Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SVN Cornerstone, LLC v. N. 807 Inc.

Court of Appeals of Washington, Division 3

August 20, 2019

SVN CORNERSTONE, LLC, a Washington Limited Liability Company, Appellant,
v.
N. 807 INCORPORATED, a Washington corporation, d/b/a BERKSHIRE HATHAWAY HOMESERVICES FIRST LOOK REAL ESTATE; KENNETH M. LEWIS and MICHELLE S. LEWIS, and the marital community composed thereof; and HENRY SEIPP and JANE DOE SEIPP, and the marital community composed thereof, Respondents.

          Pennell, J.

         SVN Cornerstone, LLC (Cornerstone) appeals several superior court orders permitting former employee Henry Seipp to go forward with an arbitration complaint for lost real estate commissions. Cornerstone argues that Seipp's claims should have been raised in the parties' prior litigation, [1] and therefore Seipp's current claims are barred by the doctrine of res judicata and as waived compulsory counterclaims.

         Because Cornerstone's arguments regarding res judicata and compulsory counterclaims are defenses to the merits of Seipp's arbitration complaint, they must be decided in arbitration, not by a court. Although there are circumstances in which a court should determine whether a prior judgment precludes a subsequent arbitration claim under a theory of res judicata, this case is not one of them. The parties' prior suit was resolved through a negotiated, out of court settlement agreement-not by a trial or contested motions. Given this circumstance, this court has no special role to play in discerning the scope of the prior litigation or the applicability of res judicata. Instead, because Seipp's claim for commissions properly belongs in arbitration, the defense of res judicata and related issues must be decided in that forum.

         BACKGROUND

         Seipp worked for Cornerstone until April 20, 2015, when he left to work as a broker for Berkshire Hathaway Home Services First Look Real Estate (Berkshire).[2]Prior to Seipp's departure, Cornerstone had developed a marketing package for the sale of the Timber Court Apartments owned by EZ Properties, LLC. Two days after Seipp associated with Berkshire, Berkshire and EZ Properties entered into an exclusive listing agreement to sell the Timber Court Apartments. Berkshire sold the Timber Court Apartments, and once Cornerstone learned of the sale it asserted it was entitled to a commission from the sale. The final sale agreement for the property listed Seipp as the listing broker and Berkshire as the listing firm.

         Cornerstone filed a complaint in Spokane County Superior Court against Berkshire, its owners, and Seipp, alleging Seipp's involvement in the sale of the Timber Court Apartments breached his independent contractor agreement with Cornerstone. Cornerstone also made claims for unjust enrichment, tortious interference with contract, violation of the Uniform Trade Secrets Act, chapter 19.108 RCW, conversion, and breach of the fiduciary duty of loyalty. Berkshire responded to Seipp's complaint by alleging Cornerstone's claims were subject to arbitration with the Commercial Brokers Association (CBA), since all the parties were members of the CBA and were required to arbitrate some disputes. Berkshire and Seipp then filed for dismissal and to compel arbitration. Cornerstone filed a cross motion for partial summary judgment for its breach of contract claim. The superior court declined to compel arbitration and denied the motion to dismiss.

         In May 2017, this court affirmed the superior court's decision to not dismiss the complaint, but reversed the denial of the motion to compel arbitration, finding the plain language of the CBA's bylaws required arbitration of all of Cornerstone's claims related to lost commissions. We allowed that the superior court could retain jurisdiction over any claims unrelated to commissions.

         Cornerstone petitioned for review by the Washington Supreme Court. While the petition was pending, the parties privately negotiated a settlement. Under the terms of their settlement agreement, Seipp agreed to pay Cornerstone $20, 000, Cornerstone agreed to dismiss its Supreme Court petition for review, and the parties agreed the superior court case would be dismissed with prejudice and without attorney fees or costs to any party. The settlement agreement contained a one-sided release provision, in that Cornerstone agreed to release its claims against Seipp, but Seipp did not waive any claims or potential claims against Cornerstone. The agreement specified that disputes arising from the agreement would be decided in Spokane County Superior Court. On August 22, 2017, a stipulation and order of dismissal with prejudice was entered in Cornerstone's superior court lawsuit. The stipulation and order did not refer to the settlement agreement or cite the reasons for dismissal.

         Prior to finalization of the settlement agreement, Seipp was approached by an individual named Dennis Crapo. Crapo had hoped to enlist Seipp's services in selling some commercial property. But when Seipp informed Crapo about the ongoing litigation with Cornerstone, Crapo decided to proceed with another broker. Crapo ultimately sold the property on August 28, 2017.

         Seipp filed an arbitration complaint with the CBA against Cornerstone during September 2017 (the month after entry of the stipulated dismissal order). In his complaint, Seipp alleged Cornerstone's prior lawsuit caused him to lose the opportunity to list and sell Crapo's property, which could have resulted in a commission of over $1 million. Seipp asserted several causes of action: perversion of the court, malicious prosecution, failure to arbitrate, and tortious interference with business relations. In his prayer for relief, Seipp requested lost commissions for Crapo's property, punitive damages, and $60, 000 for attorney fees and costs incurred in defending the recently dismissed lawsuit related to the Timber Court Apartments commissions.

         Seipp later amended the arbitration complaint to remove the request for punitive damages and attorney fees and costs, but prior to this Cornerstone filed a complaint in superior court for breach of contract against Seipp and Berkshire (hereinafter collectively Seipp). Cornerstone alleged Seipp breached the terms of the settlement agreement by seeking an award of attorney fees and costs incurred in the first lawsuit in the arbitration complaint. Cornerstone requested damages and injunctive relief to prevent the CBA from arbitrating claims that were dismissed in the first lawsuit via the settlement agreement.

         Cornerstone moved for summary judgment on its complaint on January 5, 2018. Cornerstone argued Seipp's arbitration complaint was barred by the parties' settlement agreement. Cornerstone also argued Seipp's claims were barred by the doctrine of res judicata and that Seipp waived his claims by failing to bring them as compulsory counterclaims in the prior litigation. Cornerstone requested the superior court address the issues of res judicata and compulsory counterclaims by issuing an injunction, prohibiting Seipp from going forward with his claims in arbitration.

         Shortly after Cornerstone's motion for summary judgment, Seipp filed a CR 12(b)(6) motion to dismiss, arguing that because Seipp amended the arbitration complaint to remove the claims for punitive damages and attorney fees and costs, Cornerstone had failed to state a claim upon which relief could be granted. Seipp also argued the settlement agreement did not bar Seipp's amended arbitration complaint.

         In response to Cornerstone's motion for summary judgment, Seipp made a twofold argument. First, Seipp claimed Cornerstone's arguments regarding res judicata and compulsory counterclaims were defenses to the pending arbitration complaint and needed to be raised in arbitration. Second, Siepp argued Cornerstone's claims on the merits, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.