Huard Septic Design And Monitoring, Llc v. Prestige Custom Builders ( 2014 )

v i,- k ::
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MICHAEL KEITH and LOIS ANNE No. 70656-0-
KEITH, husband and wife,
DIVISION ONE
Plaintiffs,
v.
PRESTIGE CUSTOM BUILDERS, INC.,
Defendant.
PRESTIGE CUSTOM BUILDERS, INC., UNPUBLISHED
Respondent, FILED: December 29. 2014
v.
CHET'S ROOFING AND
CONSTRUCTION, INC.,
Third Party Defendant,
and
HUARD SEPTIC DESIGN
MONITORING, LLC,
Appellant,
and
MIRSKY ELECTRIC, INC.; STUCCO
WORKS, LLC; and CHESTER
CHMIELINSKI and HELEN
CHMIELINSKI, individually and on
behalf of the marital community
comprised thereof, doing business as
CHET'S ROOFING AND
CONSTRUCTION,
Third Party Defendants.
No. 70656-0-1/2
Cox, J. — At issue is whether Huard Septic Design and Monitoring LLC is
entitled to an award of reasonable attorney fees based on a contract with
Prestige Custom Builders Inc. Because there is no contract between them that
supports such an award, we affirm the trial court's denial of reasonable attorney
fees.
In April 2006, Prestige and Huard entered into a Master Subcontractor
Agreement ("Master Agreement"), as "Contractor" and "Subcontractor,"
respectively.1 Huard signed this contract on April 12, 2006, and Prestige signed
it on April 17, 2006. Thus, the "date hereof under this contract is April 17, 2006.
This five-page contract, drafted by Prestige, provided for the terms and
conditions that would apply to Huard "furnishing any materials and/or performing
any work on" construction projects that Prestige would undertake in the future. It
further provided that an individual construction project would be described in "a
separate addendum agreement called a Project Subcontract." And it specified
what constituted a "Project Subcontract."
Another document in the record before us is dated April 10, 2006.2 It is
comprised of a letter from Huard to Prestige, together with a preprinted form
containing terms and conditions drafted by Huard. It has three pages. Lois Anne
Keith, one of the owners of the real property on which it appears Huard
performed work, signed the document as "Owner" on April 26, 2006. There are
no other signatures that appear near the signature of "Owner."
1 Clerk's Papers at 34-38.
2 Id. at 40-42.
No. 70656-0-1/3
In 2012, Michael and Lois Anne Keith commenced this action, suing their
general contractor, Prestige, alleging substandard work and numerous defects in
the construction of their home. Subsequently, Prestige impleaded four
subcontractors, including Huard, claiming they were liable for the alleged defects.
Huard did not move to compel arbitration, notwithstanding that Article XVI
of the Master Agreement provides for arbitration of disputes. Rather, it moved for
summary judgment, pursuant to CR 56. The trial court granted this motion and
dismissed with prejudice Prestige's claims against Huard.
Huard then moved for an award of attorney fees incurred in defending
against Prestige's claims. The trial court denied this motion.
Huard appeals.
CONTROLLING CONTRACT TERMS
Huard first argues that it is entitled to attorney fees based on an attorney
fee provision in what it characterizes as the "Project Subcontract." In response,
Prestige contends that this provision in the Project Subcontract does not apply.
Thus, a threshold issue is whether the terms of the Master Agreement control
over the terms in the Project Subcontract. We hold that the terms and conditions
of the Master Agreement control, not those of any other document in this record.
"The 'touchstone of contract interpretation is the parties' intent.'"3
"Washington courts follow the objective manifestation theory of contracts,
imputing an intention corresponding to the reasonable meaning of the words
3 Realm. Inc. v. City of Olvmpia, 168 Wash. App. 1, 4-5, 277 P.3d 679
(quoting Durand v. HIMC Corp., 151 Wash. App. 818, 829, 214 P.3d 189 (2009)),
review denied, 175 Wash. 2d 1015 (2012).
