

         The Supreme Court rejected this argument, stating that "[a] straightforward application of the statutory language shows that [the defendant] improved his position on trial de novo."[14] The court observed that "a party is not entitled to costs in connection with an offer of compromise."[15] Thus, the court reasoned, it would be improper to subtract from the offer of compromise the costs the trial court eventually awarded when comparing the offer with the jury verdict.[16] The court also stated that "[t]he statute was 'meant to be understood by ordinary people'" and "an ordinary person would consider that the 'amount' of an offer of compromise is the total sum of money that a party offered to accept in exchange for settling the lawsuit."[17] For this reason, the court compared the $17, 350 offer to the lesser jury verdict to decide that the defendant improved his position at trial.[18]

         Nelson also involved an automobile collision that went to arbitration.[19] After the arbitrator awarded Nelson $44, 923, including costs and attorney fees, the defendant requested a trial de novo.[20] To avoid trial, Nelson offered to settle for "'$26, 000 plus taxable costs incurred at arbitration.'"[21] The parties knew the arbitration costs to be $1, 522. At trial, a jury awarded Nelson $24, 167 in compensatory damages.[22] The trial court added $3, 000 for future noneconomic damages, bringing the total compensatory award for Nelson to $27, 167-more than $26, 000 but less than $26, 000 plus the known arbitration costs.

         Nelson then requested an award of costs and attorney fees under MAR 7.3, claiming that the defendant had not improved his position at trial. Nelson characterized his settlement offer as simply $26, 000, which is less than the $27, 167 damage award, entitling him to recover costs and attorney fees.

         As in Niccum, the Supreme Court stated that a trial court should interpret a party's "position prior to trial... as an ordinary person would."[23] But the court noted that unlike in Niccum. this principle was in tension with the principle that "parties generally cannot include costs in their settlement offers."[24] It nonetheless concluded that "an ordinary person" would have understood Nelson's offer to include the $1, 522 in known arbitration costs. Thus, the trial court properly included those costs in its MAR 7.3 test.[25] Because ...


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