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Mainline Rock & Ballast, Inc. v. Barnes, Inc.

Court of Appeals of Washington, Division 3

April 16, 2019

MAINLINE ROCK & BALLAST, INC., Appellant,
v.
BARNES, INC., Respondent.

          FEARING, J.

         Mainline Rock, a party to an arbitration proceeding, appeals the superior court's denial of an award of reasonable attorney fees and costs pursuant to RCW 7.04A.250 in the superior court proceeding to confirm the arbitration award. We hold that the trial court abused its discretion when denying Mainline Rock's application for fees because the trial court misread the law and failed to exercise its discretion under the statute.

         FACTS

         Mainline Rock & Ballast, Inc. (Mainline Rock) develops and operates rock quarries to extract, crush, and sell ballast, a rock material used as the footing or base for railroad tracks. Between 2004 and 2017, Mainline Rock owned and operated a rock quarry in Torrance County, New Mexico, near Encino. Mainline Rock intended to sell ballast from the Torrance site to BNSF Railway.

         Barnes, Inc. (Barnes) works as a drilling and blasting contractor. In 2008, Barnes and Mainline Rock entered a master blasting agreement, under which Barnes would perform blasting services for maintenance at numerous locations, including the Torrance County site. Pursuant to the parties' agreement, Mainline Rock would pay Barnes for blasted rock materials when Mainline sold the rock to a third party. Individual work orders would determine the rate of payment. The master blasting agreement included an arbitration clause. Paragraph 29 of the master blasting agreement declared:

29. Attorney Fees: If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney fees, court costs and out-of-pocket costs, in addition to any other relief to which the party may be entitled. The provisions of this section shall survive the termination or expiration of this Agreement.

Clerk's Papers (CP) at 29.

         On June 1, 2016, Mainline Rock and Barnes entered into a work order authorization amendment for blasting work at the Torrance location. On April 7, 2017, Mainline sold the assets of the Torrance operation site to Vulcan Materials Corporation. The purchase included all stockpiled commercially sellable aggregate inventory. Mainline Rock then became liable to Barnes for work performed. The parties could not agree to the sum owed Barnes.

         Because of the parties' differences, they entered arbitration pursuant to the master blasting agreement. The arbitration occurred in Spokane before a three-person arbitration panel. A majority of the panel determined that Barnes was entitled to a payment higher than the amount tendered by Mainline Rock but lesser than the amount Barnes requested. Both parties sought an award of reasonable attorney fees and costs, under the master blasting agreement, as the prevailing party. The panel ruled that, since it did not accept either party's position, neither party prevailed. The panel denied each party an award of reasonable attorney fees and costs.

         PROCEDURE

         Barnes, pursuant to RCW 7.04A.230(1)(d), filed a motion with the superior court to vacate the arbitration award. In return, Mainline Rock, pursuant to RCW 7.04A.230(4), filed a motion to confirm the award. The trial court denied Barnes' motion to vacate and granted Mainline Rock's motion to confirm.

         Thereafter Mainline Rock, pursuant to RCW 7.04A.250, filed a motion for an award of reasonable attorney fees and litigation expenses incurred in the superior court proceeding. The trial court denied Mainline Rock's application for fees and costs. The order reads:

Both parties cross moved the court for: orders granting attornies [sic] fees. The parties requested that the court rule on the pleadings ...

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