On April 12, 2018, the Washington Supreme Court held in Bearden v. McGill, No. 94320-6, that statutory costs are included when determining whether a party has improved its position at a trial de novo after a mandatory arbitration award.
In the underlying matter, the parties went to mandatory arbitration, and the arbitrator awarded damages plus statutory costs to the plaintiff. The defendant requested a trial de novo, and at trial, the jury awarded the plaintiff less in damages but more in statutory costs, for a total award that was greater than the amount the plaintiff was awarded in mandatory arbitration. The trial court also granted the plaintiff attorney fees and costs, on the basis that the defendant’s position did not improve from the arbitration award to the trial de novo.
The defendant appealed, and the appellate court reversed and vacated the award of attorney fees and costs, holding that the only comparison between the arbitration award and the trial award should be the common elements of the awards in each proceeding and only include “those costs and fees litigated before the arbitrator and the trial court.” On remand, the appellate court again reversed, holding that the comparison should only include the damages portions of each award and not the statutory costs awarded in either proceeding.
The Washington Supreme Court reversed the appellate court, holding that based on the language and legislative history of the Mandatory Arbitration Rules and applicable statutes, as well as what an ordinary person would understand in comparing an arbitration award and a trail award, statutory costs are included in the calculations of a party considering a trial de novo. However, if a substantial change of parties or claims brought occurs after the arbitration award and at the trial de novo, then this comparison may be unfair and need to be considered further by the trial court.
Justice Yu concurred, arguing that the holding could be more succinct, and Justice Wiggins dissented, arguing that the amount of costs awarded does not have anything to do with the merits of the dispute and should therefore not be considered when determining whether a party has improved its position.
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