Gregory Hochhalter v. Kat's Cove Condominium Association, 37979-5

Background

Kat’s Cove is a five-unit condominium; the Declaration (2007) contains an arbitration clause (Article XII) that requires disputes among owners or between owners and the Association to be arbitrated, but allows court actions where injunctive or provisional relief is the only reasonable remedy or to compel arbitration.
In Nov. 2018 Hochhalter sued (named the Association and Lewis) under RCW 64.34.372 seeking association records (primarily injunctive/declaratory relief); Lewis initially responded pro se and did not answer that complaint.
In July 2019 Hochhalter filed an amended complaint adding co-plaintiffs and seeking injunctive, declaratory, and monetary relief (alleging financial self-dealing); Lewis retained counsel, answered, and asserted counterclaims for reimbursement/assessments.
Lewis’s counsel emailed an arbitration demand one week after answering the amended complaint, then moved to compel arbitration six weeks later; Hochhalter opposed, arguing arbitration did not cover the claims and that Lewis waived the right by litigation conduct.
The trial court denied the motion to compel arbitration, granted Hochhalter’s motion to dismiss Lewis’s counterclaims, and imposed CR 11 sanctions on Lewis’s counsel for filing a frivolous arbitration motion.
The Court of Appeals reversed: it held the amended-complaint claims fall within the Declaration’s arbitration clause, Lewis did not waive arbitration (he asserted it promptly), and the CR 11 sanctions were unwarranted; the court directed the trial court to compel arbitration.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are claims in the amended complaint subject to the Declaration’s arbitration clause?	Hochhalter: his amended claims seek injunctive/declaratory relief and thus fall within the Declaration’s carve‑out permitting court actions.	Lewis: the amended claims include monetary and other disputes among owners/Association that fall squarely within Article XII arbitration.	Held: Amended-complaint claims are arbitrable; injunctive relief was not the only reasonable remedy.
Did Lewis waive the right to arbitrate by litigating (requesting trial dates, discovery, continuances)?	Hochhalter: Lewis engaged in litigation steps and therefore waived arbitration; prejudice supports denial.	Lewis: any prior litigation related to the original injunctive complaint (non-arbitrable) and he asserted arbitration promptly after the amended complaint.	Held: No waiver. Lewis timely asserted arbitration one week after answering the amended complaint and did not engage in discovery related to the arbitrable claims; no showing of prejudice.
Were CR 11 sanctions against Lewis’s counsel appropriate for filing the arbitration motion?	Hochhalter: the motion was frivolous because Declaration permits court actions for equitable relief and much litigation had proceeded.	Lewis: motion was legally grounded; arbitration covered amended claims and was not made to harass.	Held: CR 11 sanctions reversed; motion to compel was not meritorious to the degree that justified sanctions.

Key Cases Cited

River House Dev., Inc. v. Integrus Architecture, PS, 167 Wn. App. 221 (Wash. Ct. App. 2012) (standard of review and tests for arbitrability)
Marcus & Millichap Real Estate Inv. Servs. of Seattle, Inc. v. Yates, Wood & MacDonald, Inc., 192 Wn. App. 465 (Wash. Ct. App. 2016) (presumption in favor of arbitration; doubts resolved for arbitration)
Peninsula Sch. Dist. No. 401 v. Pub. Sch. Emps. of Peninsula, 130 Wn.2d 401 (Wash. 1996) (arbitration clause interpretation; send disputes to arbitration unless clearly inapplicable)
Otis Hous. Ass’n v. Ha, 165 Wn.2d 582 (Wash. 2009) (waiver of arbitration through untimely assertion)
Jeoung Lee v. Evergreen Hosp. Med. Ctr., 195 Wn.2d 699 (Wash. 2020) (factors for assessing waiver: knowledge, inconsistent acts, prejudice)
Canal Station N. Condo. Ass’n v. Ballard Leary Phase II, LP, 179 Wn. App. 289 (Wash. Ct. App. 2013) (waiver can be express or implied; analysis of litigation conduct)
Schuster v. Prestige Senior Mgmt., LLC, 193 Wn. App. 616 (Wash. Ct. App. 2016) (resolving waiver doubts in favor of arbitration)
Heights at Issaquah Ridge Owners Ass’n v. Burton Landscape Grp., Inc., 148 Wn. App. 400 (Wash. Ct. App. 2009) (two-step arbitrability inquiry: valid agreement and scope)
Townsend v. Quadrant Corp., 173 Wn.2d 451 (Wash. 2012) (failure to assert arbitration in certain procedural contexts does not always constitute waiver)