No. 70656-0-1/4
used."4 "An interpretation which gives effect to all of the words in a contract
provision is favored over one which renders some of the language meaningless
or ineffective."5
This court may affirm a trial court's decision on any basis supported by the
record.6
Article I of the Master Agreement provides as follows:
I. MASTER SUBCONTRACTOR AGREEMENT
The parties hereto agree that from the date hereof until this Master
Agreement is terminated that Prestige Custom Builders, Inc., the
"Contractor", may contract with Huard Septic Design & Monitoring,
the "Subcontractor", for the furnishings of materials and/or the
performance of various work on projects being constructed by the
Contractor. The parties further agree that this Master
Agreement shall control their respective rights and privileges,
which arise out of the Subcontractor furnishing any materials
and/or performing any work on the Contractor's construction
projects.
It is the intent of the parties that these terms and conditions
apply to any provision of services by the Subcontractor
regardless of whether these terms and conditions are
referenced in any purchase order, subsequent contract memo,
etc. during the term of this contract.
Entering into this Master Agreement shall not obligate either the
Contractor or the Subcontractor to agree to any subsequent
request for services or to any volume of business during the term of
this Master Agreement. The intent is that if any services are
procured and agreed by both parties during the term of this
Agreement, the terms and conditions of this Master Agreement
shall apply. If any terms and conditions on any preprinted written
form from the Contractor conflicts with this Master Agreement, the
4 \± at 5.
5 Seattle-First Nat'l Bank v. Westlake Park Assocs.. 42 Wash. App. 269, 274,
711 P.2d361 (1985).
6 LaMon v. Butler, 112Wn.2d 193, 200-01, 770 P.2d 1027(1989).
No. 70656-0-1/5
terms of this Master Agreement apply and supercede any other
terms to [the] contrary.
Each individual project conducted with the Subcontractor will be
described in a separate addendum agreement called a Project
Subcontract. Your signed proposal or quote, including specific
details on Project Scope of Work, Price, Schedule, and Payment
Terms and exclusions, constitutes a Project Subcontract.^1
The emphasized language in the first three paragraphs of the above
excerpt shows that the parties intended for the Master Agreement to control the
parties' "rights and privileges" that "arise[s] out of [Huard] furnishing any
materials and/or performing any work on" Prestige's construction projects.
Moreover, the terms and conditions of the Master Agreement apply to the
projects "regardless of whether these terms and conditions are referenced" in
subsequent documents. This provision is explicit that "if any services are
procured and agreed by both parties during the term of this Agreement, the
terms and conditions of this Master Agreement shall apply"8
The objective manifestation of intent of this provision is clear—the terms
and conditions of the Master Agreement control for any projects for which Huard
provided materials and/or work, and there are no exceptions. Further, this is true
even "[i]f any terms and conditions on any preprinted form from [Prestige]
conflicts with this Master Agreement. . . ."9
In short, the terms and conditions of the Master Agreement control, and
the terms and conditions of subsequent agreements between these parties do
7 Clerk's Papers at 34 (emphasis added).
8 jd. (emphasis added).
9 Id.
No. 70656-0-1/6
not. Thus, to the extent that Huard relies on provisions of what it claims is the
"Project Subcontract" defined in the Master Agreement, those provisions are not
applicable.
Notwithstanding the clear wording of the Master Agreement that we just
discussed, Huard argues that the terms and conditions of what it characterizes
as the "Project Subcontract" apply regarding the award of attorney fees.
Specifically, it contends that the paragraph titled "DISPUTES" in the preprinted
portion of the April 10, 2006 document that it drafted and sent to Prestige is
applicable. Huard is mistaken.
First, we doubt that the April 10, 2006 document constitutes a "Project
Subcontract," as defined in the Master Agreement. The Master Agreement
specifies that such a subcontract is:
Your signed proposal or quote, including specific details on
Project Scope of Work, Price, Schedule, and Payment Terms and
exclusions . . . .[10]
The April 10, 2006 document that contains what appears to be Huard's bid
specifying details regarding work to be done at the Keiths' home is not signed by
Huard. Thus, it does not qualify as a Project Subcontract under the plain terms
of the Master Agreement between Prestige and Huard.
We also note that the April 10, 2006 document that Huard drafted appears
to primarily define the terms and conditions between "Owner" and Huard over the
work to be done on the Keiths' property. For example, the word "Owner" appears
10 id. (emphasis added).
6
No. 70656-0-1/7
throughout the preprinted terms.11 But neither the word "Contractor" nor
"Prestige" appears in the DISPUTES paragraph on which Huard primarily rests
one of its arguments for fees.12 And there is a signature block for "Owner" at the
end of the preprinted portion of the document, but no signature block for Prestige
or "Contractor."13
At oral argument, Huard noted that the signature of someone named Terry
appears on the face page of this document. But that does not change our view
of the document's effect. This signature appears to be next to initials showing
the correction of the design fee from $2,000 to $1,850.14 That does not convince
us that Terry, assuming he was the agent for Prestige, agreed to the terms and
conditions of the Disputes paragraph that appears much later in the document on
which Huard rests its argument.
Even if Huard could persuasively argue why we should ignore its inability
to overcome these threshold obstacles, Huard's arguments based on this
document are wholly unpersuasive.
Huard asserts that the Master Agreement incorporates what it
characterizes as the Project Subcontract. But there are no terms or conditions in
the Master Agreement, in our view, that support Huard's argument that these
terms and conditions of the April 10, 2006 document are incorporated into the
11
See id. at 41-42.
12 Id, at 41.
13 id at 42.
14 id at 40.
7
No. 70656-0-1/8
Master Agreement. Thus, Huard's arguments based on incorporation are
unpersuasive. Further, the terms of the Master Agreement characterize a project
subcontract as an addendum agreement to the Master Agreement. This does
not advance Huard's argument. Even if the April 10, 2006 document is an
addendum to the Master Agreement, the plain language of the Master
Agreement states that the controlling terms are those contained in the Master
Agreement. The terms in the April 10, 2006 document simply do not control.
Huard argues that Article I of the Master Agreement does not address the
relationship between the Master Agreement and other documents. Huard
contends that Article I only controls conflicts between terms in the Master
Agreement and terms in Prestige's own preprinted forms. Huard is incorrect.
Huard relies solely on the following emphasized language from Article I:
Entering into this Master Agreement shall not obligate either the
Contractor or the Subcontractor to agree to any subsequent
request for services or to any volume of business during the term of
this Master Agreement. The intent is that if any services are
procured and agreed by both parties during the term of this
Agreement, the terms and conditions of this Master Agreement
shall apply. If any terms and conditions on any preprinted
written form from [Prestige] conflicts with this Master
Agreement, the terms of this Master Agreement apply and
supercede any other terms to [the] contrary.J151
While Huard is correct that this emphasized language addresses conflicts
between the Master Agreement and terms on any preprinted written form from
Prestige, Huard's reading of Article I is too narrow. Looking to Article I as a
whole, it is clear that it addresses the relationship between the Master
Agreement and other documents. Specifically, the parties intended for the terms
15 id. at 34 (emphasis added).
8
No. 70656-0-1/9
of the Master Agreement to control, regardless of the existence of terms in other
documents. This is especially apparent from the sentence that immediately
precedes the one emphasized by Huard. That sentence states, "The intent is
that if any services are procured and agreed by both parties during the term of
this Agreement, the terms and conditions of this Master Agreement shall
apply."™ This sentence is broad and contains no limitations or conditions on
when the terms of the Master Agreement apply. The sentence identified by
Huard merely provides a clarifying point—that the terms of the Master Agreement
apply even if the terms and conditions on a preprinted written form from Prestige
conflicts with the terms of the Master Agreement. Huard's argument is not
persuasive.
Next, Huard argues that there is no conflict between the Master
Agreement and what it characterizes as the Project Subcontract. In response,
Prestige argues that the trial court properly found that provisions in these
contracts conflict and that the Master Agreement controls. But, neither party
explains why the issue of whether the provisions conflict is material. As just
discussed, Article I indicates that the terms of the Master Agreement apply
without limitation or condition. Huard does not identify any conditional language
in the Master Agreement that requires there to be a conflict in order for the terms
of the Master Agreement to control. Thus, this argument does not change our
conclusion.
16
Id. (emphasis added).
No. 70656-0-1/10
AWARD OF ATTORNEY FEES AT TRIAL
We next consider whether reasonable attorney fees are awardable under
any of the terms and conditions of the Master Agreement. We conclude, as the
trial court concluded, that this agreement does not support such an award.
"Washington follows the American rule 'that attorney fees are not
recoverable by the prevailing party as costs of litigation unless the recovery of
such fees is permitted by contract, statute, or some recognized ground in
equity.'"17 "In general, a prevailing party is one who receives an affirmative
judgment in his or her favor."18
"Whether a contract or statute authorizes an award of attorney fees is a
question of law reviewed de novo."19
Disputes &Arbitration Provision
Huard argues that it is entitled to attorney fees under Article XVI of the
Master Agreement, the "Disputes & Arbitration" provision. The trial court rejected
this argument. So do we.
In its order denying fees, the trial court concluded that Huard took no
action to compel arbitration. It also concluded that the Master Agreement
17 Panorama Vill. Condo. Owners Ass'n Bd. of Dirs. v. Allstate Ins. Co.,
144 Wash. 2d 130, 143, 26 P.3d 910 (2001) (quoting McGreevv v. Or. Mut. Ins. Co.,
128 Wash. 2d 26, 35 n.8, 904 P.2d 731 (1995)).
18 Riss v. Angel, 131 Wash. 2d 612, 633, 934 P.2d 669 (1997).
19 McGuire v. Bates, 169 Wash. 2d 185, 189, 234 P.3d 205 (2010).
10
No. 70656-0-1/11
"unambiguously allowed attorney's fees only for the prevailing party in an
arbitration proceeding."20 Accordingly, it denied Huard's motion.
A plain reading of the Disputes & Arbitration provision supports the trial
court's conclusion. This provision states:
XVI. Disputes & Arbitration
If any dispute arises between the parties, the parties will make a
good faith effort to first resolve without resort to litigation. If a
dispute cannot be resolved between the parties, then either party
may file suit in a court of competent jurisdiction. If suit is filed, the
dispute will be decided according to the Mandatory Arbitration
Rules regardless of the amount in dispute. Each party expressly
waives the dollar limits currently in effect and the arbitrator may
issue an award in any dollar amount. The arbitrator shall have the
authority to determine the amount, validity and enforceability of a
lien. The parties agree to accept the arbitrator's award as final and
binding. The parties each waive their right to file any appeal for trial
de novo in Superior Court. In any such arbitration proceeding,
the prevailing party shall in all cases be awarded his or her
reasonable attorney's fees regardless of whether the dispute
is resolved through settlement or arbitration.[21]
This emphasized language expressly indicates that attorney fees are
available for the prevailing party in an arbitration proceeding. Nothing in this
provision indicates that attorney fees are available for the prevailing party in any
other type of proceeding. As the trial court properly concluded, the Master
Agreement is silent as to whether a party who prevails at trial is entitled to an
award of attorney fees. Accordingly, because this case did not involve an
arbitration proceeding, this provision does not provide a basis for a fee award to
Huard.
20 Clerk's Papers at 199.
21 id. at 37 (emphasis added).
11
No. 70656-0-1/12
Huard makes several arguments that it is entitled to fees under this
provision. None are persuasive.
First, Huard argues that an "arbitration proceeding" is "contractually
defined as including a suit filed in a court of competent jurisdiction and
determined according to the Mandatory Rules of Arbitration."22 Thus, it argues
that because Prestige's claim "was properly decided by a superior court judge
according to Rule 1.3 of the Mandatory Arbitration Rules," Huard was entitled to
an award of fees under this provision.23 This argument is unconvincing.
This provision does not contractually define "arbitration proceeding" in the
manner suggested by Huard. And when this provision is reasonably read as a
whole, it is clear that the parties intended for an "arbitration proceeding" to
involve an arbitrator. Notably, the provision consistently refers to the "arbitrator"
when it discusses the parties' contractual modifications of the Mandatory
Arbitration Rules. Nothing about this provision suggests that an "arbitration
proceeding" is defined merely as filing suit in a court of competent jurisdiction
that includes mandatory arbitration proceedings as an option to resolve disputes.
Moreover, it is without serious dispute that this case was never "decided
according to the Mandatory Arbitration Rules." Huard failed to move to compel
arbitration. Rather, it moved for summary judgment pursuant to CR 56. This
case, as this record amply demonstrates, was decided under Rule 56 of the Civil
Rules for Superior Court, not the Mandatory Arbitration Rules.
22 Brief of Appellant at 28.
23 id at 30.
12
No. 70656-0-1/13
Huard relies on MAR 1.3 to support its argument. That rule provides that
a case filed in the superior court remains under the jurisdiction of the superior
court in all stages of the proceeding, including arbitration.24 It also states that
until a case is assigned to an arbitrator, the rules of civil procedure apply, and
after a case is assigned to the arbitrator, the MAR apply, except where stated
otherwise.25 But the jurisdiction of the superior court is irrelevant to the question
before us. And this rule does not establish that this case was decided according
to the Superior Court Mandatory Arbitration Rules. Arguments to the contrary
are simply unpersuasive.
Second, Huard points out that the provision recognizes a right to fees
when "the dispute is resolved through either 'settlement or arbitration.'"26 Huard
argues, "If a party can be entitled to fees if it prevails through settlement, then
obviously prevailing through arbitration is not the only vehicle."27 This argument
fails to overcome the obvious difficulty. There was no arbitration, and one must
at least be commenced before fees are potentially awardable.
Third, Huard argues that the phrase "in all cases" in the last sentence of
this provision supportsthe conclusion that it is entitled to fees.28 That sentence
states, "In any such arbitration proceeding, the prevailing party shall in all cases
24 MAR 1.3(a).
25 MAR 1.3(b)(1).
26 Reply Brief of Appellant at 22 (quoting Clerk's Papers at 37).
27 id
28 Brief of Appellant at 32.
13
No. 70656-0-1/14
be awarded his or her reasonable attorney's fees regardless of whether the
dispute is resolved through settlement or arbitration."29 Huard latches on to this
emphasized language to argue that fees are awardable in any "case" arising out
of a dispute about the contract. But this argument completely ignores the
opening clause of this sentence, "In any such arbitration proceeding . . . "30
Such a reading would render the opening clause meaningless, and thus, we
reject this argument.
Fourth, Huard argues that Prestige's construction of this provision "leads
to absurd consequences."31 It contends that if Prestige "can always take a shot
at winning" because if Prestige prevails, it would be entitled to fees under the
indemnification provision, but if its claim is so weak that it does not survive
summary judgment, then the subcontractor will never be entitled to fees.32 But,
as the trial court concluded, Huard could have moved to compel arbitration. It
chose not to do so. And as Prestige notes, refraining from arbitration can be a
rational choice, as it provides certain advantages. Thus, it is not the construction
of this provision that leads to these consequences, but rather, it is a party's
strategic decision that can lead to such consequences.
Finally, Huard argues that, at the very least, this provision is ambiguous
and, consequently, it must be interpreted in Huard's favor since it was drafted by
29 Clerk's Papers at 37 (emphasis added).
30 ]d (emphasis added).
31 Brief of Appellant at 32.
32 id at 33.
14
No. 70656-0-1/15
Prestige. But, as already discussed, the language of this provision is plain and
unambiguous. Thus, this argument is also unpersuasive.
Indemnification Provision
Huard argues that it is entitled to fees under Article XIX of the Master
Agreement, the "Indemnification" provision. Specifically, Huard argues that
under RCW 4.84.330, this provision is bilateral. Because Huard failed to properly
preserve this argument below, we decline to consider it.
Under RAP 2.5(a), the appellate court may refuse to review any claim of
error that was not raised in the trial court. Generally, it does not review "an issue,
theory, argument, or claim oferror not presented at the trial court level."33
In its motion for award of attorney fees, Huard cited generally to the
Master Agreement and the Project Subcontract.34 But the only specific provision
that Huard cited within these agreements was Article XVI of the Master
Agreement, the Disputes &Arbitration provision. Huard did not cite Article XIX,
the Indemnification provision. Specifically, Huard argued in its motion:
Prestige's Master [Agreement] states that the prevailing
party to any dispute shall be awarded its attorneys' fees. See Ex. 1
to Huard Decl. at sec. XVI ["Disputes &Arbitration" provision]. The
Master [Agreement] explicitly incorporates the terms of the Project
Subcontract. Id. at sec. I. Similarly, the Project Subcontract states
that the prevailing party to any dispute shall be awarded its
attorneys' fees and costs. Ex. 2 to Huard Decl. Under RCW
4.84.330, such contractual attorneys' fee clauses are
enforceable.1351
33 Lindbladv. Boeing Co., 108 Wash. App. 198, 207, 31 P.3d 1 (2001).
34 See Clerk's Papers at 61-66.
35 id at 63 (emphasis added).
15
No. 70656-0-1/16
In Huard's reply in support of its motion, it again focused on the Project
Subcontract and on the language of Article XVI, the Disputes & Arbitration
provision of the Master Agreement.36 The only citation to Article XIX, the
Indemnification provision, was in a footnote of this reply, which stated:
Section XIV of the Master [Agreement] regarding Default by
Huard, Section XV regarding Huard's Insurance obligations, and
Section XIX regarding Huard's Indemnity obligations, all grant
Prestige one-way attorney fee recovery rights. This underscores
Prestige's intent that attorneys' fees be recoverable in any
dispute.1371
But this citation in the footnote does not properly preserve Huard's
argument. First, this citation, in the reply brief, was too late to raise properly the
argument before the trial court. Second, Huard did not make any argument. It
neither provided the language of this provision, nor did it argue why this provision
entitled Huard to fees. Third, Huard did not cite to this provision in the footnote to
make an independent argument that it was entitled to fees under this section.
Rather, it cited to this provision to support its argument that these provisions
"underscore[] Prestige's intent that attorneys' fees be recoverable in any
dispute."38
Huard argues that "RCW 4.84.330 was clearly raised below by Huard."39
It points out that it cited to this statute in its motion for an award of fees and in its
reply. But while Huard cited to this statute, it never did so in the context ofthe
36 id at 160-65.
37 id at 162 (first emphasis added).
38 id (emphasis omitted).
39 Reply Brief of Appellant at 1.
16
No. 70656-0-1/17
Indemnification Provision. Additionally, it never cited this statute for the
proposition it now asserts, that "RCW 4.84.330 transforms Prestige's unilateral
fee provision into a bilateral provision."40 Rather, it cited to this statute in its
original motion to support the proposition that "[u]nder RCW 4.84.330, such
contractual attorneys' fee clauses are enforceable," and in its reply to support the
proposition that "attorney fee rights in a contract cannot be waived."41
For these reasons, we decline to consider this argument any further.
AWARD OF ATTORNEY FEES ON APPEAL
Huard finally argues that it is entitled to an award of attorney fees for this
appeal, citing the principle that "'[a] contract providing for an award of attorney
fees at trial also supports such an award on appeal.'"42 Because the Master
Agreement does not provide a basis for an award of attorney fees at trial in this
case, we deny Huard's request for fees on appeal.
We affirm the decision of the trial court denying reasonable attorney fees
and deny Huard's request for reasonable attorney fees on appeal.
OdX^J.
WE CONCUR:
IfStAe^ x^r
%Q„Llrd$. Y
40id
41 Clerk's Papers at 63, 161.
42 Brief of Appellant at 35 (quoting Hall v. Feigenbaum, 178 Wash. App. 811,
827. 319 P.3d 61. review denied, 180Wn.2d 1018(2014)).
17